Agreed. I added 2000 shares yesterday at $2.40 and another 2000 few minutes ago at $2.71. Trying to further bring down my average just in case we go much higher. But OIBR has been disappointing all around. This is the only stock I have traded in past several years where even the Fat Cats got screwed.
I have already taken out hefty profits out of PME by selling half of my position. GURE, ABAC, ZX, ZA, CCCl, and BORN are the Chinese stocks I am waiting for to jump. Just one of them will make my year, especially any of the first three.
It has to go to $4.64 before I recover all my losses, but I will play along and trade it before it gets there.
gocolts, I thought previously that this will be done sooner than later but the lawsuit dragged on and interrupted their plans. Note that the price which had gone up began to drop right after the final settlement of the lawsuit while the shareholders were thinking that it will go up. It continued to go down even after each very positive earning reports. I don't know when they will go ahead with the merger/buyout because I don't know if they will need another acquisition. They are very close to having total control now. But when this deal is finalized, if the price does not go up it means that they are planning another cash and cheap share transfer. With respect to a buyout price, it has to be at least $2.00 since this deal has already set a precedent of $2.00. The current price, though it may go down lower ,is a bargain price and with or without a buyout the price should eventually go much higher. If I had bought at a high average, I would average down by adding shares at this stage and wait it out.
PART II: A simple review of past merger/buyouts by internal or external interests, especially in case of Chinese stocks, will clearly demonstrate certain general and special features: 1) price manipulation with price deterioration with no news or apparent reason and often when the firm is showing positive net revenue; 2) a highly depressed price far below the book value for rather consistent and protracted period; 3) a merger or buyout offer with a "nice" premium over the current price; 4) a management that appears impervious to shareholder value or blames other factors for the outrageously miserable performance; and 4) sometimes, though not always, a management that stresses the long term view to allay and ease the shareholders' concerns. Need I say more?
I must point out that I am rather comfortable with all of these maladies as I specialize in trading distressed stocks and am generally attracted to them because of these signals. I follow the Fat Cats and manipulators and try to do as they do. If you choose correctly the payoff is huge as has already been the case with GURE for me and shall be repeated again. For this reason I am also usually the main target of hedge fund and/or management paid bashers. When I first bought GURE few years ago it was trading around $1.00 and I have made several very profitable round trips; and my average now with a sizable position is mere $1.376. So I am not complaining. But I call things as I see them and feel bad for those shareholders who have bought at high prices and are swindled by manipulators.. Indeed, GURE management does have a long term plan and swindling the shareholders is an integral part of that plan. I call them cro-oks because that is what they are and they are not unique on Wall Street.
Puzzle, thanks for the lengthy and coherent post. As I have indicated in the past, I respect your opinion but disagree on most accounts. Every firm has one or more believers and devout followers and companies sometimes actually deliver on their long term goals and stated objectives. But I operate as a skeptic with regard to all firms and especially the Chinese firms in general and GURE in particular. Since I began trading it I have always held the view, and stated it repeatedly, that it was being set up for a merger/buyout and feel even more strongly about it today. Of course, that is speculation but not one without merit as it has been proven by the trading behavior and management's lack of concern as though they want the price to be where it is at. I trade primarily distressed companies like GURE with solid financials and poorest price performance and have seen many cases like this in the past. The first question that an investor must ask is: why the stock of a firm which has book value of over $7.00 and cash per share value of over $3.00 trade at around $1.00? The answer is usually 1) fraud; 2) manipulation; and 3) merger/buyout, and sometimes a combination of these. I know, to the best that it can be ascertained, that it is not #1 in the classical sense. So it is not a wild guess when I consider both #2 and #3 as strong possibilities. I believe that the events will prove me right as has this acquisition. If you can explain the price behavior in better terms then I appreciate your response as I am always ready to learn and be enlightened about the market.
