iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
21,316 Blog Posts

What’s Wrong with a Little Lie?

The new big thing around the internet is raiding the shares of Chinese based stocks. It’s all the rage, really. From Citron to Muddy Waters to Zerohedge to all of the little ancillary sites in between; people are bottom barreling these stocks, declaring them to be “the next Enron.” All of them use Seeking Alpha as a convenient little conduit, as the fuckers from SA have Yahoo finance access and a strong google search presence.

In general, short sellers do a great service for the market, unveiling fraud and acting as shareholder police, well sort of. Naturally, like all vocations, manipulation and outright criminality taint the pool from time to time, especially when big money is involved. It is my belief that the people who taint the pool of a just and worthy cause are 10x worse than the criminals they are purporting to admonish. They are equal to crooked cops who serial kill on the side or firemen who commit arson.

Enter Mr. Little

Mr. Little is the author and whiz behind Citron Research, a website dedicated to unveiling fraud in the market place, a worthy endeavor indeed. Back in the old days, they were called Stock Lemon. Much to his chagrin, I know a lot of people who made a fortune betting against him, long IOC, seeing the stock trade up 7x in the past 3 years–as Citron panned it every 10 points up. These guys have a history of moving stocks wildly, with their long, drawn out, professional looking, reports.

Enter BORN

On 11/15, Citron, with the help from the homo-hammers from Seeking Alpha, posted an article, ripping into BORN, titled:

How China Borun Has Exaggerated Its Financial Performance

Ooh, catchy, right? The gist of the article is that he (Mr. Little) has seen BORN’s SAT docs, filed in China, courtesy of the “Geo Guys,” referencing some bullshit message board type forum website. He asserts: “ Shandong Borun’s revenues, income tax and net income for 2008 and 2009 are significantly understated in its filings with the SAT.” Unfortunately, he does not let anyone actually see the documents. Conveniently, they are “not his,” but belong to the “Geo Guys.” Right away, this raised an eyebrow with me and I started to accumulate the stock, from the low to mid 12’s.

Keep in mind, when he posted this garbage, the shares were trading @ $14.42. Within two trading days, the story helped shed more than 23% of BORN’s market cap.

Enter a Little Liar

With more than 20% of BORN‘s shares sold short,Β  post RINO debacle, short sellers have a keen interest in where this story is going, so they post in the Seeking Alpha comments section, like small trolls in a knoll made from jelly rolls (no idea what that meant, bear with me). Remember, the whole basis around the Citron report, aside from his amateur opinion with regards to the production of whiskey, was the fact that the company was hiding debt, as indicated in the Chinese SAT docs. Also, remember, at the end of his article, he disclosed “no position” and further affirmed his position of NOT BEING short, inside of the SA comments section.

None of this means BORN is legit and the stock is off to the races, mind you, despite my long position. All I am saying is, these guys are full of shit and should be taken to task over it.

If I might be so bold, here is a series of screen shots, chronicling this egregious story, with all of its grotesque beguiling.

Mr. Little’s disclosure: “no position”

Mr. Little reaffirming “no position”

Conjecture, regarding SAT/SAIC docs. You can hear about them, but you cannot see them, for they belong to the “Geo Guys.” Also, he throws in some more conjecture about one of his “experts” who talked to BORN’s plant managers, which further proves his thesis, with regards to the production of whiskey. It’s laughable, really.

Fast forward, post BORN‘s stock decline of 23%, to today. Mr. Little covered his short in the $10-12 range, despite his earlier disclosures of “no position.” Furthermore, he is no longer interested in “fighting with management.” He has moved on, sort of.

Oh, by the way, the SAT and SAIC docs DO MATCH the SEC docs. But, it must be fake, since China is all full of liars and thieves, no?

The “Geo Guys” confirm they now match. “lol”

Fucking idiots.

On one hand, there are intelligent short sellers, like Chanos, Hendry and Einhorn etc. On the other, you have “Geo Guy’s” with a little help from the Little’s, delivered by the hapless fuckers at Seeking Alpha. What these people are doing is feeding off American distrust of all things Chinese. Ask any American about Chinese stocks or products and they ridicule them. It’s easy to allege fraud, but hard to prove. I would be hard pressed to believe they did not trade ahead of this report, thereby profiting from a false facts (hello SEC). What must stop is the conjecture. I cannot stand stock promoters and I absolutely loathe people who raid stocks, with the help of false reports. Like I said before, I am not a cheerleader for the company. I own shares and feel they go higher, especially into earnings (2/15). But, at the very minimum, I think Mr. Little owes his readers and apology an should post a correction, now that new “facts” have arisen, vindicating the company of hiding massive amounts of egregious, insurmountable debt.

The Truth?

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88 comments

  1. MOOBS

    You are a man of honor, kind sir!

