CBI: Scam or Super Bargain?
What so my fellow Fools think about this whole Chicago Bridge & Iron (CBI) situation? I went long CBI after the initial Prescient Point short report knocked them down. I didn't buy into their arguments then and nothing changed after the release of the company's Q2 earnings. The report looked excellent.
I can sort of understand a major company like CBI not wanting to justify an attack by a short seller by responding to it. I'm fine with that, but the company could still respond to direction questions about the accounting issues on the conference call when they're presented by "legitimate" analysts. Even them not addressing the issues directly wouldn't have bothered me that much. What did really rub me the wrong way is the fact that the company's CFO was "sick" and unable to attend the quarterly conference call? Sick? I've been sick from work once in 18 years and that's when I caught a crippling case of Lyme's Disease. He had better be on death's door not to be able to pick up a telephone and participate in a conference call when the integrity of his work and that of a multi-billion dollar company are being questioned.
I'm not a forensic accountant, but CBI's numbers look fine to me. I don't see how uber-smart investors like Warren Buffett and Denali Investors could be fooled by them.
Something else that really annoys me is the taunting of the company by Prescient Point on Twitter. Here's their quote:
"The deceptions continue, but the charade is over...Conference call leaves investors with more questions than answers. story has more holes than a brick of swiss cheese."
This seems like a very unprofessional, immature response to me. What are they a teenager sitting in their parent's basement tossing out insults on Twitter? For their sake they had better be right otherwise they're toast. No one will ever take them seriously again. I guess that they seem to have remained anonymous throughout this whole fiasco anyhow so they could always pill the plug on Prescient Point and hang up a new shingle under a different name to continue their short attacks. Bill Ackmann came across looking like a pompous moror for his sensational attacks on Herbalift (HLF) *, but at least he was man enough to attach his real name to it rather than cowardly hiding and shorting.
Anyone out there have any thoughts on the CBI situation? I personally am considering the weakness in the stock to buy again.
* I personally think that Herbalife's products are complete junk and that multi-level marketing companies are garbage as well, but... say what you want about MLM it is technically legal so I do not think that Ackman has a chance of winning his battle agains the company. They're going to keep buying back stock until his options expire worthless. Having said this, I wouldn't be surprised if over time HLF does gradually decline in value.