Zeev's Turnips Patch-No Politics (ZEEV)

[Bruce A Thompson]

Darryl,

I just finished reading the Greenlight report that bashes ALD.

http://www.greenlightcapital.com/ald/alliedcapital.pdf

What it all boils down to is that Greenlight claims that, since ALD doesn't use "mark to market" to valuate their portfolio, they are committing a fraud.

ALD is doing mezzanine financing and loans and investments in private and small business. By definition, these are the same as sub-prime in the mortgage business. Mark to market accounting simply does not work for them. Booking the entire profit for a deal before it pays the "muntlies" would force the proforma profits up and cause future income to be impared if and when loans subsequently defaulted. This skews the profits and cash flow figures and creates huge percieved value that simply does not exist. Ask anyone who remembers the CTYS-CTYSC-CYYS fiasco. Mark to market is also one if the big things that got Enron in trouble.

I believe that Greenlight is using this gray area of accounting to raid the wrong company.

Bt