For whatever reason, some Chinese companies listed on foreign exchanges have bad websites.
For example, Yongye links to a press release put out by ambulance-chasing lawyers targeting Yongye.
A week ago, Yongye announced that shareholders approved the going private transaction (8-K filing). This would suggest that the merger has a higher chance of happening than before the vote. There is one less possible scenario as to why the going private transaction might fail for a second time.
Strangely enough, the stock is trading down a week later. I have no idea why this is. Shareholders may soon be paid $7.10 and the stock was previously trading at $7.08/$7.09. Perhaps Mr. Market’s mood swings are taking effect or some weaker merger arb players are panicking. In any case, I am closing a portion of my short position in Yongye. The $7 Jan 2016 puts previously trading at a bid/ask spread of $0.00/$0.05. The current spread is $0.30/$0.40. If you had a time travel machine, you could have made several times your money on these puts (before commissions and rebates). (*EDIT: When I talk about time travel, I’m being a little facetious.)
One somewhat similar situation is Fushi Copperweld, covered here on the Bronte Capital blog. Shortly before the going private transaction closed, somebody panicked and the common shares traded down. The transaction ultimately closed and the shorts lost money.
*Disclosure: I own Yongye puts. No position in the common.
(This blog post only explains very minor red flags. I think I see much bigger red flags with Hollysys but I will not explain them. This will be a lower quality post compared to other posts on this blog.)
According to HOLI’s SEC filings, it owns Bond M&E and CE Concord. Hollysys decided to buy one of these companies and then the other. Here’s Google street view showing their neighboring offices:
Apparently there is a new wave of Chinese stocks hitting US exchanges. Some of them are Web 2.0 related. Needless to say, I am extremely skeptical about these Chinese stocks. Historically, there has been an extreme level of blatant fraud from China. This is mainly because these Chinese stocks were listed on foreign exchanges around the world and because scumbags gravitate towards reverse mergers. (To be fair, these China 2.0 stocks are not reverse mergers.) The underwriting of these China 2.0 stocks seem rather loose. They do not have to comply with all parts of Sarbanes-Oxley thanks to the JOBS act. At least 3 of these companies (GOMO, WBAI, WUBA) have identified material weaknesses in their internal controls.
