Guest Hester Posted August 28, 2011 Share Posted August 28, 2011 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 can assure you it won't. China doesn't give a damn that some of it's citizens are scamming Americans/Canadians. It's almost laughable to think they would. The Chinese business culture is very different from ours. Selling knockoff merchandise is a sport over there. I'm sure you've seen the articles/blog posts on the knockoff Apple stores. China's biggest export is lead and kerosene laced children's toys. They are responsible for over 60% of worldwide product recalls. They only care about China. Plus, right now the gov. has it's hands full with trying to deflate a massive real estate bubble whilst still positively massaging GDP numbers. That's part of the problem with people buying these securities, many are oblivious to the fact that their is zero legal recourse or accountability if management decides to commit fraud. 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? I think it is misplaced. I've said before that I think there is a possibility that all US/Canada solely listed Chinese RTO's have at least some fraud. I'd like to hear of a name that doesn't. Even the ones now that haven't blown up yet and don't have funny looking financials, if you dig deeper there are some very fishy thing going on. I was thinking about this today. In some respects, even if there are a few Chicom RTO's that are legitimate, the pursuit of them is a bit like the pursuit of high flying stocks. The vast majority of iffy companies selling at 40 times earnings will turn out to be terrible investments. But a few will double earnings, and go on to sell at 100 times earnings. That's a 5 bagger. There will always be some GMCR's and CRM's. Does that make investing in 40 times earnings Wall Street darlings a good strategy? But the difference is that the those investing in the Chicom frauds are value investors and those buying the high flyers are dumb speculators. Link to comment Share on other sites More sharing options...
Myth465 Posted August 28, 2011 Share Posted August 28, 2011 Hester at this point I would say you are wasting your time. There are plenty of ways to make a buck, and lose a buck. Some people insist on doing it the hard way. Its funny how did value investing become synanomis with wading into crap and hoping for the best. Link to comment Share on other sites More sharing options...
oec2000 Posted August 29, 2011 Share Posted August 29, 2011 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. 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. S2s, my problems with blocks 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 Blocks 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. On Day 91, I am surprised that some still give more credibility to major investors like Wellington, Davis, Richard Chandler et al. than to a questionable miscreant like Carson Block. ;D When are we finally going to give Carson Block due credit for nailing a bunch of crooks? Its funny how did value investing become synanomis with wading into crap and hoping for the best. I tried, Myth, I tried: The only "analyses" that can be gathered from your posts are: a) I would rather trust the reputable analysts; b) the upside is much greater than the downside; and c) it could be a similar situation to FFH at $60. Given your own admission that "no one really trusts TRE's figures" and "I don't put a lot of faith in any of the analysts," you are left only with the FFH analogy. I don't get how this idea even merits a discussion on this value oriented forum. In a situation where you can't trust the figures, who do you think is the patsy in the poker game with Allen Chan? Link to comment Share on other sites More sharing options...
twacowfca Posted August 29, 2011 Share Posted August 29, 2011 http://www.bloomberg.com/news/2011-08-28/sino-forest-says-ceo-chan-steps-down-during-regulator-s-probe.html CEO resigned. Probably enjoying his loot with no risk of prosecution. :( Link to comment Share on other sites More sharing options...
Myth465 Posted August 29, 2011 Share Posted August 29, 2011 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. 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. 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. On Day 91, I am surprised that some still give more credibility to major investors like Wellington, Davis, Richard Chandler et al. than to a questionable miscreant like Carson Block. ;D When are we finally going to give Carson Block due credit for nailing a bunch of crooks? Its funny how did value investing become synanomis with wading into crap and hoping for the best. I tried, Myth, I tried: The only "analyses" that can be gathered from your posts are: a) I would rather trust the reputable analysts; b) the upside is much greater than the downside; and c) it could be a similar situation to FFH at $60. Given your own admission that "no one really trusts TRE's figures" and "I don't put a lot of faith in any of the analysts," you are left only with the FFH analogy. I don't get how this idea even merits a discussion on this value oriented forum. In a situation where you can't trust the figures, who do you think is the patsy in the poker game with Allen Chan? That was really a good try. I am consistently reminded of that dynamite Joel Greenblatt quote after reading this thread. Link to comment Share on other sites More sharing options...