Moreover, if one accepts this hypothesis, then speculating about how this will be accomplished is an integral part of the thesis. We must then base our understanding on history-- of how such objectives were accomplished in case of other firms in the past and whether the behavior of GURE management is consistent with our observations concerning other firms. CONTINUE in PART II
Agree alan. That is what they are going for and this stage this is worse than YONG. They are buying a company by issuing shares below the cash per share value and there is no independent valuation to determine whether it is worth what it is being paid for. We will see a buyout or more inflated acquisitions to prepare for a buyout.
There two ways they can go private which I think has been their objective:
1. Continue to transfer cash and cheap shares to the Chairman through his associates disguised as acquisitions. Then once the cash is depleted and the stock is diluted, make an offer to buy the remaining shares at a depressed price but with a premium. In this case, the price must be controlled and remain low as it has been so far. The process will also reduce the cash value as well as the stock value per share.
2. Merge the company with another company owned by the chairman and/or his associates. There are several alternative ways this can be accomplished but the net effect could be essentially the same as above. In this case too, the price has to be fixed at a low level.
3. Make a cash offer at this depressed price with a premium.
In all of these buyout/merger scenario, the price will probably be around or above $2.00, mainly because they can't give away shares in any acquisitions at $1.00 or $1.20 as was the case with this acquisition. Since there is no independent valuation, they can accomplish their objective through inflating the value of the acquired companies instead of using the obvious gimmick of using shares at $1.20.
4. No buyout/merger Scenario. In this case they can a) continue to acquire the Chairman /associates' other private interests at inflated prices (cash and cheap GURE shares) and convert them into subsidiaries of a U.S. listed company. That is "hitting two birds with one stone." or b) continue as usual which will eventually require a massive lift off for these folks to cash in their checks. The massive lift off is inevitable if they don't go through with other alternatives.
I am sure there are other possibilities but in all of them, other than BK or going dark which are extremely unlikely, anyone that shows patience and buys at these low levels will see a nice profit, though those who have paid high prices will be probably taken to the cleaners
alan, if you carefully consider your calculations it becomes obvious that it is against the interest of the management and the these two new investors to see the price at this level and would take effective measures to lift the price, So you wonder why they don't do the obvious and why they are working against their own interest? You think this way because you are honest and a gentleman but the answer to this question is hidden in the question itself. They are behaving this way not because it is against their interest but precisely because it is in their interest. They wanted a low price so the Chairman can transferred cash and cheap stocks to himself through his associates and there is _absolutely no other explanation unless you think they are fools and incompetent idiots. Once this deal is done and he has swindled the shareholders, if there are no additional lawsuits and/or repeat performance of additional funds and cheap share transfers, the price will go up, perhaps rapidly, because that also serves their interest. Please note, that these two buyers are not the friends of the shareholders by they are rather the friends and allies of the Chairman. There is no other explanation under the Sun that can explain the market or the managements' behavior.
I am not complaining. I got 192,000 shares and 48,000 of them below $1.20. But the events are now unfolding as I had expected and stated.
We sold our NLST too early. I sold 30,000 shares at $1.14, but it is up today and it could go much higher. I sold 5000 shares at $1.74 this morning. Got only 3000 shares left (:
OIBR is crazy and unpredictable. I got lots of shares and in the red. But I made good money out of NLST which I bought at an average of $0.63. Still hold 8,000 shares.
Between the two of us we almost got 3000 shares of around 9000 total volume. That tells you about the demand for this under the radar stock. The market makers can do anything they want with it. I got two bids in place just in case it drops more.
With 4000 shares volume it went down 15 cents. I got 1800 of it. We seen this before. It is possible that someone is selling but they will not buy it until it is at some low price. Maybe it will go below $1.00:) That would be really good.
All have said they will not sell their shares below what they paid which is $2.00 to $2.40. It is in the past press releases. There is really not much selling and only an effort to keep the price within a certain range. We have seen this type of trading several times before and it is usually before a major event such as capital injection or acquisitions.
You don't need so much time to negotiate with an auction house unless they are doing an appraisal. I think that is just nonsense. Your point about insiders looking after their own interest is true, but it could also mean a merger/buyout on the cheap or going dark. Holding or buying CHOP is a pure gamble and nothing less.