China MediaExpress Holdings, Inc. (fka CCME)

[bradford86]

I figured i'd put this in here --- i tried to see if there were any incentives for CCME to be a fraud.... and the fraud story just doesnt make sense given the associations and liabilities.

well, I hope these guys are legit
[Glen]
12:31am
i'm pretty sure they are.
[Friend]
12:34am
it really looks like there is a strong case against them though, are you going to short the stock?
or load up?
[Glen]
12:34am
have you read the case against them?
[Friend]
12:35am
yea i did, the muddy waters seemed suspicious
but the first one sounded pretty legit
[Glen]
12:35am
how so?
you say the citron sounded legit?
http://citronresearch.com/
[Friend]
12:36am
yea, they were basing it on how the numbers seemed too good to be true based on their cap ex and so on
but why did they reverse merger
thats a question that i'm wondering
but the stuff abt the company being nonexistenent is clearly bull
[Glen]
12:38am
at the time, the global markets had crashed
[Friend]
12:38am
it exists and is operational
i see that make sense
well, i've been watching it, interesting to see how it plays out now that there's an investigation on it...
even if they fudged a little it wont be good
[Glen]
12:40am
how would they fudge?
that's the question.
if you look at the incentives and all
if the company is lying
management personally is screwed.
just fyi.
they lose everything.
that's how it's structured.
[Friend]
12:41am
i dont know,
but its happened
[Glen]
12:42am
what's happened?
[Friend]
12:43am
'pump and dump'
[Glen]
12:44am
how do you figure?
which way?
[Friend]
12:44am
it has hapened to other companies, thats what i meant
[Glen]
12:44am
this is true
but. look at the volume.
[Friend]
12:44am
ok,
[Glen]
12:44am
pumps and dumps
screw people at the top
lol
the volume on this one doesnt make sense
look, i have no idea what i'm talking about
i'm just guessing
[Friend]
12:45am
well, the management could have bought alot on the side, privately... the 1.5 mil the cfo invested could have been purely symbolic
small price to pay
i dont know either
but we'll find out soon i guess
i want it to be legit
i'll invest all i have right now
[Glen]
12:47am
lol
[Friend]
12:47am
deal of the century
[Glen]
12:47am
all i know is that from everything i read
the fraud argument has been debunked
but i still hear rumors of fraud. so who knows
i'm open to the idea
you should know
that i'm stressing out about a lot of this stuff
because i have found fraud in china that nobody else really has talked about
and i'm doing my best to avoid owning fraud
but as far as i can tell, ccme is real.
if it was a fraud.
my arguement is as follows.
the people saying they are fraud..
would have a better argument.
right now, their argument in fact is in my opinion made up by them
lol
[Friend]
12:52am
you're right
it is still up in the air
but their opinion cant manifest into trust
truth*
if the investigation indeed shows that the books are legit then youre back in the money
but if theres the slightest bit wrong
then
its really bad
[Glen]
12:55am
the thing is.
star is on the board of directors
deloitte and touch is auditing the books and my latest feedback is things are fine
[Friend]
12:55am
ok
who is star?
[Glen]
12:56am
star investments
[Friend]
12:56am
i see
[Glen]
12:57am
http://www.cvstarrco.com/cv/starrinvestments/
[Friend]
12:59am
CCME seemed like last company to seem like they would be a fraud
[Glen]
1:00am
well.
if you look at their numbers
the numbers are pure
in terms of they aren't hiding positive cash flows from operations
[Friend]
1:00am
of course, theyre being accused of overstating the numbers
[Glen]
1:01am
well.
the thing is.
if the cash balance is real
then i would argue that it's impossible they are overstating their numbers.
[Friend]
1:02am
yea someone said that some chinese companies have taken out short term loans
to appear like they have the balance
but
they paid out a dividend
that interesting
[Glen]
1:02am
they haven't paid the dividend yet.
but i've heard that too.