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  2. surplusdroids

    Bravo good Docteur. (sic)
    1000 thank yous.

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  3. Clark

    FIG! Expose these criminals!!!

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  4. Confucius

    You must mean a ‘rittle rye’…

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  5. Yogi & Boo Boo

    Nice job Dr. Fly. I know last night you endured “Zombie Retards”. Tonight I’d like to thank you for what you have built here. A site that enables pikers like myself to have tools and access to ideas, that allow me to compete (in whatever small way) against the fucktarded in this ridiculous business. Thank you again sir.

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  6. The_Real_Hmmm

    Nice article Fly. I really like when you talk about reasons behind your theses (K-Cups, potash, trucks, etc.).

    This situation reminds me of the article I wrote about AMED in the peanut gallery like 6 months ago and before its 60% gain over the elapsed time. I just saw today too that some analyst recently upped their target to $45.

    Short selling is indeed a disgusting business when the perpetrators are praying on retarded investors, not retarded corporate officers.

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  7. JTU

    At one time you recommended KNDI, is this stock still one that you like and is it being treated unfairly the same way as BORN?

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  8. Fly

    I sold kndi right away. And yes, that’s another one being targeted. I have not looked into it yet.

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  9. Mr. President

    Gangster.

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  10. Itacud

    But what of BORN’s patents? Surely, they are worthless. The stock is a fraud.

    Jog on.

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  11. Fabian

    Potentialy major opportunity:
    I’ve owned these China names for years [long termer] and made a lot of money but have gotten hammered on stories of alleged fraud this past 6 mo. [not all are untrue but most are]
    The abuse will continue until it no longer is profitable for the shorts. So far it has been an extremely lucrative game for them.
    2 hours ago, before Fly’s piece, it hit me what might make it stop and when. [It won’t be the SEC doing it’s job and great engs reports have not been doing it]
    One of the stocks I own is China Media Express CCME. It was up 16.7% today on 333% of normal vol. High short position [see todays story-Yahoo News] and previous target of a hatchet job.
    The stock gapped up and continued up from there without pullback right into the close. High vol. the whole way. Closed near it’s all time high. [no company news].
    Had the Hallmark of the start of a short sqeeze. [If so, this stock could run a long ways fast given its growth, valuation, and short position]
    We think it is possible the legit China small cap stocks will increasingly see short sqeezes.
    This may become a new game for momentum traders who will then be looking to target [long] the next potential China bogus fraud claim/high short position stock. .
    That is what Fly is-has been looking for in BORN. It may or may not happen soon with BORN but watch CCME especially at this time.
    If this is the start of a huge short sqeeze with wild upside action, it’s quite possible the game of raid the shorts has begun. If so, there are dozens of China small fries that seem legit but have a high short position [and low valuation].
    While one can not say for sure by one days action in one stock, keep a close eye on CCME or any other China Tot that appears to be getting the upside sqeeze.
    Why??
    You will then increasingly see a snowball rolling downhill effect gathering momentum and upside action more furious and fast than any seen for any other group this last year.
    The whole group is a dry box of tinder waiting for some spark to get the momentum traders flooding in.
    A potential bull raid on the bear shorts like you have not seen in a long time.

    We’re talking about 50% to 100% moves in 10 tradinhg days or less.

    You want to be in on that and in at the start of the move, so keep your eyes peeled.

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  12. Fly

    Exactly Fabian

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    • fstrtrdr

      CCME – started loading Feb calls 2 days ago, now unloaded enough to ride a wildER SQUEEZE – free = whee!!!!!!!!!!!

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  13. Swinging for the Fences
    Swinging for the Fences

    Sounds like the Chinese lotto tickets are back

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  14. Mortimer Duke

    They got that report from Mr. Beeks.

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  15. Bullish

    Looks like Verizon likes the “cloud” plays. Merger Thursday Night in effect!

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  16. jimmie

    I fucking hate Seeking Falafel. Some decent opinions on there but for the most part it’s complete Yahoo message board fags IMO.

    I absofuckinglutely love your contrarian to the contrarian view if that makes any fucking sense.

    Check out FSLR increased short interest reported Jan 14th and the complete decimation of the shorts for the 5 days following.

    I’m no mor ethan a small pleb goatfucker but I capitalized on that shit quite nicely.

    FIG forever!

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  17. jimmie

    who the fuck gave me that gay avatar?

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  18. JakeGint

    Nice investigative journalism!

    Are you growing a Geraldo-like moustache to augment your new status?

    _________

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  19. Fly

    Lol at avatargate

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  20. Mr. Cain Thaler

    (laughter) I had wondered where you were going with this for the first half of the article…right up until you pointed out the guy blatantly contradicting himself and admitting he was, in fact, short.

    Nice title as well. A hat tip to you, sir.

