All the talk about fraud in this space for the past year has one fantastic result, at least the way I see it: These RTO firms who are on the top 10 list will need to go to supper human lengths now to show day in and day out that they are not frauds – crazy stuff that firms their size in the US do not need to do - wow, what else could an investor want and love – I love that the market is making life a living hell for the CEO and CFOs and boards of the firms I own stock in – be perfect or die is the new rule.
Every day, I love this space even more as the firms here get bashed – it’s now like a prison of China RTO companies trapped in US Exchanges where every day a new one is taken out and shot just to show the others how to behave (I know it done by shorts who make up a lot, but the lessons are learned by others) – I love that as a long investor – daily lessons on how dishonored you can become if you are not perfect and if leave any opportunity for the short to hurt your firm. This focused bashing of each and every remot issue is wonderful – this space is creating a supper set of monster RTO Chinese firms so clean that they are going to take off - it will not happen today, but it is coming.
Look at the massive focus now on every corner of an RTO firms books and operation – it is so over the top that in 6 months these firms could become the safest bets in the world. CCME is now going to have to prove it is not a fraud, daily - every PR release, every word, is going to be so vetted – what a lesson for all the rest.
I bet the CEO’s and CFO of these RTO firms wished they never heard of a reverse merger - their lives are now a living hell, and I am sure many would love to be back in old days working for the Party - but they are stuck with us now – no going back to their stock exchanges in their home market with fraud charges against them - those exchanges would never have them – these firms are now in a corner with crazy US investors and low teen multiples, and the only way the CEO/Chairman who own these firms get to riches is to now play the “be perfect” RTO game. This is better than watching Roman gladiators battle it in the ring – the result is going to make investors with steel balls rich.
Just look at what CCME is now going to have to do each and every day to prove they are not a fraud.
I agree with Ramos and how he paints the owners of these firms and the history he gave – just a fantastic explanation Ramos – you nailed it
For those of you who think that China CEO lie, give me a break – All CEO around the world are far worse than Lawyers – these China CEO’s and Founders just are going through a cultural change of sorts, by getting a beating each and every day from the markets. I would not put a dime into India or Russia – hey in those countries corporate misstatement is a sport. I have faith that the executive a the top firms in the RTO space in China will learn very quickly – and they will be good at being great honest CEO – most of them have overcome much much harder issues in their lives that we could ever imaging with the politics of the party and such. But I think they will be some of the best executives in the world – at least the top 10 will be – and soon.
My experience - (skip this part): I owned a decent firm that took on a few large killer investors after 20 years in operation and $30m sales and very profitable – a tech firm in 1996 – I wanted to go public so I needed some friends as investors to make that happen. I brought on 3 grade A funds, who all seemed to be so nice during the round – then at the first board meeting it all changed – they beat on me for 4 hours – yelling in my face telling me I was not fit for the CEO job. If it was not for my CFO and yearly Anderson full audits I would of pushed the envelope “for the good of the company” just to make it all better and to keep it all together. I thought about it every day, every hour and had yelling matches with my CFO weekly about moving up revenue recognition on project just a few % points so I could go into the monthly board meeting having met my stupid goals - he would not do anything that was very remotly gray – and trust me there was lots of opportunity. My investors/board memeber, made a sport out of yelling at me every monthly, all at once, telling me I was the stupidest fool and they were going to kick me out, take over the firm and there was nothing I could do about it – it was hell. I learned slowly that the only way I could lose was to commit fraud, and my new board members knew that, and they want me to do it so they could take over the firm (you think shorts are bad). But I became perfect fast, and after a very long painful period of two years, and I learned how to do great business while being perfect, which was hard after running a $30m firm as the only owner.
So I feel for these CEOs. Okay, not really, I am on the other side of table now and I love it. What they are going though is a 100 time worse than what I had to bear, but they will learn and I am going to be there to make $$.
So seeing these firms beaten to a mass of blood makes me love this space even more. But like many have said, investing in this space is not for anyone who cannot stand to lose it all. This space is now an all or nothing investment, so if you going to stay in, and I would be careful, well if you’re going to be in this mess, suit up with everything you got in the closet to protect yourself. If you not 100% committed, maybe do the smart thing and run for your life. Scary times are coming.
I think most of you here have what it takes to benefit from what you have created. Look how much you all have learned – this board is just amazing in the knowledge and vision you now have. The level of understand of what to look at and how to judge by investors on this board and by others has moved into very advanced area - all the work that evil shorts frims have done to find all these problem areas, real or not, has resulted in a very very solid understanding of how RTO need to operate in China and what long investors and trader need to know to make money and to have solid fraud insights. You now have much better understandings.
To be clear, I only look at 4 firms here and would have a hard time investing in any others (CCME, YONG, GFRE and NEP). The main reason for YONG, GFRE and NEP is due to how pounded they have been - I like the constant banging on management to provide they are not fraud and all the attention they get on every issue. Now that CCME is the poster child of short selling fraud, I love it even more.
So while some of you are all in cash, I am being a bit foolish and am all in with the belief like the last post… The best time to jump in is when the IHub board is all cash and hating the space and seeing everyone as a fraud – I feel very comfortable that the four firms I love, who have no choice but to fight their way out, and become perfect firms, will end up being very big wins over the next 12 months.
They don’t have a choice – they are in RTO prison and there is only one way out without dishonor and shame and never having a public company again in China – that is making me rich.
Good luck to all