In addition, for so long as Starr owns at least 3% of the Company’s Common Stock on a fully-diluted and as-converted basis, Starr will have the right to purchase a pro rata portion of any additional shares of capital stock proposed to be issued by the Company, and will have the right to join certain stockholders in their sale of capital stock of the Company on a pro rata basis, in each case in proportion to Starr’s then current percentage of ownership of the issued and outstanding shares of Common Stock, on a fully diluted, as-converted basis. As long as Starr owns at least 3% of the issued and outstanding shares of Common Stock, on a fully diluted, as-converted basis, it will also have the right to require certain stockholders to purchase its Preferred Stock and the Common Stock held by Starr or issued upon the conversion of Preferred Stock or exercise of the Purchased Warrants upon the occurrence of the Company’s failure to achieve audited consolidated net profits (“ACNP”) for 2009, 2010 or 2011 are less than $42 million, $55 million and $70 million, respectively (each, a “Profits Target”) or to fulfill certain of its obligations under the Purchase Agreement. The Performance Adjustment Amount payable in any of 2009, 2010 or 2011 will be a fraction of $343,462,957 which is proportionate to the amount by which the Company’s ACNP in such year falls short of the then applicable Profits Target. The Performance Adjustment Amounts will be payable in cash or stock, but only to the extent such stock, together with the shares of Common Stock acquired or acquirable as a result of Starr’s ownership of the Preferred Stock, the Purchased Warrants and the Transferred Shares, will not exceed 19.9% of the total number of shares of Common Stock of the Company issued and outstanding as of the date of the Purchase Agreement. In the event that the stockholders subject to the obligation to purchase Starr’s shares under the put right or to obligations under the performance-based adjustment provisions do not comply therewith, Starr will have the right to require such stockholders to sell up to all of the Companys’ capital stock directly or indirectly held by them to a third party pursuant to a managed sale process.
The message is too long.
sent you a message
[Friend]
1:10am
yup, thats significant
it relly does seem more genuine than not
doesnt ge tmuch better than that
[Glen]
1:11am
well ..
basically
if the company is lying
[Friend]
1:11am
they owe starr alot
haha
[Glen]
1:11am
lol yeah
[Friend]
1:11am
but
i think even if it turns out its all real
the issue would be the 'image' of the company
its going to be a while
[Glen]
1:12am
i dont know.
[Friend]
1:12am
before investors have faith in it
[Glen]
1:12am
things happen faster than you'd expect.
[Friend]
1:12am
i hope so
[Glen]
1:13am
i'm trying to figure out if they can lie their way through it all and still make money lol
[Friend]
1:13am
they were quite aggressive with this profit guarantee
[Glen]
1:14am
right now
the fully diluted share count is 38M
there are 14M in earn-out shares
52M shares total fully diluted
[Friend]
1:15am
was this agreement from 09?
[Glen]
1:15am
from way back
i'm just trying to figure out how it could be a fraud.
the earn out shares are 15M shares
[Friend]
1:16am
ok
[Glen]
1:16am
cheng zheng owns 13M
[Friend]
1:16am
the CEO?
[Glen]
1:16am
he's the ceo
[Friend]
1:17am
haha
[Glen]
1:17am
Cheng Zheng, the sole shareholder of HKMDF at the date of dividend declaration.
so he gets the earn-out shares.
[Friend]
1:17am
he's not having a very good chinese new year
i see...
dude idk
i'm gonna wait on the outcome
but
[Glen]
1:18am
lol
he doesnt care.
if the company is real
and they are making money
[Friend]
1:18am
did you see someone dump big time before the report come out?
[Glen]
1:18am
he gets an additional 14M shares
look i'm trying to figure out
if there is incentive for him to lie.
he currently owns 13.2M shares
[Friend]
1:19am
insider syndicate
[Glen]
1:19am
he'd get another 14M shares
[Friend]
1:19am
there could be incentive
[Glen]
1:19am
27.2M shares
[Friend]
1:19am
anythings possible
[Glen]
1:19am
lol
[Friend]
1:19am
oh i see
[Glen]
1:19am
the market value of his shares is currently less than what he'd owe starr if he was lying
[Friend]
1:20am
so why would he want useless shares
exactly
haa, yea it is a mystery
[Glen]
1:20am
it's just understanding incentives
so basically
[Friend]
1:21am
maybe they expected to be able to get away with it for long enough
to be able to sell out
[Glen]
1:21am
based on my calculations
if the ceo is lying
he loses everything
if he's not lying
he makes a lot of money
starr got involved
and picked the outside auditor
who hangs out at ccme's office.
dude.
this looks real to me.
