The Shorting of Frauds, Overhyped and Bankrupt Stocks Journal

Quote from failed_trad3r:

So the uptick rule is good for shorting?? Because short squeeze rallies aren't that big due to there not being a big plunge but a steady sell-off?
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I'm referring mainly to daytrading shorting here, I find that it helps slower traders, people who don't have bloomberg terminals or price action alerts. You have plenty of time to get in shorting because the adjustment is not made right away(Since short sellers can't short at will). It also helps people that trade small size since its easier for you to get your order filled

It fits my personality because it makes the trend really predictable and steady but those are just a few impressions, I could be wrong
 
Quote from Daal:

UAPC XCLL GWBU SEFE AAMRQ PVTA LUXR. The weights are not equal because I started shorting really small positions to get comfortable with this strategy, the shorts I'm adding now are bigger
My goal is to devote something like 5% of my networth to the garbage index with the goal of making something like 60-80%(50% after short fees perhaps) a year in that portion. Margin requirements are bigger than normal stocks. 5% might require something like 20% margin or more, so that is something to take into consideration

That nice thing is that it helps to deal with squeezes. GWBU soared today, it still not a big deal, its just 1 input in the index
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I'd note that if a stock in the index doubles I will probably cover and wait till it loses strength before shorting again
 
Quote from Daal:

Haven't read in detail but its the same BS with these Chinese companies, they always deny everything. Muddy should issue a rebuttal either today or tomorrow
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I haven't read the Muddy Waters report in full, but the thing that jumps out at me immediately is that EDU issued a statement that was very short compared to the 97-page report. ie, they probably didn't address every issue raised by MW.
 
Quote from m22au:

I haven't read the Muddy Waters report in full, but the thing that jumps out at me immediately is that EDU issued a statement that was very short compared to the 97-page report. ie, they probably didn't address every issue raised by MW.
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EDU shows how important to read market action correctly. The reaction had little to do with people believing the rebuttal. It was more like short covering followed by a momentum trend(probably exacerbated by HFT and algos)
 
MS might an example of how no uptick rule affect a stock with bad news. Short sellers wacked the bid all day, the stock reached a level where it attracted value buyers, they jumped in after the stock got upgraded and now are reversing the stock. If there was an uptick rule there, the adjustment might have taken longer and the short sellers would not be able to just jam the stock down all day long. The value buyers wouldn't jump in because their levels wouldn't have been reached

Small sample here but these are just some observations
 
More EDU stuff

* Bloomberg interview with Carson Block
(after the 19 July close in New York; duration 4 mins 19 secs)
http://www.bloomberg.com/video/carson-block-targets-new-oriental-LXdGNzaxSyqW3b1VC9MZag.html

This interview only really covered the franchising aspect of the report. Block's thesis was as follows:

(1) Company previously strenuously denied franchising arrangement
(2) Company backflipped and admitted in recent PR that it does have some franchises
(3) Therefore if it lied about the non-existence of franchises, it may also be lying about the number of company-owned centres (versus number of franchises)

* Interview with Michael Yu, CEO of EDU:
http://finance.sina.com.cn/stock/usstock/c/20120720/031112620145.shtml
http://translate.google.com/

* (shorter) Interview with Michael Yu, CEO of EDU.
http://www.morningwhistle.com/html/2012/China_Stocks_0719/213133.html
Alternative:
http://messages.finance.yahoo.com/S...w?m=tm&bn=51424&tid=3239&mid=3239&tof=4&frt=2

* This article discusses the change to the VIE that took place in January but was only disclosed in July
http://english.caixin.com/2012-07-19/100412800.html
 
What I like about EDU is that the government is already looking at the company. At FSIN I got hurt because even though the company is a total fraud, investors never found out and then they found a crony banker to finance the takeout of the company, I still own puts there but its likely they will expire worthless. FMCN too, has fraud in its books but it might take quite a while for the market to find out

With EDU all it takes is a couple sentences from the SEC and the stock will be at the pink sheets and collapsing huge

An additional catalyst is the fact the SEC has sparred with the auditor of EDU a few times in the past. This just makes it more likely the SEC will halt trading
 
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