Is China Valves Technology a legitimate company?
October 30, 2011 12:07 PM Subscribe
China Valves Technology (ticker: CVVT) has plummeted this year largely due to suspicion of fraudulent activity and reporting practices. I have read generic accusations on various websites, but have not seen anything specific. Then I ran across this article supposedly "redeeming" them. http://seekingalpha.com/article/294624-china-valves-technology-online-due-diligence-indicates-legitimate-structure?source=marketwatch So I thought I would ask the metafilter community if they had any knowledge involving this company. Do you believe that this is a legitimate investment or is it just another Chinese fraud? Thank you for your time and expertise. Have a great day.
My impression of the kind of fraud companies you are talking about usually happen on the OTCBB or Pink Sheets not on NASDAQ listed companies.
posted by josher71 at 12:14 PM on October 30, 2011
posted by josher71 at 12:14 PM on October 30, 2011
Response by poster: Regarding the investor relations firm, I have not contacted them. I'd assume that they would have nothing but positive things to say about the company given them being employed by said company.
posted by gibbsjd77 at 12:17 PM on October 30, 2011
posted by gibbsjd77 at 12:17 PM on October 30, 2011
No, I know they are on the NASDAQ and the more stringent reporting requirements that they have is more comforting to me when wondering about this sort of thing. That's not to say aren't a fraud, but it is harder doing it on a larger exchange.
As to the investor relations company, you are right. They may just be promoters. However, they also might have some insight you wouldn't get otherwise.
posted by josher71 at 12:24 PM on October 30, 2011
As to the investor relations company, you are right. They may just be promoters. However, they also might have some insight you wouldn't get otherwise.
posted by josher71 at 12:24 PM on October 30, 2011
On the other hand, Citron Research is usually right about things...
posted by josher71 at 12:42 PM on October 30, 2011
posted by josher71 at 12:42 PM on October 30, 2011
@josher There have been a number of fraudulent companies that have managed to get themselves listed on reputable western stock exchanges, including the NASDAQ recently. (Usually they did so by executing some kind of reverse merger with an existing US firm in the case of the NASDAQ I believe). Many of these companies received strong support on a number of well-meaning finance blogs all the way to the bottom. Some of these companies managed to comprehensively fool well-established multinational accountancy practices for years: ultimately, when you're dealing with a corrupt system where you can't even trust the bank statements (because the company board members have co-opted the local wing of the bank in question) all sorts of frauds can go un-discovered for years until they finally blow up because the cash isn't there.
John Hempton at Bronte Capital has been busily making a killing shorting the life out of these fraudulent Chinese stocks for the last year or two at least.
Personally, I would stay far, far away but then I'm risk averse by nature.
posted by pharm at 1:07 PM on October 30, 2011
John Hempton at Bronte Capital has been busily making a killing shorting the life out of these fraudulent Chinese stocks for the last year or two at least.
Personally, I would stay far, far away but then I'm risk averse by nature.
posted by pharm at 1:07 PM on October 30, 2011
Stay away from this company unless you have real, scarce insight into it.
Is it just another Chinese fraud? Probably not.
Is it a legitimate investment? Probably.
Is it a good investment that will make you money? It may or may not be for MANY reasons.
Also, Citron Research is a pump-and-dump scam (since they short the stock and them bad-mouth it I guess they...smash-and-cash? buffet-and-profit?). That's not to say they're wrong since they do pick lucrative targets, but they certainly don't have the public's interests in mind so much as their own. Your uninformed investment is a tool used to make other people money, so please be careful.
posted by michaelh at 2:21 PM on October 30, 2011
Is it just another Chinese fraud? Probably not.
Is it a legitimate investment? Probably.
Is it a good investment that will make you money? It may or may not be for MANY reasons.
Also, Citron Research is a pump-and-dump scam (since they short the stock and them bad-mouth it I guess they...smash-and-cash? buffet-and-profit?). That's not to say they're wrong since they do pick lucrative targets, but they certainly don't have the public's interests in mind so much as their own. Your uninformed investment is a tool used to make other people money, so please be careful.
posted by michaelh at 2:21 PM on October 30, 2011
I think you should pick your words a little more carefully michaelh. If Citron honestly believes their research then there's no scam. Yes, they profit from publishing it & driving the stock down as a consequence having shorted it, but that's entirely legitimate activity. It would be a scam if they were publishing dishonest research on companies in order to profit from their shorts, but there's no evidence that this is the case.
posted by pharm at 2:31 AM on October 31, 2011
posted by pharm at 2:31 AM on October 31, 2011
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posted by josher71 at 12:13 PM on October 30, 2011