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More Chinese Fraud: Kerrisdale Claims China Education Alliance (NYSE:CEU) Is "Mostly A Hoax" - Stock Monkeyhammered
The onslaught against Chinese fraud stocks is getting stronger as we expected, and the cottage industry of those looking for Chinese public scams is starting to make some serious cash. Today's casualty is China Education Alliance which according to Kerrisdale Securities "is fabricating its SEC financial statements. We believe that the company’s revenue and profit are highly overstated in its SEC filings and that the company is mostly a hoax." Stock down about 18% at last check. Of course, from $3.61 to zero it still has a long way to fall. All in all, this is just another slap in the face for the NYSE which continues to admit the biggest (alleged) scam companies to trade on it, destroying all credibility of prescreeing, merely to pursue a listing dollar here and there.
CEU today:
From the evidence section of the report:
- The company’s websites do not work, despite the fact that CEU is an online education provider and its websites are the company’s main revenue-generating assets. We have recorded three videos here, here and here which show that the main www.edu-chn.com and www.pk1234567.com websites have non-functioning payment methods and are full of broken links and HTML errors.
- The company’s websites receive a fraction of the visitor traffic generated by comparable sites such as those operated by China Distance Education Holdings (DL), which reports lower revenue and lower margins than CEU despite having functioning websites, a larger number of web assets, operational payment schemes and no broken links on their sites.
- We hired an investigator to visit the company’s training center in Harbin and found it to be barren of desks and teaching equipment. We provide a video where we present a slideshow of the empty building. We also explain why we are confident we visited the correct location.
- The company’s local filings to the Chinese government show that the online business generated less than $1 million in revenue in 2008. We provide SAIC filings from 2006, 2007 and 2008, including both original Chinese photocopies as well as English translations.
- The company’s financials are not believable when compared to publicly traded comparable companies. The company reports higher margins and revenue growth when compared to DL, CEDU and CAST, despite having a non-functioning website and an empty training center.
- CEU has had 4 low quality, non-reputable auditors since going public in 2004. The company also raised capital in 2009 at an irrationally low valuation without providing a sensible rationale for why the capital was needed.
We also get our latest (alleged) scam accountants: the company current auditor is Sherb & Co. For our readers' benefit here is a list of Sherb's 158 audit clients.
We recommend readers focus their non-momo attention (and actual due diligence) on Tianli Agritech, (OINK), Wowjoint Holdings (BWOW), China Shen Zhou (SHZ) and China Wind Systems (CWS).
Full Kerrisdale report - link.
h/t Adam
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China is mostly a hoax. Why bother with their stocks ?
Yes, you should put your money in US financials and OTC derivatives. Those are much more real.
Worth watching:
Huaxi: Secrets of China's richest village
http://www.youtube.com/watch?v=yru1C-RE7lc
(Hint: You can check out any time you like, but you can never leave with your wealth.)
They are only slightly ahead of their time. NYC will be in the same shape in 10 years. SF same thing. The walls are going up.
The smog looks dewey sweet.
at least GM has certified, unqualified, really good financial statements.
Holy Sh!t, if that isn't an Orwell postcard, what is?! Unbelievable!
I think instead of pronouncing it (hwa-shi) it should be phonetically pronounced (hoax-ee).
Our future's so bright...
Why invest in Financials? Borrow to buy a bigger TV and don't worry about saving or investing. Social Security will be there to take care of you.
" China, china, china "
Fuck them, they got problems too.
I don't trust them at all.
No need to trust them. If their system is viable, they will survive. If not, they will collapse.
Best to focus on creating industry here, and eliminating the obstacles toward that goal. Let the Chinese do as they wish. Absent armed conflict, all it can do in the end is enrich us. All government spending and protectionism can do in the end is impoverish us.
Fraud ?!? Communism ? NPL ? Cook'd Books ...Noooooooooooooooooooooooooooo
Only a fool would invest their money in this stock.
I would love to audit the "Jill Kelly Productions" company.......I wonder how they get their audit fee paid on that one.
that one is most likely safe. the SEC click, click,click, click,click, click,click, click,click, click,click, click,clicking will have their rev stream "humming".
