With so much going on in the markets...
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As promised in our last post, here below some comments from our visit to this seminar.
Our general impression we got from the speakers, is that finding "deep value" stocks has become more difficult than a few years ago.
The suggested investments show a smaller margin of safety compared to earlier years. However, it is important to avoid value traps, and so as not to have disappointments. This is important for us to know as mechanical value investors.
Sahm Adrangi of Kerrisdale Capital Management
One of the interesting presentations, was about chinese scams companies exposes by Sahm Adrangi of Kerrisdale Capital Management, a value-oriented and special situations fund based in New York.
In recent months, Kerrisdale has shared in-depth research with the investment community on fraudulent U.S.-listed Chinese companies, including China Education Alliance and Advanced Battery Technologies. Mr. Adrangi is a leading expert on Chinese stock scams and his work has been discussed in Bloomberg, Businessweek and the Wall Street Journal. His Long short fund was one of the first funds to investigate all the reverse Chinese mergers.In June last year we wrote anonymously, and over past year and half we have identified a lot of shorts, and taking an active role in exposing them. Kerrisdale compiled two reports on Chinese frauds, China Education Alliance and Advanced Battery TechnologiesThis work has been mentioned by numerous media outlets, including The Wall Street Journal, BusinessWeek and the Financial Times
See : http://kerrisdalecap.com/blog.php
A new short idea is Gulf Resources; Gure- Kerrisdale thinks it should be trading under $1. Gure is a manufacturer of bromine and bromine derivative productsThe company went through RTO in 2006. The stock has gone down as a result of all the RTO news, but is still trading at $12.Gulf- claims to own assets which it does not own. It is only owned by the chairman, they are not owned by the publically traded company.Subsidiaries have same numbers, same addresses.Their largest customer, which appears to be owned by Gulf chairman, has the same address, phone number, and fax numbers as the company.The margins are irrational, 90% of bromine is produced in Shandong, the competitors and service providers know each other well. The company is commodity business but revenue growth is 30-50%.There are many consulting firms that provide reports for commodities.Kerrisdale' fund purchased one by a Chinese chemicals report on Bromine and list the top 30 producers, and their production was ½ of what they claim in SEC fillings.They have talked to other competitors, and Gulf is not a major player, and some even said they think GURE is a fraud. Conclusions for us at MFIE.
It's not that we want to shorts these particular companies , but the above tips and ideas are useful to know, how to avoid fraud.
(*) source : http://www.valuewalk.com/
Next week, our team will attend the 8th Annual Value Investing Seminar in Molfetta.
Top value investors from the United States and Europe will present their very best investment idea, a great opportunity to meet, share ideas and learn from some of the world’s most successful money managers.
Confirmed speakers this year include:
T2 PARTNERS LLC, USA
T2 PARTNERS LLC, USA
GREENLEA LANE CAPITAL, USA
KHANER CAPITAL LP, USA
EMERGING VALUE CAPITAL MANAGEMENT (EVCM), USA
KERRISDALE CAPITAL MANAGEMENT, LLC, USA
GARDNER RUSSO & GARDNER, USA
BORIS V. ZHILIN
ARMOR CAPITAL, SWITZERLAND
ARGOS MANAGERS, SWITZERLAND
LLB ASSET MANAGEMENT AG, PRINCIPALITY OF LIECHTENSTEIN
FPM-FRANKFURT PERFORMANCE MANAGEMENT GMBH, GERMANY
RENTROP FAMILY OFFICE, GERMANY
ATYANT CAPITAL, INDIA
TOQUEVILLE FINANCE, FRANCE
CREDIT SUISSE, UK
OWNER, THE MANUAL OF IDEAS AT BEYONDPROXY LLC, UK
CICCIO AZZOLLINI/FRANCESCO GAGLIARDI
CATTOLICA PARTECIPAZIONI SPA, ITALY
MORGAN STANLEY, ITALY
Every year we look forward to this event, and the value investing techniques used by the aforementioned investors. A unique opportunity to collect ideas.