China Minzhong Food Corporation

[CityFarmer]

In this case, how do you conduct your due diligence?

I can't be 100% sure that CMZ's farmland is certainly there. Even if there's a picture of the farmland, it doesn't certify anything except creating a false sense of security - pictures can be faked as suggested by Huabao Intl. It doesn't need to be a Chinese S-chips to allow fraud to happen.

I think what makes CMZ different (with respect to farmland) is this:
1. They are more transparent in their disclosure - their FY2010 or FY2011 AR has a list of their leased farmland. And they are the only agricultural company (at least from what I know) who makes the effort to do this. Chaoda doesn't and China Green doesn't either. Of course, the list can be a fake. Nobody can guarantee this. But if they truly want to create a fraud then by going through all this means of exposing themselves (by creating a fake list), it's either they want to steal the cash big time or they are genuine. As of date, we know management may have yet to cash out any huge sum at all.

2. They organize site visits to their new processing plant in Putian. They do have site visits to their old Putian plant as well. In fact, I suppose there is an analyst site visit sometime this month but I'm not sure if it was executed. I believe you can request to their IR if you're interested but at my investment level, my cost-benefit weight suggests otherwise.

3. Lastly, Templeton's huge investment stake. Even though their investment is not my primary anchoring factor, it does show a strong signal with regard to CMZ business. I know it can be a free ridership issue but I supposed the mgmt will tackle this similar issue before putting in a huge stake.

But I agree with you, there is always that possibility of fraud just as much as I can't prove against it 100%. But at current level, it is a discomfort level that I am comfortable with.

I certainly won't enter if CMZ was trading at around 80c or even past a dollar. But at around their all-time low, the market has probably priced in too much pessimism?

Sigh, am I the only one for CMZ now? :x

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GAM has ceased to become a substantial shareholder. They had been net sellers ever since 3Q FY12

That remind me on WB quote

"In this game, the market has to keep pitching, but you don’t have to swing. You can stand there with the bat on your shoulder for six months until you get a fat pitch."

When in doubt and the stock investment involve too much of uncertainty, should we just ignore and move on to next one?

The market has plenty of worthy stocks for us to invest time and take advantage of