TRE - Sino-forest put.

[libor.plus1]

Just an afterthought here: Can anyone tell me wtf that Singapore Fund was thinking when they started investing in this? Even as a corporate raider/activist, the fund would have had nothing to raid...

[given2invest]

Yes, this isn't big news.  The stock hasn't bounced at all. 

[oec2000]

From the G&M article:

 

The commission also revealed Friday that Sino-Forest recently suspended Mr. Ho, Mr. Hung and Mr. Yeung temporarily and curtailed Mr. Ip’s duties and responsibilities.

 

Why was no company announcement made of this?

 

But, hey, why trust the guys at OSC who are just a bunch of underpaid and underachieving civil servants? They have no skin in the game unlike Richard Chandler and Wellington who have bet with their wallets.  ::)

 

[Kraven]

This all makes me chuckle.  For some reason the line that keeps popping in my head after reading this is Richard Vernon, the assistant principal in the Breakfast Club:  "Don't mess with the bull, young man.  You'll get the horns."

[cofabmd]

Carson Block, in a Bloomberg interview this morning, said he was 'certain' about TRE, was still short the stock and that it was a zero.

[Guest Hester]

"If nothing else this whole episode should be a bit of a learning experience."

 

What did you learn?

 

Ask me in a couple of months.

 

What did you learn?

 

[given2invest]

I never wanted him (or anyone) to lose money here.  I just thought the arrogance was absurd. 

[ERICOPOLY]

Screwed by Yeung Hung Ho. 

 

(I just can't resist.  apologies).

[cwericb]

Just caught up to this a minute ago - away for the weekend. Well, you win some, you lose some. As I said at the first this as a gamble.

 

I don't have time to get into this right now but given2invest... " I just thought the arrogance was absurd." If for one minute you believe that you obviously misread something.

 

From day one I was surprised that some would give more credibility to Carson Block than to some other major investors like Wellington, Davis, Richard Chandler et al., especially when Block freely admitted shorting the stock.

 

It will be very interseting watching where this goes from here. For instance, I don't think I would want to be in Ernst & Young shoes.

 

 

 

[given2invest]

that's a heck of a mea culpa  :-\

 

what about the fact that tons of "major investors" blew out like paulson?  someone was on the other side of the trade when those "major investors" bought in. 

 

"major investors" owned worldcom, enron, etc.

 

anyway, didn't want to see you lose money.  but you had a dozen people telling you to be careful.

 

 

[Guest Hester]

Just caught up to this a minute ago - away for the weekend. Well, you win some, you lose some. As I said at the first this as a gamble...

 

From day one I was surprised that some would give more credibility to Carson Block than to some other major investors like Wellington, Davis, Richard Chandler et al., especially when Block freely admitted shorting the stock.

 

The perfect end to a perfect thread

[alertmeipp]

most of us know this is a coin toss with nice upside. :)

i agree, u win some, lose some - not a big deal.

 

To those who play and lost (so far), better luck next time. 8)

[beerbaron]

The best deals I ever made were the ones I passed...

 

BeerBaron

[alertmeipp]

the nice thing about investing is you don't need to get the best to win and you don't even have to always win to win.

[S2S]

From day one I was surprised that some would give more credibility to Carson Block than to some other major investors like Wellington, Davis, Richard Chandler et al., especially when Block freely admitted shorting the stock.

 

You still don't get it. It is never just about the names; we know why Carson Block  and then John Hempton short Sino - both are willing to put their investment theses through the court of public opinion. A few bulls attempted to poke holes here and there (something, by the way, you never did), but net-net Block's short thesis held up well.

 

There is no such transparency when it comes to your favorite "major investors". As far as the alleged credibility that mere mention of their names bring, well, as given2invest said, there are always at least a couple of those "smart guys" in every single blowup.

 

Let's not even mention the rampant ad hominem in your posts. Tell us again, why should we care about what parties Block went to in college?

[twacowfca]

"So convenient a thing it is to be a reasonable creature, since it enables one to find or make a reason for everything one has a mind to do." 

 

  -- Ben Franklin

[Guest Hester]

From day one I was surprised that some would give more credibility to Carson Block than to some other major investors like Wellington, Davis, Richard Chandler et al., especially when Block freely admitted shorting the stock.

 

You still don't get it. It is never just about the names; we know why Carson Block  and then John Hempton short Sino - both are willing to put their investment theses through the court of public opinion. A few bulls attempted to poke holes here and there (something, by the way, you never did), but net-net Block's short thesis held up well.