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  21. jimmie

    You guys crack me up and make me money…great stuff

    Will you marry me?

    My wife doesn’t read this πŸ™‚

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  22. Fly

    Caine

    Email ms

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  23. Archetypal

    Nice post. Im glad that my comments on SA helped inspire your latest blog. I would only take exception to your stance on Geo. Their site has a good wealth of info and does a good job “digging” so to speak . Of course not everything they turn up should be taken at face value (like any website publishings, especially mainstream media like CNBC) but that is up to the reader to decide. Geoinvesting never took a stance one way or the other. For the most part they remain neutral IMO.

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  24. Fly

    I cannot agree. The geo guys never scanned the docs. Therefore, they are just as guilty.

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  25. chuck bennett

    These people are also feeding on the racism that runs with us all. seriously, they do.

    wish I didnt sell my born so fast. dam!!!

    nice write up is an under statement.

    regards

    chuck

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    • elephant

      Indeed, in a general sense, prejudice is inate. A survival skill in fact. But completely wrong at times.
      Does this mean that fetus soup was never in vogue?

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  26. thewife

    Beautifully done! Thank you for doing this research and sharing it with us.

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  27. GYSC

    Hall of Fame worthy, that was some serious messing with some one!
    Mad props to The Fly, Steve Chase would be so proud.

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  28. John Welsh

    Fly – I agree and disagree with you. I agree that the garbage dump of seeking alpha should not be allowed to post their junk on yahoo finance. It’s moving stocks in this speculative froth with pumping and or china bashing…..seeking alpha is total trash and I would not even use their bathroom.

    Regarding BORN, I would not touch this stock with a 10 foot pole….I don’t even need to look at the numbers…which don’t add up by the way. In one of their filings, they pump up their new process of distilling technology like it’s magic and it’s gonna change the world. They spent less than 1 million in R&D on this new process. Statements like this that management makes are red flags, and draws shorts to the company. Their has gotta be a better china company than this to trade in.

    Welsh

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    • The Earl of Braveflaps
      The Earl of Braveflaps

      Welsh,

      You must know Tom Jones, no?

      I’ll send you a box of his cast-off panties to mop up your short sweat.

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  29. Fly

    Welsh

    You are believing the false reports being filed. Let’s not pretend to know anything about the production of whiskey

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    • John Welsh

      I am only a consumer of whiskey πŸ˜‰

      I don’t trust BORN management or seeking alpha losers.

      Welsh

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      • JakeGint

        Good whiskey takes a while to make. I’d be very surprised if they have a technology to circumvent that process.

        Granted, moonshine (the pure distillate) takes almost no time, and for all I know they are serving up rotgut, Swearingen-Koksucka style.

        __________

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  30. Charlie Sheen

    Guys, Flotek (FTK) is the stock for 2011 – how many times must I tell’ya? Stop flitting around and and stick with a winner for a change. I am so busy these days that I hardly have any time for stocks and I recognize Flotek.

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  31. Fly

    Fair enough Welsh.
    I am going after the raiders not supporting the company.

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  32. Archetypal

    If nothing else Geo is helping to raise debate with respect to the China smallcap space getting their paperwork in order. See here: http://www.geoinvesting.com/companies/born_china_new_borun_adr/research
    Obviously the issue of SAIC files and their importance (or lack thereof) has been beaten to death by now but in the long run its a good thing. Management of these companies are finally taking away the dubious shorts’ ammo.

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  33. Archetypal

    (the Oct 11,2010 post in the above link ). also see http://geoinvesting.com/geowire/273/the_sec_vs_saic_fact_finding_mission

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  34. Fly

    Well then GEO should post an article as a rebuttal to Cintron. As of now, they are complicit.

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  35. Archetypal

    Agreed. A comment on IHUB is way too obscure for the average investor. I’d like to see an article.

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  36. chuck bennett

    Hello Mr. Welsh.

    I am curious if you have an opinion on IOC as well.

    Seems to me these people have been 100% wrong for the last 5-6 years on this one. however, never stopped them from throughing up the same stupid nonsense, every 3-6 months.

    let me know what you think.

    regards,

    chuck

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  37. HuggieBear

    Bad news Fly….we are in a deflationary depression and the other shoe is about to drop. I didn’t believe it myself but turns out its true.

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    • Bullish

      You’re right! But that shoe is not a shoe at all… It’s Big Ben’s boot on the bears throats.

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      • HuggieBear

        maybe he will have the last laugh…i don’t know. But not before the severity of our economic morass makes itself clear once again.

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        • Bullish

          Thinking that negative can hurt ya. Just close your eyes and think growth, prosperity and wealth creation! It’s been happening since the cave men, why stop now?

          But what do I know? I drink Bernanke koolaid by the gallon.