Guest Hester Posted September 7, 2011 Share Posted September 7, 2011 Looks like the top executives will be eating well for the next few years. http://www.bloomberg.com/news/2011-08-30/sino-forest-insiders-including-ex-ceo-sold-83-million-of-shares-since-06.html Link to comment Share on other sites More sharing options...
tyska Posted September 7, 2011 Share Posted September 7, 2011 Looks like the top executives will be eating well for the next few years. http://www.bloomberg.com/news/2011-08-30/sino-forest-insiders-including-ex-ceo-sold-83-million-of-shares-since-06.html Now if we were using insiders pilfering shareholders in a company as a template for a company that is a fraud, we would have what, 2 or 3 companies listed that are legit. ;) Link to comment Share on other sites More sharing options...
cwericb Posted September 7, 2011 Share Posted September 7, 2011 Tyska, you’re probably being optimistic. Guess it depends on the definitions of fraud and theft, versus bonuses and severance packages. But $83 million split 3 ways over 5 years averages out to about 5.5 million each which seems pretty small potatoes compared to what some execs have paid themselves over 5 years in bonuses and severance packages - but of course that’s not fraud because they said “we’re taking it and there ain’t nothing you can do about it” ;) Link to comment Share on other sites More sharing options...
Ballinvarosig Investors Posted September 7, 2011 Share Posted September 7, 2011 When are we finally going to give Carson Block due credit for nailing a bunch of crooks? He won't get any credit here. Link to comment Share on other sites More sharing options...
Parsad Posted September 7, 2011 Share Posted September 7, 2011 He won't get any credit here. I'm happy to give him credit. He did something that TRE's own board of directors couldn't. Doesn't mean I have to like the guy, just like I don't like Jim Chanos, Fabrice Taylor, Peter Eavis, Jim Cramer, John Hempton, Adam Sender, Steve Cohen and a bunch of other people. Do I stop people from criticizing Patrick Byrne? So, why am I going to stop people from criticizing Carson Block. Byrne rubs many people the wrong way, and there are as many who like him. Just like Block now I'm sure. I don't think either is going to care who does or doesn't give them any credit. Cheers! Link to comment Share on other sites More sharing options...
FFHWatcher Posted September 7, 2011 Share Posted September 7, 2011 I think at this point, there is a better than 50/50 chance that Carson Block uncovered something significant. Perhaps he isn't 100% or even 50% correct but it is significant as senior executives are getting turfed based on preliminary report and OSC. At this point, I am willing to give CB credit as well. As Sanjeev said, if the Board can't uncover this stuff and some outsider can, it really makes you question what the heck is the point of having a Board to represent shareholders. Independent Directors William (Bill) E. Ardell Toronto Lead Director since 2010; nominated as Director since 2010; previously President & CEO and a director of Southam Inc. Bill was director for a number of public and private sectors, including not-for-profit organizations, serving in varying capacities as Chairman, Director, or member of the board committees. He began his career with Touche Ross in Montreal. James (Jamie) P. Bowland, CA Joined the Board in February 2011; former Managing Director at BMO Capital Markets, Investment & Banking Group; extensive experience in mergers & acquisitions, capital markets and corporate banking. Jamie is a Director of a number of TSX-listed companies and not-for-profit organizations. He is a Chartered Accountant and holds the Institute of Corporate Directors designation. James (Jamie) M.E. Hyde, CA, C.Dir Toronto Director since 2004; previously Vice President, Finance and Chief Financial Officer, GSW Inc., Executive Vice President and Chief Financial Officer, Resolve Business Outsourcing Income Fund, Former Partner, Ernst & Young LLP, where he provided for 24 years a board range of professional services to public and private companies. Edmund Mak, MBA Vancouver Director since 1994; Associate Broker, Royal Pacific Realty Corporation; over thirty years with public, multi-national and private corporations in North America and Hong Kong, in the real estate, computer and high technology equipment, transportation, construction, oil & gas, textile and China trade industries. Simon Murray, CBE Hong Kong Director since 1999; Chairman, GEMS (General Enterprise Management Services (International) Limited); thirty-five years in Asia; previously Executive Chairman, Asia Pacific, Deutsche Bank Group, Independent non-executive director of a number of listed companies in HKG including Cheung Kong (Holdings) Ltd., Orient Overseas (Int’l) Ltd., Wing Tai Properties Ltd., and non-executive director of Greenheart Group Ltd. Peter Wang Hong Kong Director since 2007; Senior Commercial Consultant of Zijing Copper of Zijing Mining Group, a HKG-listed company; has over 30 years experience in Sino-foreign business affairs, predominantly related to petrochemical and mining industries, as well as wood-based panel industries. Garry J. West Toronto Joined the Board in February 2011; former Partner at Ernst & Young; With 35 years of extensive financial experience including auditing, corporate restructuring, public financings and strategic planning initiatives for a number of major organizations; Director and Chair of the Audit Committee for two other TSX-listed companies; Fellow of the Ontario Institute Chartered Accountants. Link to comment Share on other sites More sharing options...
