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ProShares Ultra Real Estate Message Board

o_xia 6 posts  |  Last Activity: Sep 5, 2014 11:04 AM Member since: Dec 21, 2008
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  • o_xia o_xia Sep 5, 2014 11:04 AM Flag

    No non-sense but you need to keep its gross margin and roi in mind.

  • I think HPJ is doing great. Its management team is very stable and has been executing very well. No surprise that its stock price is climbing back to 1 year high level. The company's Li-ion battery business is taking off and its overall business has a very bright future.

    However one definitely needs to be cautious chasing stock price spike with "exciting" news coming out: keep in mind that these are times that could hurt you most. One needs to look into its low gross margin and ROI, and even more important, its very high debt ratio. It needs to roll over its debt soon and keep in mind that debt market in China right now is not a pretty picture at all. HPJ may have to have another secondary offering before the year end and it certainly won't help its stock price in a short run.

    Regardless, it is a great long term buy, even at the current price level.

  • Reply to

    NQ is priced at a level where you can't lose.

    by ellhajmalik Jul 3, 2014 5:07 PM
    o_xia o_xia Jul 3, 2014 5:12 PM Flag

    downside is 100% loss if NQ did commit fraud. Everyone needs to keep this in mind, long or short.

  • Reply to

    NQ needs to change its auditor right now

    by o_xia Jul 3, 2014 4:48 PM
    o_xia o_xia Jul 3, 2014 5:07 PM Flag

    Kenji,

    Audit risk is high when an auditor signs up with a client with weak internal control, an incompetent staff, or an intent to cheat, or when an audit team is not capable or experienced enough to uncover potential issues. There are many many quality professionals in Big 4-as a matter of fact, they have most accounting and auditing elites in the world with them, but they also hire many fresh out of school yound inexperienced boys and girls doing the actual audit work, and if the senior associate, manager, or senior manager of the team is not experienced enough to identify the audit errors, a company can just get away with it-there is no way for a partner to find it otherwise if a senior manager didn't get it.

    Don't be surprised that an auditor make mistakes, sometimes very serious mistakes. If you were an auditor, you could make the same kind of mistake PwC made.

    Having said this, I still believe NQ had weak internal control as DT report indicated. Now its stock is in a very dire situation. But its business is not as bad as what MW alleged. NQ is right to take action on its audit committee. Hopefully it will get DT in asap to move it forward.

  • An auditor is concerned with audit risk and audit fee with its client. PwC is in an awkward position: Deloitte found some issues they didn't find as NQ auditors. PwC's audit risk is high, very high, at least perceived so by PwC itself. It needs to redo DT's work to prove the findings are accurate or not, and on top of it, need to go back to days when NQ was still private to find out whatever irregularities of numbers they audited. So it is not surprising that PwC may need at least 9-12 months to get its job done.

    Any big 4 auditor would ask for the same thing, except for DT. It already spent 8 months in the investigation and should be very familiar with the company operations and financials. Any work from here would be built on this solid basis.

    NQ management did a very bad job talking about "considering"-plainly stupid. If it didn't have any agreement, don't say anything. Next time I wish it talks something positive or at least constructive, like have PwC out and DT in as its auditor.

  • As DT confirmed no fraud, it is virtually impossible for PwC to find it otherwise. But because DT found significant internal control issues, PwC has to treat it very carefully. I have dealt with all these Big 4 auditors for many years-they are very good at accounting and auditing, but they are all very proud, sometimes so proud that they found it extremely difficult to admit they made mistakes, especially in this case-it is quite different from calling a quit to a fraud, instead, all these years PwC never announced these issues to the public-Maybe PwC just missed it, or has been aware of these issues to a certain extent but never considered it significant enough for an opinion other than an unqualified one.

    Anyway, PwC is in a big dilemma now: it either has to justify why these issues are not significant enough to show in auditor's report, or has to explain among themselves why they made mistakes. I have gone through this process and I can assure you that it is very very time consuming, never short of finger pointing between partners in PwC, and lots of unreasonable requests from PwC could drive NQ management crazy.

    My estimate is no annual filing anytime soon. But it will be either a fully clean opinion or a clean one with restatement. NQ price will go back to 15-20 for sure, but it will be a long wait.

URE
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