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China Fraud Basket Update

Tyler Durden's picture




 

While the rest of the world finally wakes up to the reality of pervasive Chinese reverse merger fraud, a topic we discussed way back in November and alleged that soon enough the bulk of Chinese companies receiving NYSE and Nasdaq listing are very possibly frauds, we would simply like to demonstrate the performance of our short Chinese basket discussed most recently here. At a 75% annualized profit, shorting Chinese fraud is proving to be two times as lucrative as being long silver.

 

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Tue, 04/12/2011 - 14:16 | 1162367 slow_roast
slow_roast's picture

ALL HAIL ZH!

Tue, 04/12/2011 - 14:36 | 1162459 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

+ 1,

Zero Hedge rules supreme, best to recognize.

Tue, 04/12/2011 - 15:09 | 1162612 Ahmeexnal
Ahmeexnal's picture

Chinesisch fetzen!!

Tue, 04/12/2011 - 14:42 | 1162486 Robot Traders Mom
Robot Traders Mom's picture

Agreed. I have been telling other brokers at the desk I am officially a Zerohedge kool-aid drinker. There is literally nothing else in the media world I take with 100% confidence.

+1 Tyler

Tue, 04/12/2011 - 14:16 | 1162369 vast-dom
vast-dom's picture

Yo Tyler give us some hot pics to short! 

Tue, 04/12/2011 - 14:17 | 1162384 ZeroPower
ZeroPower's picture

ZH never gives investing picks.

Besides short china RTOs, long silver and gold, short GS and cramer, and short all world equities.

Tue, 04/12/2011 - 14:21 | 1162396 Tyler Durden
Tyler Durden's picture

What's the P&L on that basket?

Tue, 04/12/2011 - 14:29 | 1162439 The Axe
The Axe's picture

Like a hedge there Short Cramer Long Goldman  

Tue, 04/12/2011 - 14:32 | 1162450 ZeroPower
ZeroPower's picture

Pretty darn green, sans the global market short.

Tue, 04/12/2011 - 14:33 | 1162456 Tyler Durden
Tyler Durden's picture

What part of "stay out of stocks thanks to massively manipulated equity capital markets" (Zero Hedge August 2009) is still unclear?

Tue, 04/12/2011 - 18:18 | 1163203 Arthur Two Shed...
Arthur Two Sheds Jackson's picture

except...

KBLB

your welcome....

Tue, 04/12/2011 - 14:45 | 1162487 SheepDog-One
SheepDog-One's picture

Youre looking for equities to go long on here? No problem- Just wait for Robotrader posts, he always finds some retail towel store or leotard monger that has a boner chart to go long on. Of course its always a different 'basket' of boners every day so buyer beware.

Tue, 04/12/2011 - 14:57 | 1162555 punxsutawney phil
punxsutawney phil's picture

I don't know what you have in that basket, but the borrow on some of those names is upwards of 50%!!!!  CCME which has been halted was trading borrow at 70% prior to the halt.  You could have priced that borrow rate from the options.

 

Tue, 04/12/2011 - 15:30 | 1162691 Ruffcut
Ruffcut's picture

What basket? Easter basket early? Filled with piles and piles of dog turds again, this year?

Darn.

Tue, 04/12/2011 - 14:16 | 1162377 Ransom
Ransom's picture

Mmm Mmm Mmm!

Tue, 04/12/2011 - 14:23 | 1162385 Mercury
Mercury's picture

You can't game fraud so it always = SELL.

ZH should run with this 'fraud basket' concept and get on the ETF bandwagon...

Tue, 04/12/2011 - 14:19 | 1162390 The Axe
The Axe's picture

they killing those China boys today....blood

Tue, 04/12/2011 - 14:20 | 1162391 AR15AU
AR15AU's picture

Wait, isn't silver up 100% YoY?

Tue, 04/12/2011 - 14:20 | 1162395 Cdad
Cdad's picture

Thank you Duncan Niederauer.  I can see why shareholders are rewarding you while you sell the fucking floor of the NYSE to the Germans.  Nice work if you can get it.  Another fuckwad steps fully into the light on the Wall Street and demands applause.

But enough about that...someone quick start another conversation about Lulu Lemon!

Tue, 04/12/2011 - 16:47 | 1162963 MSimon
MSimon's picture

Does she pucker?

Tue, 04/12/2011 - 14:19 | 1162398 cosmictrainwreck
cosmictrainwreck's picture

but...but...but, fraud is against the law in China! they shot some guy for making bad baby formula.... oh, in the market is OK, huh?

Tue, 04/12/2011 - 15:33 | 1162695 UninterestedObserver
UninterestedObserver's picture

Correct fraud IN China bad - selling stock of scam companies to Americans AOK

Tue, 04/12/2011 - 16:24 | 1162890 chumbawamba
chumbawamba's picture

I guess they didn't like us diluting the value of those two trillion worth of treasuries we dumed onto them in exchange for their cheap crap, eh?