cwericb Posted September 7, 2011 Share Posted September 7, 2011 Given that the Sino board is mostly composed of (Canadian) senior accountants they should be held to account and contrary to what has been previously posted here, this is a Canadian company operating in China and certain senior officers of the company, including the vice chairman and the CFO are Canadian and I believe are Canadian residents, so the question of extradition should become moot in their case if they have violated any laws. I think the real question here still remains, is the company rotten to the core or do we have a few bad apples? However, it probably no longer matters as Sino is thoroughly corrupt in the eyes of many. We may have a better idea tomorrow after the OSC hearing but they may simply postpone everything until the PWC report is released. But on the other hand, they could announce that they are laying charges based on the results of their own investigation. Question: If such a thing as trading in TRE was halted permanently and the company de-listed, what happens to the shorts and naked shorts? An also what happens to someone like Chandler who now owns nearly 20% of the company - assuming the company has any value left? Link to comment Share on other sites More sharing options...
Guest Hester Posted September 8, 2011 Share Posted September 8, 2011 Question: If such a thing as trading in TRE was halted permanently and the company de-listed, what happens to the shorts and naked shorts? An also what happens to someone like Chandler who now owns nearly 20% of the company - assuming the company has any value left? The stock is a zero. That is a certainty due to the capital structure. The bonds probably have some residual value but it is completely impossible to know what, and this will take years to sort out. The questions are: Is there any money left in Canada? They just repaid some debt holders, there might be clawbacks to them. There might be recourse to canadian execs. Maybe they can find a couple trees, etc... But Chandler just lost a couple hundred mil. Or however much he owned. That's pretty much certain. I don't know his net worth but he might of just fallen off the forbes list. The shorts get to keep all the money they received when they borrowed the stock. They won't have to cover if the stock is immediately delisted and canceled. Block was probably short the stock, probably short some bonds and probably owned a bunch of puts. I'm sure he just made "F you" money. That is to say he's made for life. No more love box storages! Link to comment Share on other sites More sharing options...
given2invest Posted September 8, 2011 Share Posted September 8, 2011 lol @ what happens to the naked shorts :( Link to comment Share on other sites More sharing options...
Guest Hester Posted September 8, 2011 Share Posted September 8, 2011 As Sanjeev said, if the Board can't uncover this stuff and some outsider can, it really makes you question what the heck is the point of having a Board to represent shareholders. It's time for all the anti-shorts on this board to admit that the shorts are the best defense in the world against financial fraud/shenanigans. Independant BOD's won't do it, the auditors won't do it, regulators won't do it. There is simply nothing like the financial incentive put forth for shorts as a reward for catching fruad. There is no other way to do it if your a human being. Would Madoff have been so successful if his fund was a public security? Link to comment Share on other sites More sharing options...
given2invest Posted September 8, 2011 Share Posted September 8, 2011 Come on Hester. They are all OK with shorts, it's the naked shorts that are putting companies out of business that otherwise are healthy and profitable. People selling and selling (naked shorting and naked shorting) without a borrow with just not enough demand to counter the selling, thus sending the stock to 0. Don't you get it? If only there was a way to stop the naked shorts from destroying healthy companies, what a world we'd live in. Link to comment Share on other sites More sharing options...
cwericb Posted September 8, 2011 Share Posted September 8, 2011 “Independent BOD's won't do it, the auditors won't do it, regulators won't do it.” How true and how sad. Personally I agree that shorting can serve a legitimate function. If you can go long you should be able to go short. Both are assumptions of where the stock price will go in future. Longs provide capital, whereas shorts can uncover wrongdoing. The problem comes in when you have a short attack on a legitimate company and artificial measures are taken to drive a stock down. Am I correct that naked shorting is legal in Canada and not in the US? Link to comment Share on other sites More sharing options...
