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IBDvalueinvestin (99.66)

2011 should be named "Year of Chinese Scams"

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4

December 16, 2011 – Comments (5) | RELATED TICKERS: SINA , BIDU , YOKU

Even as I type Chinese Stock scams continue..

 Beware of SINA, BIDU, SFUN, YOKU, SOHU , VIT , DANG , QIHU, because Scams have continued in CHINA with no slowdown and floodwaters drown all victims even the non guilty parties.

QIHU called a scam 12/7/11
http://citronresearch.com/

CMED called a scam 12/6/11
http://www.reuters.com/article/2011/12/06/us-chinamedical-shares-idUSTRE7B51H420111206

A more cut-and-dried case of fraud has crushed investors in Beijing-based Longtop Financial Technologies (NYSE: LFT).

The recent accounting scandal at Chinese software company Longtop (NASDAQ: LFT), which hoodwinked even its blue-chip underwriters, causing its auditor Deloitte Touche Tohmatsu to resign (see Reuters’ report on the incident), has highlighted the enormous dangers inherent in the recent craze for cashing-in on China’s ongoing IPO boom.

It’s not just Longtop, but a whole host of other firms who are suspected of bad accounting practices, which leave their IPOs and valuations on very thin ice. The proverbial brown stuff has hit the fan already for two Chinese firms – Shengdatech, and China MediaExpress – who have been delisted from Nasdaq, and are now under US legal investigation for misleading investors. This year's IPO darling YOKU could also be headed in the wrong direction with a failing business model that lost $25 million in the first 3 quarters of 2010 and over $100 million since inception.

other scams in 2011 included: SinoTech's (CTE) has been halted since mid-August

Partial Chinese Stock list of stocks in trouble:

LFT  halted

ADY  2.61

SGTH halted

CNTF 1.60

PUDA 0.22

CCME 0.07

FUQI halted

CHBT now 0.64

CAGC now 1.81

CNAM now 0.27

CMFO now 1.39

CHNG halted

CWS  halted

SKBI now 2.61

RINO halted

SCEI 1.13

CELM now 0.11

SHE  halted

CBEH 0.46

CMED 2.82

5 Comments – Post Your Own

#1) On December 16, 2011 at 12:01 PM, IBDvalueinvestin (99.66) wrote:

Keep in mind that the majority of the Chinese stocks I listed traded over double digits and now most are just penny stocks and the list just keeps getting larger every month.

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#2) On December 16, 2011 at 12:07 PM, catoismymotor (41.70) wrote:

I'm thinking of joining the FEED class action suit. That way the next time I'm called for jury duty I can say I've been part of a class action suit and possibly be dismissed.

I made some money off them, just a little, before the stock went south.

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#3) On December 16, 2011 at 12:53 PM, IBDvalueinvestin (99.66) wrote:

The Street.com is bad mouthing QIHU and YOKU today saying they will go to $5-$8 range, so I am surprised they are up:

 Youku.com(YOKU_) and Qihuoo 360(QIHU_) both remain very attractive shorts, each with share prices hovering around $18 and market caps of about $2 billion. I am quite certain that both of these stocks will join the rest of the herd of China Internet stocks and see single-digit share prices in the near future, which is a drop of 50% or more from current prices. My best guess is somewhere in the range of $5 to $8 for each of these stocks.

 In the case of YOKU, the company has seen losses accelerate due to increased content costs. Despite what Wall Street analysts had been saying, this should have come as no surprise to anyone as it is widely known that YOKU continues to single-handedly bid up the price of premium online content in China by a factor of several hundred percent. Over the past 12 months, YOKU has lost roughly 160 million RMB, despite very rapid growth in revenues. Cash flow has continued to be negative. The company has just over $500 million in cash compared to its market cap of over $2 billion, leaving plenty of room for the stock to drop.

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#4) On December 19, 2011 at 9:57 AM, IBDvalueinvestin (99.66) wrote:

Year of Chinese scams continues, with more Chinese stocks crashing as the Housing Bubble implodes like a house of cards.

The domino effect is in full force.

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#5) On December 20, 2011 at 8:40 AM, Ragingmoose (< 20) wrote:

Watch Sino Forest (TRE.TO). It speaks by itself.

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