An excellent example of fallacy!
I don't expect info in advance ("before it was announced") as you wrote. I want info when the deal is inked! So far we've got info on what assets were moved and for how much. Months ago! Not to mention we still don't know WHY!
In what 10Q they have communicated their intention to sell their assets to Buchang JV? And in what 10Q they wrote what it will be good for and how shareholders will benefit from such a move?
Can you imagine that AMD forms an alliance with Qualcomm without telling PUBLICLY the REASONING? You are defending the indefensible!
By the way, have you read the recent 8-K about Buchang joint venture? What do you think about this?
- March 13: Chengdu Tianyin had completed the transfer of 72% of Qionglai Tianyin's stock to Shandong Buchang
- April 8: Shandong Buchang made the first installment of payment
- July 14: Chengdu Tianyin and Shandong Buchang are currently negotiating the timeline for the remaining payments
How does that add up with your "legitimate businessmen" thesis?
And last but not least ... the deal price ($24M). I remember that some two or three years ago Dr. Tong claimed Ginkgo Mihuan alone was worth about $1.3 per share (~ $40M). I can't see legitimate businessmen at all. And all it needs is just to keep my eyes open
I understand your point, but legitimate and honest management is a necessary condition for a successful investment, but not a sufficient condition! Why don't invest in GOOG (+16% today) or HTZ (+12%) instead of dubious chinese micro cap? You have to admit that Google's or Hertz's management is legitimate and odds that those at helm will flee with your money is far lower than in case of TPI. The history of chinese micro caps and weird (almost non-existent) TPI's PR are the facts you just can't ignore
There is huge disproportion between book value and share price of TPI. Some interpret it as a discount, but I prefer to look at this "discount" as a function of probability to loose whole investment - the larger discount is, the higher odds it goes to $0.
What holds TPI management to "invest" company cash into let's say marketing or advertising services? For example, TPI can pay money for phoney services to a company owned by a sister of TPI's CEO.
- In US, that would be enough to put management in the prison
- In case of chinese company, there's no justice for US investor
The point is that "the pieces of this company" you refer to can change in a blink of an eye if chinese management decide so.
Why do people believe that TPI (or any other chinese management) will act in the best interest of the shareholders? I agree they should, but will they really? Why would anyone think so? Based on what?
This is a real phenomenon! A public company closes a huge deal involving assets exchange without a SINGLE WORD of explanation what it is good for, but still some investors tend to think "will it help them to buyback some shares from me?" What a weird mindset!
In fact, I think this kind of blind faith is the fatal flaw behind huge losses for a lot of US investors (including me). I can give you ten examples of chinese frauds and scams for any single honest chinese company you name. Well, if you manage to find at least one ...
- a company not able to report on time repeatedly?
- a company who makes a shady deals (involving huge portion of its assets) with another company without telling investors a single word about what it is good for?
- a company from country where robbing foreign investors is not a crime but a pastime?
TPI? It's sell and forget, sorry.
They can still move the cash to JV and sell the 20 % of their JV share to Buchang for let's say 10 million. Later, they can move 10 $ to JV and sell remaining 3 % to Buchang for $100k, and then ...
Michael, you suggest exact opposite of what we can see today. Chinese entrepreneurs flee US stock exchange because of terrible reputation resulting in very low valuation. Simply put, it doesn't make sense for a chinese company to list in US any longer