Well now we know that the dividend will be announced next week, it will seem like an eternity for us longs...
So let's revisit (and speculate) about the dividend rate and date. I think it will be announced on Tuesday morning before close. I think it will be roughly 2.5 cents per quarter (equal to last year's .10 lump sum). I do not think there will be a separate lump sum dividend (though there is a good argument to make that there should be a separate, let's say, .05 dividend because investors will be cheated out of the time value of receiving the dividend all at once in June, vs. spread throughout the year).
I'm really not convinced that they will institute more buybacks, because I haven't read anything about more purchases. I think they should (even if it is a reduced amount) because it all ties back into confidence in the company (it also would show that they believe their stock is undervalued).
I know a few months back Tom spoke about the "doubled edged sword" problem with validating the cash accounts. In summary, while he believed it to be a good idea, he said it would also imply that there is a reason to doubt the validity of the cash positions. I think we are all beyond that at this point. I would support the audit, even if it led to a temporary decline in the stock price. As least I could feel like we moved on.
What else can XIN do demonstrate to investors that it should not have the taint of a chinese fraud stock?
If an assembly or assemblies, containing many different parties have dalliances with fraudulent activities, it does not matter what information outsiders posses. If the cash is non existent, it is simply not there.
A CFO manages information, if cash is non existent it does not matter. The CFO would not know if he is not a member of such an assembly. I have no remarks regarding Gurnee's relationship with Longtop Financials but often legitimate directors resign when involved with scandalous or inimical matters that threatens their reputation.
This also holds true for CEOs. We have recently seen Chinese CEOs owning a large percentage of stock and yet the company was fraudulent. Large ownership in this case was probably intentional to validate genuine activity however it does not guarantee legitimacy. The converse can also be true, CEOs also manage information and can be unaware of such activities. After the exposure, we find the truth however. An empty sack does not stand upright.
Reverse take over or initial public offering. Through Merrill Lynch? Still does not make legitimacy valid.
Dividends and share repurchases? still these are not indicators of legitimacy however it validates the existence of at least some cash.
Big-4 Auditor? We have recently seen fraud go through the big 4s, recent example in this topic is Delliote in China. They are also people, they make mistakes, they don't have all the answers for your questions and will not do your homework.
At one point 90% of all halted companies in NASDAQ were Chinese companies. Which industries did they belong? In technology and media, hear public and firm accusations of LFT, CHBT, MOBI, DEER, CCME, SEED, EDU, RINO, FMCN, CVVT, JRJC, BORN, etc. Some are still under investigation and all fraudulent claims can also be false. Categorizing accusations or exposed fraudulent activities by sector is not a validation of anything however, as we know that SNOFF, ONP, PUDA, etc.
Recent supervention involves technology companies again however, hear ZSTN, HRBN, etc. Again this is not to improve the validity of real estate firms as legitimate, but a great majority of all accusations or actual fraudulent involvement was with technology and media firms. There is a reason for their major involvement but is beyond the extent of this post.
While the public remain cynical it has become more difficult for fraudsters to operate. Chinese companies listed on the US exchanges are under inordinate scrutiny from the public eye, short firms(Citron, Muddy Waters) and the big-4. If red flags are existent it is brought up into attention and public conversation instantaneously. What holds true for most, does not hold true for all. Ignoring the real estate bubble and other pecuniary matters in China's financial and political system we obtain these distressed prices part reasoning of the uncertainty of legitimacy.
Of course the last problem is to be delusional, but abstaining from any upside or downside commitments before valuation and obtaining enough information from parties that deviate from XIN's proprietorship and interest in China I find legitimacy.
You never know who is swimming naked until the tide goes out. A great majority of shorts and short firms have cleansed the US-Chinese listed stocks and it seems that HK-Chinese stocks are the next target. The public will come to eventual realization that XIN was not swimming naked.
*While this does not belong to the topic, recently an institution has purchased 1,490k shares and also an individual investor, Mike Koza of 560k shares at $3.10. We still have other institutions with considerable positions in XIN.
I always enjoy trying to figure our who's who for ID's on a board. I'm pretty sure I know you. Don't worry; I won't out you.
In fact, I'm writing this to encourage you to keep this ID as a well informed boo-leader, to offset some of the bulls' tendencies to cheerlead from time to time.
I have only one request: stop using Gurnee for spin purposes, at least as it relates to criminal activity. I know that you know that he has nothing to do with a certain ongoing litigation, so let's stop implying anything to the contrary, fair? I can't be more specific in that last sentence without outing you, so I'm just going to assume your sense of fairplay will prevent you from making further unfair implications.
Outside of that, rock on.
DJ, can you explain a little more how audits of the cash accounts would work? I'm unfamiliar with that procedure.
Also, where would I look to find the "double edged sword" discussion? I checked the 2/23 CC, but didn't see it there.
I am not familiar enough with the process, I was just brainstorming what is left for XIN to prove themselves. The buybacks and last year dividend weren't enough.
The minutes say "double hedge", I thought it said "double edged" as in "double edged sword".
I recommend reading the whole Q&A of the nov 11 conference call. Lot's of good stuff covered. It's what convinced me to invest in XIN in the first place...I posted the link below, but if it doesn't work, go to seekingalpha.com, look up the nov11 q3 conference call transcript and click on Q&A at the top.
Here's the passage...
Thomas H.R. Gurnee
"Yes, well its funny, I’ve had a couple of bloggers and stuffs mentioning that we should do forensic audit of cash to prove to people that we have the cash is real. Well it’s kind of double hedge because if you do a forensic audit, it sort implies you don’t believe it’s there.
Well, now we do have Ernst & Young as our auditor and Ernst & Young I’ve talked to them several times since these blow ups to make sure that their cash verification procedures are completely up to date, and they have all the Big Four have revised their cash verification procedures in China and to the point where when they get the verification, they have to absorb the person signing and chopping the verification.
They wants let it go behind the wall or done electronically, they have to actually physically see it happen. There is a lot of new cash verification procedure. I don’t want to go and do a forensic audit. I believe this CATS verification audit is sufficient."
Surviving this 20-F should be sufficient. The auditors have really cracked down after last year's debacles, its highly unlikely they will let another fraud case get through, especially since XIN is being treated like one by the market which will cause them to be extra careful. If the 20-F is okay that is very positive, as is a dividend. IMHO, those two events eliminate 80% of the fraud risk from this co, and its already pretty low.
>>What else can XIN do demonstrate to investors that it should not have the taint of a chinese fraud stock?<<
A dividend of 10c per qtr.
I think they can afford this amount. In addition, (assuming the stock jumps up) they can sell some of the shares the bought back to bolster cash - assuming these shares were not cancelled.
They need to keep cash to purchase more land to build on, and expand to keep making money to pay future diviends.
They need to announce another buyback program. They are not obligated to purhcase the whole $10 million if they did, but if the share price continues to stay under half the book value, they can buy back more shares.
I would be disappointed if the dividend was over .03 a share, and no additional buybacks.
XIN has already proven that they are not a fraudulant company, and needs to do no more than to keep making money.