ONP hasn't been turning out to great for shorts lately. The audit just came back with a clean review and thestreet.com had an article pumping the stock. I liked the MW report because at least they had substance whereas the audit just said no evidence of fraud and the street.com guy just kept saying its great and other vague stuff. Its hard to fight delusional investors I guess. See the last 4 months of equities.
I suppose this is going to diminish the value of the PhD in Biochemistry I got from them 3 weeks ago? Probably serves them right. I wanted a PhD in Nanotechnology, but got the 404 Error: File not Found after I paid my $299, so I had to go with Biochem...
"Junk Chuckers in Denial"
Is this a hedge against their bond holdings?
Sell, Sell, Sell, Sell, Sell, Sell!!!!!!!!!!!!!!!!!!
monkeyhammer n A drop-press, in which the weights, sliding in guides, is suspended from a cord by which it is raised and let fall.
http://www.youtube.com/watch?v=NjX712VUbNU
The Pink Sheets has about as much credibility as the NYSE does at this juncture.
New
Yorkers
Steal
Everything
Something similar to Cuba based funds betting on the demise of Castro/Cuban communism with no real assets.
We now have several generations of Communist Chinese plutocrats weened on centralized corruption, legalized lying, and institutionalized information warfare for the glorious peoples' triumph over corruption, lying and info-war.
Yeah baby! Wall Street is where you belong!
Exactly. A friend of mine from a communist country used to say "Both here and in the US we are fed lies every day in the media. The difference is, here we know it's lies."
"All in all, this is just another slap in the face for the NYSE which continues to admit the biggest (alleged) scam companies to trade on it..."
NYSE to Tyler:
As long as the NYSE and our investment banks make fees... Who cares?
The only losers are a few pension funds and 401k mutual funds...
Now, Tyler are you interested in our next new listing: Acme China Blogger Software International?
Great fundamentals...
I know Harry got in that shorting situation ....
Does anyone know when they changed the DOW divisor? I had it last at 0.1323191250. And what was the reason for the change?
thanks
zippy
Why would they do this? They could have just mashed up industrial waste into imitation baby asprin pills to sell in the USA and generated a real revenue flow. Seems like they didn't think this one out very well.
+1
Answer: Because they've used up all the industrial waste making children's toys for this Xmas at Wal-Mart, and the rush import of industrial waste from S Korea was delayed by "turbulence".
and as follow-on interest: "Tianli Agritech, (OINK), Wowjoint Holdings (BWOW), China Shen Zhou (SHZ)"
Who in their right mind lists as: OINK?
Who in their right mind lists as: BWOW? Bow-wow?
Are you looking at me? Hmmm? Am I funny to you? How exactly am I funny? Funny looking? Hmmm? I really would like to know.
We all have our issues, but please, some levels of comedy are not meant to be.
Sorry but OINK is funny as Hell. Even if you got caught in the fraud, just having held the stock would be serious laughs. I'd buy a couple shares just so I could give them as gifts to office colleagues I secretly despise. Although on a point of technicality I don't secretly despise any of them ...
Funny, eh LeB?
Somehow I think this is a slap in the face. Look we can list companies and fleece investors and we can give them names like OINK and you pigs will still buy them.
Like the drop kick right after the upper cut!
One-Two...light's out!
ORI
http://aadivaahan.wordpress.com
Totally agree, ORI
This is like potty humor, too easy and lacking in intellectual taste.
At least Lenny Bruce and Bill Hicks stimulated discussion and real thought about morals and society with their vaginal and penile references, this is pathetic.
Just another reason to renounce.
Who handled thier reverse IPO? I may want to hire them.
6 years was a pretty good run.
Whats going on with the market today? This site has been stuck on -131.12 since I turned my computer on 30 minutes ago. They crashing that bad? Maybe I best go tune in CNBS.
http://finance.yahoo.com/q?s=^dji
Oh never mind, it just changed.
Just believe in Wall St..you can trust them...you can trust the business community!
Fraud? China? Where?
http://www.youtube.com/watch?v=AIX_0nMlIBU
And Kerrisdale Capital should expect a visit from the Chinese mafia in 5...4...3...2...
So when do some of Leo's solars show up on the hitlist?
I wonder if Helicopter Ben will POMO them into profitability?!? He's doing it to every other Wall Street liar!!!
A quick look at management for oink coupled with High profit margins and low market cap makes me wonder if they do anything but launder money
Can't you just fly to Beijing and demand your money back?
