A-Power Energy Generation Systems, Ltd.(fka APWR)

[Ecomike]

Actually I was lucky I guess. I got a birds eye view (last 2 years) of what happens when a China/US reverse merger firm changes auditors to a top 4 firm (Deloitte...) and then announces the new auditor is going to redo the prior 2 years reports, because the new auditor "can not rely on the old reports" (OUCH!!!), so it took them 14+ months to redo 2 old annual reports, plus the new one that was already due, and the stock dropped another 80% in that 14 months. The funny part (or sad part) was the reworked, 2 old 10-K annual reports over reported losses, LOL!!!!!!

I bought the falling knife, the bottom and sold about 3-4 months ago (kept some shares) with a nice 400% gain. One of the keys was a 5 million dollar unsecured signature loan signed by the CEO to secure funding needed to secure the construction of their huge new plant they were building (now up and running....), the company was CYGV, which is slowly getting cheap again itself, and may be a buy soon, as they should have positive earnings finally by year end as the new plant has given them a 4x capacity boost, and they already have the 4X increase in orders. It was one of the first firms to go through this auditor swap out mess, which in my opinion has more to do with differences in accounting methods between China and the US (GAAP). These small cap hybrid China/US firms must do dual accounting for dual reports to China banks and Gov. agencies, and the US investors / SEC. It would be real interesting to see what kind of skeletons are rattling around under the rugs of huge international firms like GE with huge operations in China!!!!!

It is all about timing. I knew APWR was going to have huge working capital issues, would need to dilute to raise capital for all the large orders and projects (Texas Windfarm and factory), acquisitions, I new the GE Press was going to be bad (In spite of what I think of GE, which is not good, they are better off with out GE!!), and then with such a nasty chart already, the shorts just piled on. Now they are finally (like most US/China reverse merger small-micro-mid caps) going through the same auditor problems, I expect most of them will go through, which should make a huge value bottom for stocks like this one. They will survive, but the next 6 months will be bloody hell, especially if the Mexican standoff happens in Washington DC this summer over raising the US Debt ceiling, and scares the hell out of investors, yet one more time! Personally I hope Washington is not that stupid, but they proved otherwise in 2008 in their first failed vote on the bail out, after which WS crashed!

But a Phoenix will rise from the ashes, and I believe APWR will be one of them.