Sino Forest quote of the week
Muddy Waters
commenting on Sino Forest's conference call:
TRE [Sino Forest] had some notable blocks / drops of other awkward questions. TRE cut off the Nomura analyst Anissa Lee rather than answering her question asking for more details on where the cash balances are kept.
Management also failed to attempt to answer a question about whether its banks are uncomfortable with extending credit. Instead of answering, there was a death ray type of sound toward the end of the question, and the questioner was no longer there. In true memory hole fashion, management moved onto the next questioner without making any statement in response to the question.
You can use a more neutral source. Here are tidbits from FT Alphaville's live coverage of the call. ("Noise on the line" = death ray.) Note RBS is the only broker maintaining its buy rating, so perhaps the death ray really was inadvertent.
ReplyDeleteJM
Nomura on now
JM
From Nomura
JM
Q: “is the company in compliance with all the planting regs in China?”
JM
A: Yes
JM
Q: can you put the docs online?
JM
A: if we’d done things wrong, they’d have already informed us
JM
Q: what is the current cash level of the company?
JM
A: 1.1bn end of March
JM
“some of the cash has been used in normal operations”
JM
but no major acquisitions or purchses
TA
Oooh
TA
They just shutdown the Nomura lady
JM
will disclose the rest at end of June
JM
yup
TA
Only three questions allowed
JM
smack down
JM
Back to RBS
TA
Again?
TA
External funding again
JM
“What are your banks telling you now?”
JM
And then lot’s of noise on the line.
TA
(A Reader – sadly I am listening to the webcast, am not on the call)
TA
Uh oh
TA
RBS has been silenced
The Globe & Mail has just written a surreal editorial: "Carson S. Block of Muddy Waters' relentlessly hyperbolic comparisons of Sino-Forest to Bernard Madoff and Ponzi schemes, and his relentless repetition of the word 'fraud,' undermine his own credibility, even if he eventually turns out to be right."
ReplyDeleteSo basically, if you find a Ponzi scheme and a fraud, then using those terms will undermine your credibility. Even if those companies are later demonstrated to be Ponzi schemes and frauds. Huh?
Talk about rallying around the Maple Leaf ...
In honour of Sino-Forest's spiritual ancestor, how about we rename it TRE-X?
ReplyDelete@Robert
ReplyDeleteHere is a much better transcript of the RBS portion of the TRE-X call:
Operator: Your next question comes from the line of [indiscernible] (1:02:46) from RBC - or I'm sorry, RBS. Your line is open.
Q: Thank you very much. I just have one question. Given the external funding has always been a very important component for your business historically, can you just give us a sense of your banking relationships now?
What are - what are banks telling you now, are they expressing concerns if any banks [indiscernible] (1:03:12) any of the credit line? And also on the [Inaudible] (1:03:22)?
A - Louisa Wong: Well, I think it probably got cut actually. The line was quite bad. So maybe operator, can you pick the next one please?
Hey here it is - http://www.theglobeandmail.com/globe-investor/key-partner-casts-doubt-on-sino-forest-claim/article2066110/
ReplyDelete$35billion Hedge fund guy(Read as John Paulson) lost to 2 room guy Muddy Water. This is the beauty of investing due diligence.
A scaled down version of the Sino Forest story
ReplyDeleteMK.