RATO/CCME:
Rato Quote: "I just cannot understand what they were thinking to sell this company at that valuation in a situation where they were well capitalized and had no need or use for the cash. I'm not comfortable with the argument that these were just poor little rural chinese entrepreneurs that really wanted to go public in the grand old USA, to live the American dream. Not buying it for a second. When you have a high-quality business like CCME, with huge growth and cash flow, you don't go public on those kinds of terms. You just don't do it. They could have gottten a better deal in a conventional RTO for crying out loud."
Couple of things in response. Jacky explained that they did not anticipate the overall world markets would improve and thus they accepeted a lower valution. This was common during a tough economic period for any company, mining companies are a prime example given they are easier to value and takeovers are common. It may not be so easy to believe now because the macro conditions look better today; but at the time CCME wasn't the only company that was giving itself away for a song. His explanation is highly probable and highly believeable given the situation last year. Also, CCME was new to the business, and honest mistakes were made. The need for capital was over estimated in my opinion. Great companies, in all markets, make, have made and will always continue to make strategic mistakes and the shorts have you believing that CCME's honest business mistakes increase the probabilty of CCME being a fraud. The shorts are effectivly blurring the line between business decisions and control processes.
AI