Nigger is as nigger does, niggers.

Gold, bitches.

I am Chumbawamba.

Tue, 04/12/2011 - 14:23 | 1162415 TN Jed
TN Jed's picture

Chinanigans

Tue, 04/12/2011 - 16:24 | 1162895 chumbawamba
chumbawamba's picture

I'm going to give you props for that one because it was good.  Shame on everyone else for not doing so.

I am Chumbawamba.

Tue, 04/12/2011 - 16:55 | 1163004 TN Jed
TN Jed's picture

Much obliged Chumba. twas my first post.

Tue, 04/12/2011 - 17:54 | 1163155 Hephasteus
Hephasteus's picture

Well bad first post. Don't leave much room for improvement when you have an opening punch like that. LOL

Tue, 04/12/2011 - 21:28 | 1163719 chumbawamba
chumbawamba's picture

Heph's got a point.  You've got a lot riding on your second, er, I guess now third post.  Gotta live up to that first post orgasm.

Eighth rule of Fight Club: if this is your first post at Fight Club, you have to fight.

I am Chumbawamba.

Wed, 04/13/2011 - 01:12 | 1164240 TN Jed
TN Jed's picture

Damn, you're right.  One and done. CooooStanza!

Tue, 04/12/2011 - 14:27 | 1162430 Careless Whisper
Careless Whisper's picture

well they certainly know how to market cars in China

How to draw attention to your auto show in China: Paint some boobies and call it "art"

http://shanghaiist.com/2011/04/12/how_to_draw_attention_to_your_auto.php

 

Tue, 04/12/2011 - 15:34 | 1162699 UninterestedObserver
UninterestedObserver's picture

What cars?

Tue, 04/12/2011 - 23:34 | 1164041 Creepy Lurker
Creepy Lurker's picture

He's painting her jugs like jugs. LOL

Tue, 04/12/2011 - 14:30 | 1162442 Jason T
Jason T's picture

I'm bullish on China.  

Tue, 04/12/2011 - 14:32 | 1162451 nah
nah's picture

PUT THE LOTION IN THE BASKET

Tue, 04/12/2011 - 15:00 | 1162568 punxsutawney phil
punxsutawney phil's picture

Anyone who is short these names can you tell me if you are getting better borrow rates than the implied borrow rate from the synthetic.  Some of the worst names are in the 50-70% range.

Tue, 04/12/2011 - 15:37 | 1162705 UninterestedObserver
UninterestedObserver's picture

I just keep buying puts and looking for more scam RTO's - it is like printing money, I almost know how Bernanke feels everyday (without the holy shit I am destroying the world part)

Tue, 04/12/2011 - 16:08 | 1162848 gosh
gosh's picture

ive been buying these companies like mad.  The same people that said the market would never recover in march 2009 are saying the same about these hidden gems.  Buy of a lifetime.  Of course when these stocks triple ZH wont run an article saying they were wrong (ZH is never wrong of course)

Tue, 04/12/2011 - 16:32 | 1162923 Tyler Durden
Tyler Durden's picture

So by now at least half your purchases are indefinitely halted?

Tue, 04/12/2011 - 17:48 | 1163142 bweis
bweis's picture

you've got to adjust this for the cost of borrow, like phil says above.  your 40% return quickly gets eroded with borrowing cost.  that's IF you can even borrow the shares.  fraud, no doubt...skeptical of china, count me in.  but your returns are misleading and assume that you could execute a short based on a bloomberg chart.  this is certainly not the case.

Tue, 04/12/2011 - 18:19 | 1163206 UninterestedObserver
UninterestedObserver's picture

That's what options are for

Wed, 04/13/2011 - 10:33 | 1165034 bweis
bweis's picture

that's not what options are for, and the pricing is the same if you do it with an option (that's how somebody would price the lending rate).  if you want to use options, then you should at least approximate covering the bid/ask spread on the vol curve and 3m+ of option premium.  the returns are materially different, making this misleading.  a good trade, no doubt...but the returns imply that you can execute based on a bloomberg chart which simply isn't true.

Tue, 04/12/2011 - 17:35 | 1163104 UninterestedObserver
UninterestedObserver's picture

LOLOLOL - so how much RINO,DGW,PUDA,CCME etc did you own? Not to mention the more than dozen names that are already trading in the pinks for pennies. 

Tue, 04/12/2011 - 17:57 | 1163162 sharkbait
sharkbait's picture

Got suckered into NIV.  Small position, big lesson.

Tue, 04/12/2011 - 20:29 | 1163575 Zero Govt
Zero Govt's picture

China frauds busted, next winner, think the ticker is 'Wall Street'

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