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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 | Link to Comment slow_roast
slow_roast's picture

ALL HAIL ZH!

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

+ 1,

Zero Hedge rules supreme, best to recognize.

Tue, 04/12/2011 - 15:09 | Link to Comment Ahmeexnal
Ahmeexnal's picture

Chinesisch fetzen!!

Tue, 04/12/2011 - 14:42 | Link to Comment 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 | Link to Comment vast-dom
vast-dom's picture

Yo Tyler give us some hot pics to short! 

Tue, 04/12/2011 - 14:17 | Link to Comment 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 | Link to Comment Tyler Durden
Tyler Durden's picture

What's the P&L on that basket?

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

Like a hedge there Short Cramer Long Goldman  

Tue, 04/12/2011 - 14:32 | Link to Comment ZeroPower
ZeroPower's picture

Pretty darn green, sans the global market short.

Tue, 04/12/2011 - 14:33 | Link to Comment 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 | Link to Comment Arthur Two Shed...
Arthur Two Sheds Jackson's picture

except...

KBLB

your welcome....

Tue, 04/12/2011 - 14:45 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment Ransom
Ransom's picture

Mmm Mmm Mmm!

Tue, 04/12/2011 - 14:23 | Link to Comment 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 | Link to Comment The Axe
The Axe's picture

they killing those China boys today....blood

Tue, 04/12/2011 - 14:20 | Link to Comment AR15AU
AR15AU's picture

Wait, isn't silver up 100% YoY?

Tue, 04/12/2011 - 14:20 | Link to Comment 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 | Link to Comment MSimon
MSimon's picture

Does she pucker?

Tue, 04/12/2011 - 14:19 | Link to Comment 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 | Link to Comment UninterestedObserver
UninterestedObserver's picture

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

Tue, 04/12/2011 - 16:24 | Link to Comment 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 | Link to Comment TN Jed
TN Jed's picture

Chinanigans

Tue, 04/12/2011 - 16:24 | Link to Comment 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 | Link to Comment TN Jed
TN Jed's picture

Much obliged Chumba. twas my first post.

Tue, 04/12/2011 - 17:54 | Link to Comment 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 | Link to Comment 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 | Link to Comment TN Jed
TN Jed's picture

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

Tue, 04/12/2011 - 14:27 | Link to Comment 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 | Link to Comment UninterestedObserver
UninterestedObserver's picture

What cars?

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

He's painting her jugs like jugs. LOL

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

I'm bullish on China.  

Tue, 04/12/2011 - 14:32 | Link to Comment nah
nah's picture

PUT THE LOTION IN THE BASKET

Tue, 04/12/2011 - 15:00 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment Tyler Durden
Tyler Durden's picture

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

Tue, 04/12/2011 - 17:48 | Link to Comment 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 | Link to Comment UninterestedObserver
UninterestedObserver's picture

That's what options are for

Wed, 04/13/2011 - 10:33 | Link to Comment 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 | Link to Comment 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 | Link to Comment sharkbait
sharkbait's picture

Got suckered into NIV.  Small position, big lesson.

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

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

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