The situation...the obviousTo me the situation for SVM, TRE, ONP, HRBN and many of the other chinese companies that have been caught in the recent 'trend' of the "short and distort" tactic seems to obvious and the more I look and reason the more obvious it becomes. Lets take a look...Muddy Waters might have been correct on CCME and gained some street cred along with it, but the biggest accomplishments for the company are the take down of ONP, TRE, SPRD. Now 2 of those last 3 have sucessfully proven MW wrong, ONP went through an audit (less publicized and no wrong doing was found), TRE is currently being investigated, and SPRD has also successfully proven MW allegations to be false.
The track record looks a little less rosy when it is all laid out for you and then come the oddities: After amazing success on TRE June 2nd, SVM short interest increased significantly on June 3rd, is it coincidence that the day after the most recent victim of the short and distort tactic (TRE) was so successful that short interest jsut happened to increase on the soon to be victim SVM, I'm not thinking so...The only difference; Muddy Waters didn't put out the SVM report it was posted on Alfred Little after an anonymous letter was forwarded to various regulatory bodies. Who is Alfred Little and who is MW. Alfred Little is a recently created website, Muddy Waters is a recently created company, both have the same mission and both have been fairly successful to date. The difference is that MW puts their name behind their research and has a face (whatever that is worth) and Alfred Little appears to be working under 'anonymous' or fictitious name as their is no "Alfred Little".
My best guess is: this "International Financial Research & Analysis Group" in my suspicion consists of Alfred Little, Muddy Waters, and who else knows what funds/connections it has that work together to spread allegations which spread doubt on companies that they know (from doing business in China themselves) will have a hard time producing evidence to refute the claims and they specifically target overly complicated corporate structures, companies where regulatory environment differences allow different reporting etc etc (i.e. China VS Canada). Let's face it a recently incorporated company cannot just put out a report and have even a small influence let alone what these guys have done!
I am of the opinion and have taken long positions in SVM, ONP, and TRE as to me this "short and distort" tactic is the "new" way to exploit the markets which are already fearful as every other day it is a new economic woe; US debt, euro crisis you name it somebody, many people are scared if it (as the recent recession is still fresh in everybody's mind) so why not take advantage of peoples fear by distorting the facts on companies doing business in an economy that you know the majority of Canadian and American investors do not 100% understand.
The real bueaty of the whole system is now that this group of "short and distort" short sellers have established Alfred Little and MW they need not even take responsibility for the allegations, the group can simply send an anonymous letter (as I speculate was done) and then come out and concur that they had the same suspicions after the fact to avoid responsibility...a perfect plan.
The strategy seems to obvious to me however I am sure there are many who say otherwise (hell look at the SP of any number of RTO chinese companies.) Anyways to sum it all up it seems as though people have either lost their minds or I am losing mine and only time will tell, what I can guarantee is that the regulatory environment is about the change depending on the outcome of SVM and TRE as if they are not fraud there is some serious problem with the system and if they are again there are some serious problems with the system.
It's too late here I could go on but I think my point is made...ridiculous!
Cheers,
Import1