Liberty Posted September 8, 2011 Share Posted September 8, 2011 It's time for all the anti-shorts on this board to admit that the shorts are the best defense in the world against financial fraud/shenanigans. Independant BOD's won't do it, the auditors won't do it, regulators won't do it. There is simply nothing like the financial incentive put forth for shorts as a reward for catching fruad. There is no other way to do it if your a human being. Would Madoff have been so successful if his fund was a public security? I totally agree with that. Some people might not think I do because a company I like is heavily shorted, but I think that while they're wrong in that case (which created the opportunity for me to buy a good business at a low price), I agree that they're often right and can be more motivated to find bad businesses than anyone else. So I'm cool with shorts, as long as they don't make stuff up and put their real names on their reports. Link to comment Share on other sites More sharing options...
given2invest Posted September 8, 2011 Share Posted September 8, 2011 Come on Hester. They are all OK with shorts, it's the naked shorts that are putting companies out of business that otherwise are healthy and profitable. People selling and selling (naked shorting and naked shorting) without a borrow with just not enough demand to counter the selling, thus sending the stock to 0. Don't you get it? If only there was a way to stop the naked shorts from destroying healthy companies, what a world we'd live in. To be clear, this post was 100% sarcastic. Amazing I have to point that out. haha Link to comment Share on other sites More sharing options...
MrB Posted November 15, 2011 Share Posted November 15, 2011 Panel refutes Sino-Forest fraud claims...and...Sino-Forest Says Probe Finds Muddy Waters’ Allegations of Fraud Incorrect http://www.ft.com/intl/cms/s/0/9de9db0a-0f3c-11e1-b585-00144feabdc0.html#axzz1ddkGVMh6?ftcamp=crm/email/20111115/nbe/BreakingNews1/product http://www.bloomberg.com/news/2011-11-15/sino-forest-says-probe-finds-muddy-waters-allegations-of-fraud-incorrect.html It's NOT a fraud....It's a fraud...No, it's not...yada, yada, yada. Looks like Fairfax is in the money on its Sino-Forest investment.... Link to comment Share on other sites More sharing options...
Grenville Posted November 15, 2011 Share Posted November 15, 2011 Looks like Fairfax is in the money on its Sino-Forest investment.... Hi MrB, Did Fairfax buy puts? Is the Sino-Forest investment disclosed in any filings? Link to comment Share on other sites More sharing options...
cwericb Posted November 15, 2011 Share Posted November 15, 2011 The actual interim report is here. http://www.sinoforest.com/schedules/SF-Release-Independent_Committee_Interim_Report.pdf Link to comment Share on other sites More sharing options...
libor.plus1 Posted November 15, 2011 Share Posted November 15, 2011 Before you start running around screaming its not a fraud, something you should consider: The panel that claims it is not a fraud consists entirely of Sino executives who are charged with fraud relating to Sino Forest. Also, an independent auditing firm was supposed to release a report, but there is no mention of them (forget which big 4) Link to comment Share on other sites More sharing options...
cwericb Posted November 15, 2011 Share Posted November 15, 2011 libor.plus1 Agree. I would want to see a report cleared by PWC before we really know the end result. Link to comment Share on other sites More sharing options...
A_Hamilton Posted November 15, 2011 Share Posted November 15, 2011 Looks like Fairfax is in the money on its Sino-Forest investment.... Hi MrB, Did Fairfax buy puts? Is the Sino-Forest investment disclosed in any filings? FFH bought SinoForest debt. A lot in Q2. A little more in Q3. Link to comment Share on other sites More sharing options...
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