 

There is no such transparency when it comes to your favorite "major investors". As far as the alleged credibility that mere mention of their names bring, well, as given2invest said, there are always at least a couple of those "smart guys" in every single blowup.

 

Let's not even mention the rampant ad hominem in your posts. Tell us again, why should we care about what parties Block went to in college?

 

Agreed, not only is this ridiculous appeal to authority a terrible reason to own the stock, but the actual appeal was bad in and of itself. First his argument was that the creditworthiness of RBC, Dundee, and Paulson were better than Block, so it can't be a fraud. Then they all dropped coverage/sold the stock. So then he switched to Wellington, their creditworthiness must better than Blocks. So I demonstrated how Wellington had already bought/owned an impressive list of blatant and proven frauds. So then the argument became, well Davis/Chandler must be smarter than Block. He was focusing on the wrong facts, but even when those facts changed, he still never changed his mind.

 

But I guess this was just a coin toss went awry ::)

[Myth465]

I too think the wrong lessons are being drawn from this ordeal. But its not my money, and I lose enough so who am I to judge.....

 

You know what they say.

 

 

○ Gordon Gekko from WS 1 - A fool and his money are lucky enough to get together in the first place.

 

[ubuy2wron]

I can understand why someone would be tempted to either go long or short TRE. The reward was potentialy great with either trade. On one side you had a brash newcomer Mr Block who had made some pretty outlandish claims some of which appeared to be incorrect I am referring to his claims of the impossibility of the harvest when the company was not harvesting trees but supposedly just selling forests. However if his claims of a basic fraud were true then a zero was pretty much a certainty. On the other side you had a company which had had operated for at least a decade and had produced audited financial statements and had some sophisticated investors willing to buy into this is not a complete fraud thesis. In this instance its likely however the only people who could invest with any margin of saftey or knowing what the true odds were were the company insiders. All companies that are claimed to be frauds are not all Chinese RTO`s that are claimed to be frauds are not"[tho a shockingly high percentage seem to be} I stated earlier that if someone was lying I would prefer it was the company as there was a chance for some justice if it was Mr Block who was grossly misprepresenling the facts the chances of Mr. Block or any other guilty participant being forced to compensate the victims would be almost zero. Short and distort and pump and dump are two trading strategies that have been around for a long time  less than scrupulous "investors" have been involved for as long as there have been mkts.  I must admit I am almost always surprised however when long term large scale fraud is discovered in public companies. I would have thought that companies external auditors would make large scale long term fraud very difficult to pull off. I am guessing the compnaies auditors at his stage are feeling a little of what the shareholders have already felt and I guess rightly so. 

[Guest Hester]

I stated earlier that if someone was lying I would prefer it was the company as there was a chance for some justice if it was Mr Block who was grossly misprepresenling the facts the chances of Mr. Block or any other guilty participant being forced to compensate the victims would be almost zero.

 

Actually the opposite is true. If a company and management live and operate in China, they will not face any criminal or civil charges if they only commit their crime in the US. There is no extradition treaty between the two nations. The shareholders and government have no recourse against fraud. There is no justice.

 

This fact alone should make the investor either avoid these types of securities automatically, or seriously put their guard up.

 

Yet there continues to be a long line of people, including many value investors, willing and eager to hand their money over to these companies.

[twacowfca]

I can understand why someone would be tempted to either go long or short TRE. The reward was potentialy great with either trade. On one side you had a brash newcomer Mr Block who had made some pretty outlandish claims some of which appeared to be incorrect I am referring to his claims of the impossibility of the harvest when the company was not harvesting trees but supposedly just selling forests. However if his claims of a basic fraud were true then a zero was pretty much a certainty. On the other side you had a company which had had operated for at least a decade and had produced audited financial statements and had some sophisticated investors willing to buy into this is not a complete fraud thesis. In this instance its likely however the only people who could invest with any margin of saftey or knowing what the true odds were were the company insiders. All companies that are claimed to be frauds are not all Chinese RTO`s that are claimed to be frauds are not"[tho a shockingly high percentage seem to be} I stated earlier that if someone was lying I would prefer it was the company as there was a chance for some justice if it was Mr Block who was grossly misprepresenling the facts the chances of Mr. Block or any other guilty participant being forced to compensate the victims would be almost zero. Short and distort and pump and dump are two trading strategies that have been around for a long time  less than scrupulous "investors" have been involved for as long as there have been mkts.  I must admit I am almost always surprised however when long term large scale fraud is discovered in public companies. I would have thought that companies external auditors would make large scale long term fraud very difficult to pull off. I am guessing the compnaies auditors at his stage are feeling a little of what the shareholders have already felt and I guess rightly so.

