His latest tweet:
JeffreyMatthews Jeffrey Matthews Least Helpful Call, So Far: JPM cuts price target for TRMB (gps for construction) from $51.50 to...wait for it...$47.50. Last trade, $37.49.
Jeff however does not follow Hong Kong listed frauds.
Today I received a copy of Felix Fok's latest piece on Chaoda Modern Agriculture. This is from JiAsia - in other words from Societe Generale. To quote:
Ji Asia is terminating coverage of Chaoda Modern Agriculture (Holdings) (682 HK, HK$1.10, Ji BUY, Target HK$10.50).
The price on my screen is 55c but it is not trading any more.
The reason stated by Felix Fok is "following a realignment of resources within the team".
Chaoda is suspended for a reason: it is almost certainly a grotesque fraud.
The buy was a bad call. The dropping coverage: that was clearly the most useless call of the day.
John
Disclosure: Proudly short Chaoda Modern Agriculture.
10 comments:
When is John getting on twitter?
John,
You're right.
Cheers,
Jeff
He is... john_hempton I think.
I can't understand at this point what sellside analyst would cover any of these kinds of companies. It's career suicide.
Forgive the amateur question, but... could you buy something like a CDS on all these Chinese frauds as a cheaper alternative to shorting? I imagine there is little to no market, but if someone would sell you a deep OTM put, maybe they would sell you a default swap? ...I know nothing about how big you have to be to actually enter into a CDS contract.
Tom, dealers haven't written Chaoda CDS since 2007 which should tell you something. Ditto Sino-Forest. Seems the credit analysts in Asia are a bit more smart.... or perhaps have less upside and are therefore a lot more skeptical. Hard to say.
@Tom:
short version:
BIG. and you wouldn't want to do it anyways.
long version:
You'd have to have a friend at a bank or $100m+ AUM to get ISDA with someone who would even look at this (liquidity in something like this is limiting to 0).
You'd get so raped that you might lose money even if they defaulted (on a credit like this, you'd pay a huge sum up-front + high running costs, not to mention that it would be marked against you at every opportunity. Not to mention that with relatively low issuance of the debt, they could happily game the whole thing (say, let you write expensive CDS on 100% issuance, physically settled only, then cheaply buy all the debt thus making it impossible for you to deliver and your contract worthless. Happened before).
you just gave this poor guy the perfect wedding gift (in Nov '11 I heard...)
I see. Thanks guys :)
What if you short a stock and that stock is suspended from trading indefinitely cos of going into liquidation? Does that mean you win 100%?
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