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  38. theedge111

    And using computer algos that look for openings to attack stocks is OK and sound investing?

    Wow, what a hypocrite. Algos are as evil as any short seller. The market’s been turned into a fucking casino that looks at what stocks will do in the next 11 seconds versus fundementals.

    Gimme a break on this one Fly. Cat calling the kettle black.

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    • Cascadian

      Not the same thing. analyzing trade data vs slamming someone on bad research. Not even in the same ballpark.

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    • Mr. Cain Thaler

      Why are cat’s concerned with kettles, now? If you’re going to use figures of speech, it would be nice if you didn’t slaughter them.

      Evil also seems a ludicrous choice of wording.

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  39. TraderCaddy

    Good investigative job there Fly.
    My head is still spinning.
    Right up there with David Faber on CNBC and you make Herb Greenberg look like a Girl Scout selling thin mint cookies.
    As an aside, watch Egypt implode tomorrow (Friday prayer day is always good for rioting) and then on to Lebanon (Hezbollah takeover) and then Jordan.
    Not sure about Syria but I do know that the “secure” Egypt border with Gaza could collapse, Hamas will run wild and the PLO in the West Bank could fall.
    And I am sure Israel will not be standing around just watching.
    Watch oil and gold in the days ahead.

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  40. Tiny Tim

    Do yourselves a favor. sell your time wasters
    and buy ford, pbr, tex, bbrg, and some siri
    for dice roll.

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  41. Fly

    Shut up idiot Tim

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  42. Fly

    Jake

    They are not making high quality stuff

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  43. Fly

    The edge

    Ppt is not hft. Apples and oranges

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  44. Woodshedder

    Well done Flyseph!

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  45. Kenai

    This is why you are the Master.
    Awesome article.

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  46. The_Real_Hmmm

    I like MSPD right here in the semis/networking and maybe some BWS for retail.

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  47. Cascadian

    Nicely done Fly. Hold that fucker’s nuts to the fire. He said it, now he can stand by it or give it up. Mr. Little has been called out.

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  48. Doc

    Weird…
    More info on the Tanned One…
    Jan. 28 (Bloomberg) — Former Countrywide Financial Corp. Chief Executive Officer Angelo Mozilo warned as early as 2004 of a possible housing-market collapse while the Federal Reserve overlooked the threat a year later, according to documents released by the Financial Crisis Inquiry Commission.

    Full story:
    http://www.businessweek.com/news/2011-01-28/mozilo-predicted-u-s-housing-collapse-as-fed-overlooked-risk.html

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  49. JakeGint

    Not so fast, there, Wile E. Coyote.

    A quick revisit to the silver market, and why I think the dollar is oh so close to bottoming…

    +++++++++++++++

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    • Dr Fly

      Jake gint truly has no shame, as he is a devout and belligerent spammer on my blog. Does it make sense?

      NO

      Will he do it again?

      Yes

      Why?

      Because he is SENATOR GINT and he is out to get the commie bastards.

      Night.

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  50. Teahouse On The Tracks
    Teahouse On The Tracks

    Self indicting of this Little fellow to claim no position in his first few posts and then indicate he is indeud short on his last post with this inspiring title:

    http://seekingalpha.com/article/236141-china-new-borun-investors-race-to-exit-as-concerns-mount?source=commenter

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    • Cascadian

      When he first said he had no postion he said he could not find shares. So it kinda indicates he wanted to be short.

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      • JakeGint

        It still kinda boolsheet to claim you “have no position” if you are actively seeking a short one.

        ______

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  51. Trading_Nymph

    Yet, my focus with BORN and everything from China is Whether they will restock after coming back from their Closed Markets Feb 2 thru the 8th? Steel Mills can’t decide yet…China Govt gossiping around about a rate hike during the holidays too…I am watching the ships and so far everyone is on the sidelines. But maybe Fly’s BORN is win/win…China continues to grow, they drink more…if China slows down, they drink more. I have had some fustration doing fundie analysis on China Companies before, esp the State owned ones…but that guy really should have done better analysis before he wrote the article at seeking alpha imho.

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  52. riggedgame

    All I can say is China in a Bull Shop.

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  53. Cascadian

    Is Jamie banging that woman? he got her on CNBC with Faber.

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  54. triesy

    Chinese are going to knock us off 1 by 1. Firestone tires, moldy drywall, bad toothpaste, poison milk, drugs in toys, crappy tools, tainted heparin, and now getting us to say DANG. Watch out.

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  55. Tx Slave Trader

    It’s one thing to try and to play your hand and pump or trash a stock, but it’s a whole new level of ignorance to try and put that shit in writing hahahahah……post-financial crisis particularly! Regulators have a hard on right now, they may be slow, but they’ll come….

    Great work Senor.

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  56. Blind Read Ant

    h

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