I've been long for a while now, and I don't think this is fraud. The one thing killing me is why don't they just hire a forensic auditor to come in and "investigate" the company. Yes it will cost some money but less than a dividend (something that I have expressed the stupidity of numerous times) or a stock buyback. They need the capital to grow. Spending a million to get some respectable people to go through everything AGAIN would add 100's of millions to the market cap. Hell the announcement that they were doing it would bring the cap back to 300mil. Why wouldn't they just do this and stop all this mess. Am I missing something that doesn't make it as easy as it seems? I know the immediate response will be the time and inconvenience caused. Well the time they have to spend creating and constantly addressing allegations of fraud is probably worse. 1 month from now the stock could be back at 9 and everyone would be happy. Except the shorts who would be a little lighter in the pocket. Could you imagine the gap price just from the PR saying they were doing it?
No, I am not short. I've held shares for over a year now and have gotten up to a few thousand so i'm feeling the pain.
First of all, this was done by ONP and it was moderately successful in raising the stock price short-term. However, it never really lifted the shadows of doubt and they now continue to be mucking through issues with accounting and auditors. (though potentially through no fault of their own)
Second of all, there's a much cheaper, simpler way to end all doubt: List the top 3 distributors on the next quarterly. Shoot down the biggest weapon the shorts have had.
I agree. I am painfully aware that 'forensic' audit did not work for ONP. I bet on it working, and when it did not...
Therefore, if the Yongye management has balls they should call in a short seller that is respected both by shorts and longs to lead a forensic audit. My candidate is Alfred Little. At least it would be interesting to see how the other shorts would try to put a spin on that.
The truth is nothing would work right now because the investing public has become totally irrational with FUD, and anything Yong did would only last for a day or two. Nothing to do now but wait until this nonsense is over and buy at the bottom to take advantage of their stupidity.
I agree, stone. Independent respected third-party, take whatever lumps may come out of the process - returns YONG to fair market value. If investors have nothing to fear, and shorts have no seed of doubt to plant, we trade at 12 X earnings.
Saving face is the reason this won't get done, imo: Skeletons in the closet, e.g. some CEO/other self-serving transaction(s) in the past that would not materially impact on financials or business prospects (I'm saying IF).
If YONG did just announced this, shorts would be climbing over each other to cover - it would demonstrate that YONG is rock-solid clean.
There are a lot of different things the company can do, spend money and gamble on raising share price. The best and surest thing they can do is keep their eye on their business and in time the price will adjust to the correct amount. That is what the market is for, that is why companies go public, to get a accurate price for their company. If they were interested in selling the company now, they would need to get the price up now. Otherwise hold for long term.
My thinking is, YONG and CGA should merge right now. Both are being squeezed by the shorts and maybe one or the other has skeletons in their closet. A merge would cover more area of China and allow both companies to regroup and get it right. And can you amagine what it would do to the shorts and analysts today.