Ask Nine Inch Nails and Saul Williams.
http://www.youtube.com/watch?v=sXzK0AFpmcI&feature=related
That Muddy Waters short sale on ONP was a real scorcher, eh?
"That's China..."
http://www.youtube.com/watch?v=g_xht-jR5ug
Fraud?? In China?? NOOOOOOOO.
I wonder how many more shell companies are out there sucking up all of that excess liquidity sloshing around in the system?
+1 That about says it all...
And they say Nigerians are the biggest scammers in the world. Let's see a Nigerian set up a fake shell company and manage to get listed on the NYSE!
But here from china i managed to register to their education website http://www.360ve.com/, add a training course to the cart, go to the checkout page. Then i was suggested to choose between 13 different bank for online payment, a mobile payment option or the account number of their 3 different banks accounts. It all look fine to me.
But the report Kerrisdale show a video where the analyst says that the checkout page doesn't work, that you have only online payment with 2 banks (ICBC and China Merchant Bank). It's obviously wrong.
Also another video from Kerrisdale show empty buildings and office in Harbin. But they show that they went to an address that the company stated back in 2005. And it is a different address that the one showed on every website of China Education Alliance.
To me, this report is a fraud
You should also keep in mind that Zero hedge has also posted a similar article on another Chinese company named Orient Paper(ticker ONP) dated Nov15 . After an initial sell off of about 40%, the stock has almost gained back all of its loss.
So read article on zerohedge with a question mark. No one is posting to making you rich. So what's their real intention?
CEU is not a clean stock. but no stock is clean. So those tragedy events can happen in any stock that you and me are holding.
I feel bad for CEU shareholder: their hard earn money is being robbed by ugly hedge fund manipulators.
only fools buy chinese stocks.
Welcome to the AMEX East. They should move back into the Rector Street building.
"The onslaught against Chinese fraud stocks is getting stronger as we expected, and the cottage industry of those looking for Chinese public scams is starting to make some serious cash."
And yet in the United States we have Enron and WorldCom as shining examples....
This news is simply not the slippery slope is is being played out to be. It's evidence that when running with passionate affection (toward anything of any kind) that judgement may be impaired. This typical "love affair" --- and in this case an education company with a billion potential customers (ie: Anything Chinese) only proves lack of general principals and judgement--- it's not a "revealing insight / window" into some cracked ideal that everything Chinese is a scam, as some would have us believe.
I suppose the 'online blog' referenced here is ZeroHedge. http://finance.yahoo.com/news/China-Education-Alliance-prnews-78180611.html?x=0&.v=1
but...but, everyone tells me they "execute" fraudsters in China?!?!?
You mean China fuckin steals trillions of IP over the decades and we expect them NOT to steal investor capital? LOL
China = FRAUD
They need these companies on the stock market in order to trade and get pumped. They know a penny stock would be known as such, so they get these companies that they know are at best penny stock and allow them to trade and give them respectability. This in order to keep the market going.
A company listed Harbin, the centre of all illegal chinese pyramid gambling? OMFG people are retarded. There are a billion and a half highly entrepreneurial/risk-on Chinese people in China, there is enough capital going round in private circles to get any type of company up and running, as a nation their patriotism and xenophobia runs to the core and there were celebrations on the sts in Beijing when 9/11 occurred.
Culturally, everyone only does business with either family members or friends of family so that they have a head to crack if someone fucks them over. The chinese don't trust each other so W[hy]TF does anyone think they would treat foreign, round eye capitalist invaders any differently? There is a sign left in a park in downtown Shanghai as a legacy to the British when they took parts of Shanghai. It reads "no dogs, and ABSOLUTELY no Chinese". They haven't forgotten that, the Chinese are a proud people where social standing and reputation are THE most important part of society.
I've been doing business there for years and anyone banging on about the virtues of China either blows Cramer, has never been or went on a party approved tour of the place and ate that shit up.
Unless you go to China, develop relationships with people over time and do business in a mutually beneficial manner it's like getting into bed with Steve Jobs. He/they promise you great things and that he/they only want to spoon, but once you fall asleep dreaming of the new iPhone/fruits of your new found friend's slave labour - they will fuck you!
Anyone who thinks that these are not Chinese gov sponsored entities designed to reclaim some of the losses they are making on their USTs is kidding themselves.