[Friend]
1:22am
yup
[Glen]
1:22am
more real than i thought.
previously.
[Friend]
1:22am
haha
[Glen]
1:22am
seriously.
[Friend]
1:22am
yea, i'm leaning towards real
[Glen]
1:23am
i think i'm willing to bet large on this.
[Friend]
1:23am
the video with the chinese dude was enough for me
but i need to know they're absolutely clean because now theres a microspcope
[Glen]
1:23am
look, i've identified frauds
i'll tell you one, call me
[Friend]
1:24am
haha, why wont you type it here
?
nvm
[Glen]
1:28am
lol
oh the name of the company?
maybe.
lol
so if ccme is a fraud
and it drops to $5
and their audited financials bounce
lets see.
the ceo would owe starr
roughly $6 in share stock price
he owns roughly 20M shares
[Friend]
1:30am
the company would, they would just declare bankruptcy
[Glen]
1:30am
out of a total of 50
so..
no dude.
this stuff is put to death in china.
just fyi.
[Friend]
1:31am
oh shti
[Glen]
1:31am
yeah.
so.. here's the question
would you bet your life on a business?
that's ridiculous.
[Friend]
1:32am
ui wouldnt load up though
[Glen]
1:32am
also
the company would be worth less than $5
if it was fraud
everyone would murder sell
the cash balance is $169M
here's the problem.
if he can keep up the fraud
to 2012
lol
then he keeps it all baby
so lets calculate what he keeps
25M shares
roughly
so let's see
if he is a SCAM
and he has banks loaning him money to run this scam.
and he's got $169M on loan now
+$130M on loan next year
+$31M for Q42010
that's
$330M
and he has 25M shares
he needs a share price of at least 13.2
and the issue is
he needs to sell 25M shares at $13.2 average
and..
i think it would be very difficult to sell half your company
at that price
[Friend]
1:36am
the loans i assume are so short term that they just need to be in there for the auditors to see
[Glen]
1:36am
without people figuring out it's a fraud
well there's another problem
it's my understanding that when you pick up DTT
they are always randomly checking on things
and that various research firms have all independently confirmed cash balances at random times
and delotte is in and out of the office all the time
lol
[Friend]
1:37am
i see
[Glen]
1:37am
like most blue chip companies
have offices for their auditors built into their HQ
it's not like they just glance at the numbers once a year.
they actually review the 10-Q's annually
Starr is on the board of directors checking shit out monthly
dude, running a scam like this for 3 years
to try to sell half your company
into the market
lol
that's the fraud argument as i see it. straight up.
[Friend]
1:39am
i dont know if he was relying on selling his own shares
[Glen]
1:39am
ok listen..
if these are bank loans he is getting from a bank.
[Friend]
1:39am
someone could have been loading up outside
yup
[Glen]
1:39am
he needs to pay them off
so..
i guess he would have the cash from the bank
to give back.
[Friend]
1:40am
he doesnt need to spend it
yea
we'll see
[Glen]
1:40am
but then again...
if he is lying...
and his audits dont check
he gets taken down
so basically he is betting that his audits check
so i'm curious how he knows the cfo
let's look.
[Friend]
1:42am
the cfo would have to be in on it too
[Glen]
1:42am
http://www.ccme.tv/eng/about/management.php
yeah but the thing is.
if you run a fraud.
you can't keep the money.
lol
dont forget that.
Jacky, Wai Kei Lam, Chief Financial Officer and Executive Director
Mr. Lam has served as Chief Financial Officer since May 2009. He is experienced in public company accounting and is primarily in charge of CCME's strategic planning, finance and accounting related matters. Prior to joining CCME, he spent over eight years in PricewaterhouseCoopers Hong Kong. He also served as an accounting supervisor in a multinational company and was employed by a local audit firm before joining PricewaterhouseCoopers Hong Kong. He received his bachelor degree of business administration in accounting from Hong Kong University of Science and Technology in 1996 and a masters degree in financial engineering from the City University of Hong Kong in 2004. He is also a member of the Hong Kong Institute of Certified Public Accountants.
jacky is from hong kong
[Friend]
1:43am
wow
he's a cpa
theres no way
i dont believe its a fraud
[Glen]
1:44am
how does being a cpa do anything?
