Thursday, February 03, 2011

"CCME" spells "wow"

CCME In the Headlines!

What a day for CCME, my comments this morning were only a pre-cursor to today's action. A firm called "Muddy Waters" either:
  1. sang the blues today about CCME or
  2. Muddied the Waters
I don't have access to what they wrote, but suffice it to say the stock dropped from a hair over $16 to a hair over $11 in just a few hours.

Here are some headlines
I am not a stock advisor, and surely CCME is not without risk. But to re-state my comments in my prior post, I find it difficult to believe that they are as fake as is being suggested. The problem is that people are very antsy regarding the Reverse Merger Chinese stocks because they are so foreign. Of course the other problem is that a few of them have been frauds, so investors are very easy to stampede. I did put my money where my mouth is and bought a bit more (I had sold some shares at $17+ and $19+). I will not include it in my MFI portfolio as I already have a full boat of CCME in that portfolio.

The one thing that Muddy Waters is very clear about is that they are short CCME (as was Citron). So essentially, they have a ton of financial incentive to sow fear with innuendos and half truths. Could they be right? Of course they could, to some extent. But ask yourself, "why do they publish these reports several days after this headline: CCME: The Biggest Short Squeeze of 2011?"

To help the poor uninformed investor? I think not...

The day does make me understand why MagicDiligence just gave up on these stocks, they are clearly too volatile for the average investor. But I'd suggest for those with a longer time horizon and a stomach for some ups and downs and the ability to diversify a bit amongst the stocks that there are some very "satisfactory" profits to be made.

I do have my eye on a new MFI stock: CATO. I do have a chunk in cash, so I may pull the trigger in February, but I may wait for my next stock to mature in early March (KSW).


Homer315 said...

Check out the CCME write up on VIC, and especially the robust discussion in the comments section.

Marsh_Gerda said...

Homer/Al, I saw the # of comments but could not read them. I did find this website that had a lot of interesting info:

He raised a very interesting point about the short attack - it has been done over the Chinese New Year, so they gambled that CCME would be slow to respond. I feel terrible for people who sold in panic, but I believe it was a terrible mistake to sell.

Homer315 said...

An article from suggested that a lot of brokers raised their margin requirements on CCME mid-day from 30% to 80% and that a lot of sellers were involuntary sellers.

Half the comments on VIC were stating that the risks were too high that many of these chinese stocks were frauds, while the other half were basically defending them saying that, at least in the case of CCME, there has been little actual, you know, proof, that there is fraud -- as opposed to allegations and conclusions based on cherry-picked facts.

I don't own it, and doubt I will buy it any time soon.

Marsh_Gerda said...

good reason not to use margin...