China MediaExpress Holdings, Inc. (fka CCME)

[Johnstone20]

That is a worrisome list Headley. I was hoping somebody that follows the company more closely than I might reply to your questions, but I haven't seen any responses yet. I miss most of the activity on this board, so I wouldn't know if some of your concerns have been addressed here previously.

If CCME would only...

Those are the words that I have uttered myself and heard on this board many thousands of times. Yet, as always, we are left with nothing but a common sense approach to evaluating the situation, because the company, after over 1.5 years of being raided and attacked by shorts, has been completely inept to respond to their accusations and assaults in a factual and meaningful enough of a way to put them to rest. Further, they have done nothing with their “Moat” of cash to protect their shareholders. I personally sent Jacky multiple emails regarding my concern over the burgeoning short interest and warned of an impending bear raid, yet they were all ignored and the company did nothing to prevent the attack.

The question that should plague everyone on this board is why can't CCME put an end to the claims that they are a fraud if they are as successful and large as they claim they are? Further, the following is a list of questions and concerns surrounding CCME that I feel use a common sense approach to analyzing the situation and lead to my conclusion:

1. When short interest was approaching 50% of the float well over a year ago, why did CCME do nothing about it but head fake a share buyback, unless they had nothing to fire back with?

2. Why would a company with hundreds of millions in cash reserves and unparalleled cashflow hire a third rate PR firm, especially considering the negative reputation that they were drawing and the startling lack of institutional interest in the company?

3. Why would insiders sell at preposterously low valuations with record earnings right around the corner? Was there really a better investment out there that demanded money so urgently that it warranted dumping a stock that had all of the promise in the world only months before a 10-K that would be sure to knock the socks off the market?

4. Why did it take an advertising company that is worth hundreds of millions of dollars being publicly proclaimed a fraud to revamp their disgustingly amateur website? Last I heard, companies worth that much have marketing people that they hire to keep up the image of their publicly traded company.

5. The biggest question for me - Why have no major analysts covered one of the "best value stocks in the world?"

6. Why can the company not provide conclusive evidence that they exist on the scale that they say they do? FMCN doesn’t seem to have any problem validating their business. CCME fraud accusations have been rampant for over 1.5 years now and the company still has not done a single thing to put those claims to rest once and for all. I mean, how hard is it to prove a business as simple as CCME’s?

7. Why would a company with the cashflow of CCME continue to raise capital at incredibly low valuations? This point was well chronicled by Rato.

8. Why has Starr not commented about the legitimacy of CCME? Aren’t they major stakeholders with unfettered access to the company’s operations and finances?

9. Why, to this point, has CCME still not announced a share buyback? Oh yeah, they are waiting for just the right moment to spring that on the unsuspecting shorts, right?

10. Why have they not provided any indication as to why they halted the stock intra-day?

11. Why has the company not mentioned a single word about renewing their “exclusivity agreement?”

12. If the company has so much cash, why not issue a one-time dividend to reward investors and punish the shorts or anything for that matter that would prove the presence of cash, deter shorts and reward faithful longs?

13. If there is institutional interest in the stock, then where is this volume coming from? The entire float is traded every 6-9 days, so clearly the float is not “being locked up” like I have seen claimed here for over 1.5 years now. Clearly most of the float remains in the hands of retail and traders, not institutions.

My gut tells me that the answer to these questions is that the company is likely to be, at least at some level, unauthentic. If they are not unauthentic, then they are one of the most poorly run companies from a PR perspective in the history of the stock market. That may sound like a facetious statement, but it is not. If CCME is 100% authentic (not likely IMO) then the fact that they are trading at 5x earnings and have been unable to hold any reasonable valuations is clear evidence that they are poorly managed.

I strongly urge everyone to put all emotions aside and use some common sense here. Either we are all smarter than Wall Street, which has had plenty of time to vet CCME by now, or we have been duped like thousands of other investors in dozens of other Chinese frauds. Which do you think is more likely?

Disclosure – I lucked out and got out of dodge prior to the halt. I have no intentions of shorting CCME.