Nowadays when I look at a company I ask myself:
- What would a good legitimate business look like?
- What would fraud look like?
This post attempts to answer question #2.
Advertisements
stocks
Liberator Medical’s “investor relations” firm
(This is not an actionable idea.)
Libertor Medical (LBMH) is a direct-to-consumer medical products supplier with a $224M market cap.
The investor relations page of Liberator’s website shows that Wall Street Resources (WSR) is Liberator’s IR firm for non-institutional investors. WSR is very unusual for an “investor relations” firm. The WSR website boasts:
Since inception on March 13, 2009 our Trading Alerts have resulted in a 109% average annualized return. This means $100,000 invested on 3/13/2009 would have grown to $1,477,162 on 9/30/2013.
Golly, I am sure that WSR is doing a wonderful job as an “investor relations” firm and that those associated with WSR are compounding money at 109% and are on their way to becoming millionaires.
2013 Year in review and my plan for 2014
My portfolio was largely:
- Long US stocks. This did fine as Altisource (ASPS) was one of my largest positions.
- Short US stocks. Unsurprisingly, I lost money here.
- Long volatility/options.
- Long Canadian junior mining stocks. I am slightly profitable here despite the bloodbath in the TSX Venture.
I lagged the S&P 500 index but still had a profitable year.
Chinese stocks and ICP numbers
Chinese Internet users face restrictions as to the websites that they can and cannot visit as China censors the Internet. It makes sense for Chinese companies to get an ICP number/license to ensure that its customers can easily visit its website without having to circumvent the ‘Great Firewall of China’.
When performing due diligence on Chinese stocks, I want to see that its website has an ICP number/license. Chinese websites will typically display the number at the very bottom of its webpages. Remember to check the Chinese version of a site as the English version may not show the ICP number.
China Information Technology (CNIT): A case of multiple personality disorder?
CNIT is a very curious company. On September 4, 2013 it issued a press release titled “China Information Technology, Inc. Entered Into Exclusive Cooperation Arrangements with Biznest Internet &Software Co.” (see the 6-K filing). One might be led to believe that Biznest Internet & Software is an independent company.
However, the domain registrations involved with Biznest show chinacnit.com email addresses.
If a junior miner funds something other than its flagship deposit, watch out!
Nowadays when I look at a stock, I ask myself:
- If the company was legitimate, what would it be doing?
- If the company was a scam, what would it be doing?
I will no longer say what I truly think about potentially fraudulent companies
Regulators everywhere (not just Canada) seem to have a history of going after those who expose fraud. I need to be more careful (e.g. apparently Canadian libel laws suck). So from now on, I won’t be so explicit.