[Friend]
1:44am
he could lose his license
[Glen]
1:44am
lol so?
[Friend]
1:44am
he was from pwc
[Glen]
1:44am
you dont need a license if you're rich.
[Friend]
1:44am
haha,
no its about
the type of person
its alot of work getting there
[Glen]
1:45am
8+ years at PwC
you're right.
[Friend]
1:45am
you dont become a cpa just to commit a massive fraud
[Glen]
1:45am
that's true.
what are your thoughts?
[Friend]
1:46am
I think citron might have shorted the stock
[Glen]
1:46am
well no duh
[Friend]
1:46am
and the released the report
but
the numbers might not be a lie
[Glen]
1:47am
which numbers?
[Friend]
1:47am
ccme's reported statement
[Glen]
1:47am
their 10-Q's and 10-K's?
[Friend]
1:47am
but overstated possibly in some minor way
yea
[Glen]
1:47am
look see..
i just don't see it.
[Friend]
1:48am
its not likely that this is a massive fraud
but
[Glen]
1:48am
look, the way you defraud lots of investors
is to take their money and run.
it's easy to do.
make shit up
overstate numbers
sell shares
take money and run
you absolutely NEVER
write in agreements that hold you liable for up to $350M
and let them choose the auditor
[Friend]
1:49am
i dont think the market sentiment is going to let the price go back up to 20, within the next few months
[Glen]
1:49am
that's perfectly fine with me
[Friend]
1:49am
people are scared
[Glen]
1:49am
also fine.
i dont care.
[Friend]
1:50am
thats good
[Glen]
1:50am
this is real to me as of this conversation
i just wanted to prove to myself
that the fraud didnt make sense.
[Friend]
1:50am
but just be careful, anything is possible
sometimes even if it doesnt make sense
[Glen]
1:51am
i guess.
if this was a fraud
ok another angle
if this was a fraud
and his objective was to take the money and run
he's already taken all the money he's going to get.
in terms of Starr's investment.
he's not going to be doing any offerings anytime soon.
if he tried, people would be like WTF, you have so much cash.. no.
and so, the only way to do this is to hold out
get your earnout shares
and try to sell
but, i just think that he's way to tied into this fraud.
like --- companies overstate their numbers all the time.
it's easy
i know how to do it
and i can't find any evidence that this is what they are doing
if it's a short term bank loan
find me a bank that will short term loan me $200K
i mean
$200M
to deceive auditors
to deceive everyone
[Friend]
1:53am
haha youre right
not even in china i dont think
[Glen]
1:54am
dude, the bottom line
is that if he has a friend that's a billionaire
i know of no billionaires that would try to deceive investors
by building a company
and putting in money for the next 2 years
and having the risk of losing $350,000,000
for a potential payout of $500,000,000
also..
that kind of activity
would go down in the record books
as the baddest ass billionaire
[Friend]
1:55am
hahaha!
[Glen]
1:58am
so yeah. this is what i just learned tonight
is there any other possible way ccme could be a fraud?
like, enron was a fraud.
saytam was a fraud
[Friend]
1:59am
but you could see it in the books with enron - in hindsight
[Glen]
1:59am
yes.
[Friend]
1:59am
with this it looks clean
the cash is there
[Glen]
1:59am
saytam's an interesting story.
http://blog.geoinvesting.com/?p=462
How else do we explain the fact that PricewaterhouseCoopers, one of the world’s largest accountancy firms, missed a systematic US$1 billion fraud at Satyam, the Indian information technology outsourcing giant, for as long as seven years?
lol
Satyam’s bogus accounts
ahhh.
they had multiple accounts.
In Singapore, Oriental Century requested a suspension of its shares after KPMG contacted the company’s chief financial officer on March 9, 2009, saying that it had difficulties seeking the reconfirmation of the bank balance and that there were doubts about the authenticity of a bank confirmation received earlier by KPMG.
lol here's another point.
you act as if with all these fraud accusations out there right now
that deloitte, and starr investments
aren't going to make 100% beyond a reasonable doubt that the cash is real?
[Friend]
2:01am
of course, they arent stupid
[Glen]
2:02am
accuse them of short term overnight loans?
unlikely in this case.
