Monday, February 07, 2011 3:39:15 PM
CCME - you bring up a valid point, and the shorts have not yet presented a compelling response. I acknowledge that. I think the probabilities say "no fraud." However, I think the probabilities of fraud are higher than many here think, or than I thought a couple weeks ago. They are not 0.01% anymore IMO.
Ask yourself: how hard would it have been to make a response that addresses the stronger points of MW's argument? MW says that Coke media buyers that should know who CCME is (if in fact CCME generates substantial revenues from Coke) do not know who CCME is.
CCME should then respond: you did not check with the right media buyers, MW! We do not sell to Coke through Heartland, Vivaki, Kinetic, or any of the other agencies you surveyed. We sell through __________ .
Now we have something testable. The market can verify it. All is well. No more mystery.
They did that with the Apple-Switow argument. MW says they have no relationship with Apple or with Apple distributors, and they say: we route our order flow through a company, Eading Group, that does in fact have a relationship with Apple distributors. The reason this is easy for them to do, MW will surely say, is because they don't sell advertising on Switow and have yet to generate substantial revenues from it. It's just an IR stunt, they will say. You don't have to be anyone to make a website that routes orders. You do have to be someone to generate advertising revenue from Coke.
So the Coke, Lenovo, etc. argument is key here, and we were left without a response. As usual, we can't put things to rest. Why not? The response to Citron was weak, and now this. WCTBills is doing a better job defending the company than the company itself for crying out loud.
Regardless of whether it's a fraud, I don't like the manner in which they are handling this. I would have been very clear as to the mistakes that MW made. They were not.
Even worse, IMO, they tried to evade the Coke point. Look at p.6. They grouped two arguments together ("key outdoor media players don't know you" and "your customers don't know you"), and then responded to only one of the claims, the first one, creating the impression that they had responded to both.
That's not what I want to see. Not how I would have done things, especially not in a situation like this where there is so much uncertainty and doubt in the market. Responding like that just gives people more reason to scratch their heads.
At the same time, I also would not have sat back while the shares were at 8.00 in September and all of us were suffering, wondering if we were going to lose all of our money. I would have bought shares back. But they didn't, despite the announcement. Another coincidence?
I would also have issued a stronger response to Citron's points. I would have refuted, for example, Citron's claim about Shanghai Apolo being a 2 person shop with barely any revenues. But they didn't.
I also would never have gone public in this manner. 3 times earnings? Either they don't know how to maximize the value of what they own, or something else is going on. People talk about fair value for CCME being $50? If that's the case, think about how much value they pissed away when they sold shares of this company to Americans for $5.00?
At a minimum, I have a different philosophy than this management, and therefore I am not as interested in sticking my neck out for a couple more points of upside. I think the upside risk equals the downside risk right now, to be honest. Even if they are clean, which is probably the likely outcome, that doesn't mean the stock is going anywhere. This drama is going to continue IMO, and to be honest, I'm getting tired of having my money tied up in it.
I would also urge people here not to get worked up, and start suggesting that I'm sharing my view just to drive the stock down so I can buy it cheaper. The stock went down not because of anything anyone said here, no one is even posting on this board anymore it seems. Look at this morning's initial silence. Everyone has moved to the CCME board.
The stock went down because of the technicals (sell the pop and wait for MW's next move--an obvious trade), and also because of Chimin Sang's hit piece. The discussion here is not important to what the stock is going to do, this stock trades 10MM shares a day. The discussion is just an exchange of ideas among internet friends, no big deal. This is not Seeking Alpha or CNBC. The benefit of the board is that we share views, controversial or not, to get to the truth, and then make better investment decisions as a result. To once again reiterate: my view is that the probabilities say "no fraud", but the probability of fraud is higher than previously thought, and due to a number of weird coincident indicators that don't establish fraud but do make you scratch your head, I'm stepping aside. The stress of owning this stock and having your money tied up in the saga certainly doesn't help, if you know what I mean
GLTY.
Ask yourself: how hard would it have been to make a response that addresses the stronger points of MW's argument? MW says that Coke media buyers that should know who CCME is (if in fact CCME generates substantial revenues from Coke) do not know who CCME is.
CCME should then respond: you did not check with the right media buyers, MW! We do not sell to Coke through Heartland, Vivaki, Kinetic, or any of the other agencies you surveyed. We sell through __________ .
Now we have something testable. The market can verify it. All is well. No more mystery.
They did that with the Apple-Switow argument. MW says they have no relationship with Apple or with Apple distributors, and they say: we route our order flow through a company, Eading Group, that does in fact have a relationship with Apple distributors. The reason this is easy for them to do, MW will surely say, is because they don't sell advertising on Switow and have yet to generate substantial revenues from it. It's just an IR stunt, they will say. You don't have to be anyone to make a website that routes orders. You do have to be someone to generate advertising revenue from Coke.
So the Coke, Lenovo, etc. argument is key here, and we were left without a response. As usual, we can't put things to rest. Why not? The response to Citron was weak, and now this. WCTBills is doing a better job defending the company than the company itself for crying out loud.
Regardless of whether it's a fraud, I don't like the manner in which they are handling this. I would have been very clear as to the mistakes that MW made. They were not.
Even worse, IMO, they tried to evade the Coke point. Look at p.6. They grouped two arguments together ("key outdoor media players don't know you" and "your customers don't know you"), and then responded to only one of the claims, the first one, creating the impression that they had responded to both.
That's not what I want to see. Not how I would have done things, especially not in a situation like this where there is so much uncertainty and doubt in the market. Responding like that just gives people more reason to scratch their heads.
At the same time, I also would not have sat back while the shares were at 8.00 in September and all of us were suffering, wondering if we were going to lose all of our money. I would have bought shares back. But they didn't, despite the announcement. Another coincidence?
I would also have issued a stronger response to Citron's points. I would have refuted, for example, Citron's claim about Shanghai Apolo being a 2 person shop with barely any revenues. But they didn't.
I also would never have gone public in this manner. 3 times earnings? Either they don't know how to maximize the value of what they own, or something else is going on. People talk about fair value for CCME being $50? If that's the case, think about how much value they pissed away when they sold shares of this company to Americans for $5.00?
At a minimum, I have a different philosophy than this management, and therefore I am not as interested in sticking my neck out for a couple more points of upside. I think the upside risk equals the downside risk right now, to be honest. Even if they are clean, which is probably the likely outcome, that doesn't mean the stock is going anywhere. This drama is going to continue IMO, and to be honest, I'm getting tired of having my money tied up in it.
I would also urge people here not to get worked up, and start suggesting that I'm sharing my view just to drive the stock down so I can buy it cheaper. The stock went down not because of anything anyone said here, no one is even posting on this board anymore it seems. Look at this morning's initial silence. Everyone has moved to the CCME board.
The stock went down because of the technicals (sell the pop and wait for MW's next move--an obvious trade), and also because of Chimin Sang's hit piece. The discussion here is not important to what the stock is going to do, this stock trades 10MM shares a day. The discussion is just an exchange of ideas among internet friends, no big deal. This is not Seeking Alpha or CNBC. The benefit of the board is that we share views, controversial or not, to get to the truth, and then make better investment decisions as a result. To once again reiterate: my view is that the probabilities say "no fraud", but the probability of fraud is higher than previously thought, and due to a number of weird coincident indicators that don't establish fraud but do make you scratch your head, I'm stepping aside. The stress of owning this stock and having your money tied up in the saga certainly doesn't help, if you know what I mean
GLTY.
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