hi d.o.g,
Thanks for sharing your experience on CMZ. Since you were invested in CMZ until last year, may i hopefully ask whether you were physically around in at least 1 of the AGMs in the last 2 years? (if you were, i might have caught a glimpse of...!)
Jokes aside, there are a couple of things that puzzles me. IMO, Glaucus did not really do as much forensic auditing as the more well known ones like Muddy Waters did. In pg5 of their report as they have mentioned, the main bulk of their evidence came from matching SAIC records to the prospectus to debunk their top customer and top supplier via mismatched incorporation/deregistration dates. I believe these SAIC are publicly available documents (could be free or require a fee) and if these mismatches are true, i find it extremely alarming of the POOR QUALITY of the UNDERWRITER/AUDITOR DURING IPO.
To date, the majority of S-chips that exploded were the ones with Mgt as majority shareholders, ie. they had more incentive to window dress their company and then cash it via IPO. For CMZ, prior to IPO, Mgt had a stake of 9.2%, which subsequently reduced to 7.1% after IPO (pg 93 in prospectus) and they DID NOT sell any shares. The majority shareholders were the 2 PE funds and GIC who reduced their IPO stakes. If Mgt had earned their money, it wasn't largely through IPO but through selling their stakes to the 2 PE funds/GIC way before IPO. Why would Mgt continue to act out their script through to IPO and beyond the years? Were they in collaboration with the biggest winners (ie. the PE funds and GIC) to complete the show?
As d.o.g has mentioned many times - If one were in the shoes of Chairman Lim and the rest, is it more lucrative to commit fraud OR to continue to manage CMZ profitably with a manner of integrity?
(26-08-2013, 09:58 PM)d.o.g. Wrote: [ -> ]I realized this last year and got out. The loss was painful, but I've had worse. With Minzhong I broke 3 simple rules of thumb. It had a limited track record, the managers were not the largest shareholders, and the business model consumed cash instead of generating it. China Minzhong is/was a reminder that I should not try to outsmart myself too often. Rules exist for a reason - to keep us out of trouble! Rules can be broken, but at one's own peril.
(26-08-2013, 10:59 PM)Wildreamz Wrote: [ -> ]Looking beyond everything, damn, that is really good detective work by Glaucus, kudos.
Decided to sell all my S-chips tomorrow.
hi Wildreamz,
About 1.5years ago, CMZ was a popular thread with some of the forumers like dzm87 making a contrarian call. He was one of the sole fellas who was doing so and he too, was dejected. I believe SMOL, Jared Seah posted something along the lines of 'keep your chin up...this is what trains your contrarian instinct, making calls that others wouldn't and blah blah blah......'. In the next 6 months, CMZ rosed by about 80-100%.
By relating this, i am not making a call that this will be so. But through the lessons of history and also practising some so-called 2nd level thinking (borrowed from the words of Howard Mark of Oattree Capital), do keep your emotions in check and continue thinking and digging.
I do have a vested stake in CMZ as well. I am not trying to make you feel better. I have lost as much as many other forumers previously. I look forward (excitingly in fact) to how the CMZ Saga will unfold because i find it pretty incredible in terms of how simple the fraud can be uncovered and also how i feel Mgt has greater incentive to make CMZ profitable in many more years to come. I look forward to see how this investment will poke holes into my own investment theory/process. I look forward to see how vulnerable audit systems REALLY are. I look forward to see how the Market reacts. I look forward to making my realized losses 'value for money' on the school fees that i will pay.
