CCME - thanks. I found MW's COKE argument very persuasive, and was also troubled by the fact that none of the main media buyers for companies CCME claims to represent knew who CCME was. (Of course, Ping's report was supposed to have fixed that problem, but the rigor and reliability of her report is obviously up in the air right now, at least until we hear further information on why both Deloitte and Jacky resigned).
I was also very troubled by CCME's initial response to Citron and the subsequent response to MW. I felt the company was just very lazy in how they handled the situation. It was clear from the poor quality of both responses that they didn't really care much about what was happening.
Another red flag was the failed buyback. A lot of us fought through the first bear raid in September thinking that the company had our backs. I remember talking to a hedge fund manager who was freaking out and thinking that they were not buying shares back, and I was saying, "don't worry, I'm telling you, they are in there right now at 8.00 on the bid buying back." Of course, they weren't buying anything back.
Another huge red flag was the Ou Wen Lin sale to Jacky. The sale involved just enough shares to get Lin below the 5% reporting threshold. A very dishonest, deceptive, dirty move on the part of the company and the insiders. Given the amount of money involved (more than you would think Jacky has in the bank), the likelihood of some kind of fraud in terms of misappropriation of money was/is very high. My personal theory is that they just made up the form 4 indicating Jacky's purchase out of whole cloth. Lin probably dumped all of the shares to the market, rather than selling some to the market and some to Jacky.
Fernando has argued that because of the exercise of the Starr warrants, they were already below the 5% reporting threshold. Even if that's right, what matters is where they
thought they were at before the sale, and per the filings, they
didn't think they were below the reporting threshold. http://www.sec.gov/Archives/edgar/data/1399067/000114420410066806/v205736_sc13da.htm
Notice that in the above filing, put out after the sale, they listed 1.803MM shares beneficially owned by Lin, and they represented that amount as 4.89% of outstanding shares. Thus the total shares that they believed to be oustanding at the time was 1.803MM/.0489 = 36.87MM. Add back the 100K shares sold to the 1.803MM shares and then divide by 36.87MM and you get 5.16%. So they thought they were at 5.16%, above the threshold, prior to the sale. The sale was concocted to get them down to 4.89%, so they could dump the rest without us knowing. And that's exactly what the Lins did.
THEN, to make matters worse, after the mysterious Jacky purchase, you had the flurry of PR's that came in. Dividend announcement, SWITOW announcement, etc. All in like two weeks at the end of December. Like clockwork, you had the t-trades, indicating Lin's sales. Those PR's were just a stunt to help Lin get out at the best possible price. Not immediate evidence of fraud, but definitely very shady, and an indication that you want to stay away from this management team.
Also, after some research, I thought the Citron "Shanghai Apollo" argument was very strong. He was right, it's a very small operation. Pathetic almost. If CCME were really a big time player in the Chinese advertising market, then why would their relationship with Shanghai Apollo be the best relationship they could present to us? They presented Shanghai Apollo to us IMO b/c they actually do business with Shanghai Apollo. The real part of their business involves advertising for local hotels and restaurants to low-end "greyhound" riders. I'm sure Shanghai Apollo is somehow involved in that component. Everything else, i.e., "Coke", "L'oreal", etc., is probably just part of the fraudulent IR efforts.
Finally, the biggest reason for my change of views was the fact that the SPAC made absolutely no economic sense from the founders' perspective. The company sold shares for 2 times earnings, despite having a very healthy cash balance and no real capex plans (they haven't engaged in any capex for the entire time they've been public!). That sort of thing only happens in the world of fairy tales. Nobody sells a company of the caliber that CCME claimed to be for two times earnings in some shady, back-door SPAC.
A lot of people, especially on this board, didn't take this argument seriously. People just blew it off--and to their own peril. When you buy a company from the person that founded it, you better understand how that person benefits by selling it to you at the given price. Otherwise, the joke is on you.
If the numbers were true, then Zheng Cheng didn't benefit at all. He got ripped off. Why would he rip himself off to benefit us?
Even more problematic is that all of the money taken in from the SPAC went directly to Zheng Cheng. So rather than focusing on bringing in money for this booming business, which supposedly offered all this opportunity for growth, he was focused on taking the money in for himself, i.e., on "cashing out." Never a good sign.
In retrospect, I think the key lessons for people here who got their @sses handed to them in this stock is as follows: (1) people should make an effort to entertain the opposing viewpoint, and never write off arguments simply because they come from the other side, and (2) don't buy anything that sounds to good to be true UNLESS you understand why it is too good to be true. If the market, which is governed by short term emotion, offers you a price that is "too good to be true", then take it. The market messes up all the time, the odds that you are the smarter one is very high. But if the founder of a company wants to sell you something at a price that is just "too good to be true", get the hell out of dodge ASAP. The joke is on you.
Another good lesson is this: call a spade a spade, and acknowledge quality work when it is done. Some may not like MW, or Citron. Personally, I don't much like Left. Block is OK, but Left can be irritating. OK, fine. I also don't like giddy, naive, ultra-positive longs, especially the ones that are hell bent on telling me how I am morally obligated to rush out and buy whatever junk they own, and the ones (like some on this board) that get catty and cranky whenever you express a viewpoint that runs counter to their self-interested pumpage.
Doesn't matter though. What matters is how strong the arguments are, not on who puts them forward.