 

The "investors willing to buy into the not a complete fraud argument" suggest those men seeking a mail order/Internet bride who buy into the " almost a virgin" argument.    :P

[ubuy2wron]

Hester, I experienced first hand the hard way the inability to get justice with Chinese mgmt , the company was Noble China the mgmt stole the co. blind and while judgements were granted against the officers they were able to escape justice simply by remaining in China. I expect the size of this fraud however may result in changes in Chinese policy. We very recently sent back a Chinese national to China to face trial for economic crimes in China. I suspect these parties may able to be forced to face justice. I am no legal expert how ever so I certainly would defer to almost anyones learned opinion on this matter. It is interesting however perhaps the value investors interest is not entirely misplaced. I made the point that not all Chinese RTO's are frauds tho I suspect that at this point most are suspected to be and priced accordingly perhaps it is about time to do proper due dilligence to see if there is not some babies getting thrown out with the bath water?

[twacowfca]

Hester, I experienced first hand the hard way the inability to get justice with Chinese mgmt , the company was Noble China the mgmt stole the co. blind and while judgements were granted against the officers they were able to escape justice simply by remaining in China. I expect the size of this fraud however may result in changes in Chinese policy. We very recently sent back a Chinese national to China to face trial for economic crimes in China. I suspect these parties may able to be forced to face justice. I am no legal expert how ever so I certainly would defer to almost anyones learned opinion on this matter. It is interesting however perhaps the value investors interest is not entirely misplaced. I made the point that not all Chinese RTO's are frauds tho I suspect that at this point most are suspected to be and priced accordingly perhaps it is about time to do proper due dilligence to see if there is not some babies getting thrown out with the bath water?

 

 

There are so many greedy people, organizations, officials and persons of influence involved in all of these offshore listings that's almost impossible for any of these companies to escape fraudulent transfers of wealth.  It's starting to become a scandal in China too.  These companies can't even qualify for listing on the major Chinese exchanges.  The startup funds for these budding frauds are typically raised from unsophisticated Chinese of modest means through sale of unregistered shares. 

 

When these small investors are taken to the cleaners, they are told to contact the US shell corporation to try to get some of their money back.  Meanwhile, US investors are trying to recover funds from China.

 

Thus, the head of the snake starts eating its own tail while the creature is being devoured from within.

[alertmeipp]

http://www.bloomberg.com/news/2011-08-28/sino-forest-says-ceo-chan-steps-down-during-regulator-s-probe.html

 

CEO resigned.

[cwericb]

Just to clarify a couple of points. At no time did I ever defend TRE or advise anyone to buy it unless they wanted to take a ‘flyer’. Some years ago I invested in another company that was down and out (Gentra) and that investment has paid off far beyond any expectations so salvages/turnarounds are not unheard of.

 

From day one I agreed that it was quite likely that fraud would be discovered. The question was, to what degree?  I invested no more money in TRE than I was willing to lose so the downside was simply the amount invested, but the upside could have been considerably more. All investments involve risk and I felt the risk/reward was worth the gamble. I was well prepared for a drop in share price if and when fraud was discovered, but felt that the share price would more than come back over time.

 

I assumed that some of these smart, experienced guys with deep pockets like Chandler in particular, would be in a position to step in and clean up this company and I am not sure that is out of the question. However, I never contemplated the possibility that the company could be de-listed or suspended indefinitely. To be honest, that possibility never crossed my mind and, while it has not happened at this point, it is certainly something I will keep in mind in future. (I assume this is a possibility?)

 

S2s, my problems with block’s credibility  had nothing to do with what parties he went to in college. It was the fact that some of his background was questionable and he was far from an unbiased source. He had a vested interest in trying to force the price of the stock down. As far as comparing Block’s actions to Davis, Chandler, Wellington, etc, my thoughts were that they had, or should have had, access to a lot more information about TRE than would one individual with a comparatively limited budget.

 

There are two sides to every situation. I was taking the contrarian view. That is one of the things that I respect and value about this board is that it is an avenue to see both sides of any investment, especially a controversial one.

 

It will be interesting to watch where this goes from here.