We are looking for moderators. If you would like to help moderate this board, please use the 'request to moderate board' link at top left and you will receive a confirmation that you have been added as a Co-Moderator. As a moderator you will have the ability to oversee discussions and make sure all posts are relevant.

You will also have the ability to add an advanced description for the stock. This is particularly useful if there are aspects of the company that you want to highlight and help others learn about the company's objectives. Photos and pictures are welcome. Don't be shy. Become an integral member of GEO's Culture

Hope you had a great vacation. Yes.. we are hot on the China Natural Gas (OOTC:CHNG) case.. Who is this consortium!!!!!!!!  It looks like there is an organization that is bringing deals to PE firms so they can collect their finders fee.. That would be our initial guess.

Regarding short squeeze.. that assume that there will be no sellers. I doubt this very much. I am more concerned about the game continuing if the PE firm comes back with a higher price!!!!!!!!!!!!!!!!  We will need to help with their homework.

Just got back from vacation. Great explanation on this one. I am looking to re-short it as well, and I am wondering maybe it is a good idea to write to the PE firm and ask them to search CHNG on baidu.com.

However, I am pretty concerned with the short interest. It has been on REGSHO for 5 days, and it is likely that a bad squeeze could happen and raise the price to beyong $4.25.

http://www.bloomberg.com/news/2011-07-06/nasdaq-threshold-securities-for-july-5-table-.html?cmpid=yhoo

I don't understand why naked short interest start to hike on the day when it announced the buyout? Won't that scare at least some shorts to cover?

Gomi, .. I forgot about the momo players. That is the real danger. Orsus Xelent Technologies (AMEX:ORS) is a case and point.  But we are just one Muddy or Citron piece away from reality sinking back into this market.  

Whitetiger, this is a great take.  I especially like the point that PE firms will try to buy anything below 3 PE.  I believe many PE firms today act with the same competency as textbook value mutual funds.  If this deal goes through, then it would be so ironic because public info has escaped private equity.  Institutional drones are capable of any level of ignorance.

The people to fear are not only PE's gobbling up low PE frauds, but also the legions of momentum traders out there who will see oversold + short squeeze possibility + break toward upward trend indicators.  Value guys at least would stop at 6-8 PE given all the risks, but these guys could take things higher.  THEN, once things go higher, there will be the third group - guys who sat out start to think these frauds are real (only because the price went up).

Not suggesting any of this will happen, but mentalities are out for sharp reverses toward the upside.  Shorting very selectively, and shorting smaller amounts and more as price rise as you suggest makes a lot more sense at this point.  

It would also take a lot of continuous hit pieces from the community to keep sharp reverses from taking place.  I guess we all have to constantly remind ourselves that we are fighting against the innate long bias of markets and be aware of all the dangers.

Muscleman. The lawsuit is standard in many buyout  proposals. The lawyers throw the lawsuit out there in hopes that some investors will take the lead on the case. I think if you were to look at many of these cases, even in the U.S., you will see this.

Now let's discuss China Natural Gas (OOTC:CHNG). There are some key issues to ponder:

1. Prices  normally sell at a discount to the buy out price. I would expect CHNG to fall from current prices as the saga continues.  We may consider being more aggressive with our short position. There is very little risk,as long as this deal does not happen above $4.25.

2. Who approached who in this deal? I would not doubt it if the company made the introduction. If so, has the PE firm done proper DD yet?

3. The key question in these buy outs is not whether the company is a fraud. It is more of how real is the company?  So, if CHNG is 50% real then maybe it has some value to a risk seeking PE firm.

4. Sure, the credentials of this PE firm may be impressive. But these institutional firms continue to fall into the same ignorant trap. I will bet any amount of money that they have believed the paper CHNG has provided to them. So in the end, i  believe they could get duped at some point if they execute this deal.  There appears to be so much misrepresentations by CHNG management that it is mind boggling the PE firm picked this company as their first deal.  We are working hard on the CHNG case and  are discussing issuing a more comprehensive report.

5. Will the PE firms be able to take exChinaHybrids  public in HK?  They better really consider this issue. Muddy Waters attack on Sino-Forest (OOTC:SNOFF) has shown that ChinaHybrid fraud is not just on U.S. soil.  If HK starts getting hit I doubt regulators will allow firms like CHNG to list. I actually read an article stating something like this. It basically said that none of the RTOs would have had a chance listing in HK.I will reveal some quotes from this article soon.

6. The ignorance of the PE firms will make the short game risky across the board for stocks selling between P/Es under 3. PE firms will be willing to create diversified portfolio of China RTO wasteland stocks, with their ignorant money and hope to  bat 30 to 50%.  The successful deals will be with those where tax fraud is the main issue (or where there are not issues).

We all knew this day was coming. For us, we will be very careful shorting companies with P/Es of less than 5, unless we have some solid DD. When the P/Es rise some more, we will be more aggressive with our shorts. Right now we are also attempting to find some legit firms. But remember, we are only one hit piece (truth piece) away from the space resuming an aggressive move to the downside.

This is clearly a fraud company, so why would someone want to buy it out for $4.25?

Today I see some lawyers investigating the unfairness of this deal. They are asking for a higher price, and the stock price falls instead of rises. I am confused why this would happen. Shouldn't this news support the price to be at least $4.25?

From your risk analysis section, I see this one's revenue not matching, but where can I see the original SAIC filings?

Even from their SEC filings, I can smell something fishy. Their interest income dropped over 90% from 2010 Q1, but cash balance is only slightly down. We all know that China interest rate is rising in the past year, so this is not possible unless that cash item is fake.