[Friend]
2:02am
i'm curious to know what happened with the other chinese fraud's
[Glen]
2:02am
which ones?
i know of a lot of them
i'm involved in a few right now
i'm personally not committing fraud.
but i own fraudulant companies that i intend to sell.
[Friend]
2:03am
yup, but this doesnt fit in to any of those categoried>?
[Glen]
2:03am
hahaha hell no.
not even close.
these other companies
had 2 share structures
or were way smaller
and just stopped reporting
and were otcbb
and people were resigning left and right
and you had shitty auditors
[Friend]
2:04am
assholes
[Glen]
2:04am
and were doing all sorts of shenanigans
so.. what's interesting
is i'm making the conclusion that ccme is not a fraud
because the incentive for them to be committing fraud just really isn't there.
but, you know -- i could be wrong
cctr was a fraud
i study all sorts of frauds.
just so i know what to look for.
another thing to note
is that their auditor is DTT hong knog
hong kong
and not DTT china
it's like world class education vs 3rd world education
[Friend]
2:06am
yea i agree
theres a huge diff
[Glen]
2:07am
is there anything we could be missing?
jacky checks.
auditor checks
starr checks
ceo loses everything if he's somehow coordinating a fraud
fraud accusations don't make sense to me.
[Friend]
2:08am
not outright fraud.. 1-3% chance
and i'm taking your word for the overstating
[Glen]
2:08am
if they were to overstate their income
they'd have to hide it somewhere on the balance sheet.
[Friend]
2:09am
i see
[Glen]
2:09am
in 2008
their shareholder equity was 34M
liabilities 14M
cash 29M
assets 49M
their last 10Q:
liabilities 37M
cash 169M
assets 220M
equity 183M
169-29=140M cash change
[Friend]
2:10am
yea, the cash is there
so even that seems unlikely
[Glen]
2:11am
equity change is 149M
and their liabilities rose 18M
income tax payable +7M
hmm, i think starr gave them some more money too.
[Friend]
2:13am
abt 9 m?
how
hmm
theres no way
[Glen]
2:13am
they paid $17M in dividends.
that's probably it
anyway
the bottom line
is if they are overstating their revenues by even 2x
you wouldn't see 90% of their net income go to cash
lol
[Friend]
2:14am
i agree
yea
if the cash is there
its there
trusting that the auditors did their job i think is what it comes down to
which
[Glen]
2:15am
not only that
[Friend]
2:15am
and also the lack of incentive to cheat
[Glen]
2:15am
lol.
cheating works if you are trying to raise money
but, this is like..
way to early to start cheating
you dont start cheating from day 1
you have to start cheating a few years down the line
and then you get creative about hiding it
[Friend]
2:16am
haha
yea
[Glen]
2:16am
Regarding the Starr's January 2010 investment, people have to remember Starr received Preferred Shares, which have a priority over Common Shares if the company is liquidated. This means that they have a priority to the cash.
lol
that's funny too.
if the company is liquidated
starr gets priority to the cash
http://messages.finance.yahoo.com/Stocks_(A_to_Z)/Stocks_C/threadview?m=te&bn=101061&tid=54438&mid=54438&tof=2&frt=2#54438
so basically
starr insulated itself
and said, fine..
we'll do this deal with you
as long as you let us hold your balls in this vice grip
[Friend]
2:18am
haha, yea and there seemed to be no other prferential treatment beside the warrants
thats kinda weird
[Glen]
2:18am
here's another thing
worst case scenerio
the ceo can't let this fraud come public
so it's got to continue for at least 12 more months
[Friend]
2:19am
why is that?
[Glen]
2:19am
he loses everything
in 12 months, he could get something out of it
but right now
he is set to lose everything if the numbers are lies
here's another note
when companies change cfo's and auditors
that's a red flag
and frequently they get rid of ones that wont do their bidding in china
like, if they ask questions
[Friend]
2:21am
haha
wow seriously
[Glen]
2:21am
yeah
i called the guy this weekend
and was like..
i have news to tell you
this thing is a fraud.
you did the right thing
they are lying
but alas
ccme is real
lets buy some more of that shit.
lol
[Friend]
2:22am
you're in virgina now right?
[Glen]
2:22am
yeah
[Friend]
2:22am
thats tight,
i'm gonna hot the sack, wake up for opening bell
i'll tlak to you later dude
[Glen]
2:23am
cya.