Too bad for me that I didn't consider PRC holding companies trade at such a discount because they are a rip off. If shareholders can't own assets what is the point. The lesson to be learned is stay away from PRC firms that trade via a holding company in the USA. How do you explain Ali Baba though ? You explain it through the Yahoo management that can reap value. Alot of these PRC firms are junk in fact if you look at firms that are in a tradeing halt you get back to the same topic: most of them are PRC firms that trade through a holding company. I get burned by Bin Laden in 2002 when aluminum crashed because of mothballed aircraft and I got burned in 2014 through this one. How do you hedge for freak accidents like that ? You can't ! What a drag this is like the lottery but in reverse. My only hope is I get a letter in a year from a class action lawsuit that refunds me a part of the $2.08 I was averaged in at. Risk is understandable but this stock is right out of a Twilight Zone episode. Screw me.
When stock prices go to 10 cents a share, you might be better served by taking a tax loss instead of hoping for a turnaround.
I saw Bob Lutz comment on the huge barriers to entry that exist in OEM car manufacturing and it sounds like Mr. Musk doesn't comprehend the major expenses that exist in this industry. Maybe he plans to keep his firm in the 100K unit sales niche of the market, but I wonder how he plans to make a profit with such low volume. Maybe he is taking a page from Ferrari or Lotus ?
I hope Mr. Musk doesn't get the same treatment as Packard and other car makers did in the past from the big three. Of course you can chalk it off to competition, but man he must have some confidence in his vision to go up against them. He might end up selling out if gas stays low.
'BIDU and ALIBABA are both VIE's and market caps in the billions, so the basic structure of the VIE is not a big issue to me.'
Unfortunatley VIE legal structures are a big issue as they are relevant in the event of a corporate liquidation. LCB is well versed in the outcome of court cases where assets are out of reach in the event of negligence or fraud, quite similar to the situation at hand here. The US courts might make a determination to levy some of the personal assets of the US officers here, (pierce the corporate veil) but by the time the appeals wind down and the legal proceedings cease it will be the year 2025.
Different companies have different cultures, just like 'different strokes for different folks'. 'Different strokes' are fine until it becomes apparent they are ripping people off. Let the legal process run it's course. I am out of a few pennies myself on this one (among others) but it's one thing to lose money when oil prices slide, it's another thing to get burned on a questionable chain of events like those that occured here. It doesn't matter if your post is authentic or not because the reality doesn't change no matter if the actor is a villain or a hero. These guys in FABU MGT are straight out of a future hollywood script: fast money, emerging markets and high level connections in PRC GOVT circles, but none of them have watched the 'Twilight Zone' yet, so unbeknownst to them the Asian Tiger sitting on the wings is feeding aluminum into the jet engines of their lear jet, and soon FAB will disappear just like Malaysian Airlines: deep into the anals of financial crash investigation forensics and exhaustive discovery documentation procedure. Let's just hope the lawyers can wear them down enough to recoup $1.00 a share for every one. Invest in who ever has the rights to "Twilight Zone -The Movie' and make a bundle off the demise of these miserable lotharios.
The VIE's are majority owned by the individuals that funded them, some of witch (you) are shareholders and officers of FABU. You are correct that they exist to circumvent the restrictions the PRC government places on foreign ownership of assets because they are probably owned primarily by Chinese nationals. The company accounts for their interest in these entities by either the equity or cost method of accounting and their investment is probably buried in the PP&E section of the balance sheet.
Fortunately for you flower child, the same rules do apply for 'Chinese based companies that reverse merged their way onto US NYSE MKT exchanges', because any company that issues stocks or bonds to the public in the US has to have their financial statements audited by an independent certified accountant at least once per year. It is entirely possible that the assets of FABU will be deemed impaired in the future and the equity reduced accordingly. Meanwhile, the reason your investment is worth 4% on the dollar is because investor confidence in this company has been shaken to the bone after a stock trading halt, accounting irregularities and a 46% decline in QTR ended June, 2014 revenue compared to last year. The market seems to be valuing this according to your 'fraud thesis', but I am not sure you can count them as another Enron or Worldcom yet.
Any company within the US that issues bonds or stock to the public has to have their financial statements audited by an independent public accountant once a year. If a company has a variable interest in another party and that interest does not exceed 50%, then per generally accepted accounting principles (GAAP) those assets and liabilities do not have to be consolidated. FABU stock was suspended for almost a year due to accounting irregularities and upon investigation of those irregularities it was found that a $17M bond was issued by a VIE partially owned by FAB but not exceeding the 50% ownership threshold, hence the F/S of FABU were properly prepared when they excluded that liability form the accounts. The net assets and liabilities of this entity belong to the 21 M shareholders registered by FABU. The assets and liabilities of the VIE are seperate entities and are funded by personal investments by individuals, some of which are officers or shareholders of FABU. Not only are you a bad out house lawyer but you are a below average community college branded accountant as well.
The VIE assets in China are not consolidated with the assets listed in the US financial statements. In other words they are a seperate entity and do not have to be included in the account balances the US company reports. I'm afraid you are clueless when it comes to GAAP. Why do you think the $17 M bond issue was not included in the US balance sheet liabilities ? Because under US GAAP the holding company doesn't have to consolidate a subsidiary unless they own at least 50%. You can cite conflict of interest clauses in the SEC reports all you want, but at the end of the day you cannot reinvent the wheel.
Ford and GM both have operations in China and they to manage the operations just fine from state side. I don't know what makes these PRC based companies within a US holding company any different. Some people on this MB sound like they have figured out a way to reinvent the wheel with their speculation. The balance sheet represents the net assets owned by the 21M US shareholders. If the assets are deemed impaired at some future point they will be written down and the equity reduced accordingly. Talk about #$%$ house lawyers, this MB is full of them.
Old GM and Chrysler were the victim of a 50 year recession: The stock market sunk 50% from 2007-2009, the real estate market crashed simultaneously and new car sales hit a 10 million unit annual sales pace in 2009. If MGT could have borrowed the cash to finance the short fall until the economy improved they might have survived, but the banks already had so many bad loans on the books from the foreclosure crisis affecting the real estate market that they had no money to lend. MGT blames the union when times are bad and take credit for themselves when the times are good. The UAW doesn't manage the business, the executives do. You need to keep drinking until that sinks in because apparently you are suffering from group think.
There goes a slice of a 5 million unit annual market, but I'm not sure the Americans would have a higher share even if they were never kicked out. The US Govt. needs to establish a threshold for imports and if they exceed a certain level make them 'build it where they sell it'.
I'm not sure if you still have to 'build it where you sell it' any more, but Yen 117 gets a little bonanza for the Japanese, irregardless of whether or not their economy needs it or it's affect on the US economy.
If I had to live under the control of the neo-aristocrats who control the South I would live in TX or FLA. Seems a little odd though how all those hicks down there who don't like Mexicans choose to live in a state that borders Mexico.
How many cars does Ford, GM and Chrysler sell in Japan ? Their collective market share is probably not even 5 %. Now how many cars do the Japanese sell in the US ? Toyota, Honda, Nissan and Mazda probably have a market share close to 50%. The USA fought their war machine in WW II and now people in America are funding their economic machine through car purchases, how pathetic !
Quite the contrary, he was a pom-pom gunner on a Navy ship and took shrapnel from a Japanese fighter bomber that set out to destroy the good old USA. Now you and your ilk are funding their economic machine.