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http://www.bloomberg.com/news/2013-11-19/oberweis-defies-muddy-
Oberweis Defies Muddy Waters by Doubling Down on NQ
By Matthew Kanterman & Dune Lawrence - Nov 19, 2013 1:38 PM PT
Jim Oberweis, whose China-focused fund is the best performer this year, said
he’s doubled his stake in NQ Mobile Inc. (NQ), betting that claims by
Muddy Waters LLC about the company’s finances are unfounded.
Oberweis Asset Management Inc. increased its holding to 1.8 million shares
of NQ Mobile, from 990,894 on Sept. 30, he said in a telephone interview on
Nov. 18 from Lisle, Illinois. This would make the firm the second-largest
shareholder with a 5.8 percent stake, according to data compiled by
Bloomberg. His China Opportunities Fund has returned 53 percent this year.
The share purchases, which follow those by fund managers including Altimeter
Capital Management LLC and Toro Investment Partners LP, show how some
investors are seeing consumer companies benefiting from China’s growing
middle class. Shares of the mobile-service provider have tumbled 42 percent
since Muddy Waters, the research firm founded by short seller Carson Block,
said NQ Mobile inflated sales and misrepresented cash balances. The company,
which has headquarters in Beijing and Dallas, has denied the claims.
“When you look at the business prospects, their position in the marketplace
, their ability to start to monetize and most importantly, the valuation,
the valuation, the valuation, the business begins to look pretty compelling,
” said Oberweis, who flew to Beijing after the Muddy Waters report was
published.
Carson Block said by e-mail yesterday that he stands by his sell call on NQ
Mobile.
’Massive Fraud’
The first sentence of the 81-page report by Muddy Waters on NQ Mobile on Oct
. 24 said: “NQ is a massive fraud.” The report went on to say that at
least 72 percent of NQ’s purported 2012 China security revenue is
fictitious.
NQ Mobile denied the allegations, holding a two-hour conference call on Oct.
25 with analysts and investors in which it detailed its financial statement
and answered questions about Block’s accusations.
NQ Mobile’s market capitalization has dropped to $695.4 million as of Nov.
19 from $1.2 billion on Oct. 23, the day before Block published his sell
recommendation. The decline sent valuations to 10 times estimated earnings,
down from a multiple of 18 last month.
The report also alleged that Tianjin Yidatong Technology Development Co., NQ
’s largest trade debtor, is controlled by NQ and not an independent company.
Yidatong’s owner Xu Rong said in an interview that the Muddy Waters report
isn’t accurate, and that her company has no relationship with NQ Mobile
besides a contract to process online payments from mobile subscribers.
Beating Competitors
“I met personally with Xu Rong,” Oberweis said. “She knows what is going
on, she understands the business, she is very clear. My guess is she was
friends with the NQ people and was able to leverage that relationship to
make some money.” This relationship doesn’t constitute a fraud, he said.
Oberweis’s China Opportunities Fund (OBCHX) has beaten all competitors in
2013 and over the past five years, according to data compiled by Bloomberg.
He invests in small-capitalization companies. The “magic formula” has been
buying into entrepreneurial companies in industries serving China’s
growing consumer market, he said.
Altimeter Capital increased its holdings to 6.1 percent of shares
outstanding from 1.5 percent, becoming the largest shareholder in NQ Mobile,
according to a regulatory filing on Nov. 13. Toro Investment owns 4.9
percent and Chinarock Capital Management disclosed a 5.5 percent stake.
Stake Doubled
Oberweis’s China Opportunities Fund more than doubled its stake in NQ
Mobile to 540,000 shares as of Nov. 18 from 260,000 on Sept. 30, the fund
manager said.
In the past two weeks, Oberweis has added to holdings in 21Vianet Group Inc.
(VNET), which operates data centers in China, and Hong Kong-listed China
Modern Dairy Holdings Ltd. (1117), which he visited on his recent trip there
. His father owns, and his brother runs, Oberweis Dairy Inc., which has a
chain of stores in Chicago and St. Louis.
While the technology and dairy industries are very different, they both
benefit from growing consumer demand, according to Oberweis.
“People don’t understand the growth potential,” he said. “They’re
focused around the rising spending power of the middle class in China, and
there’s a mismatch between supply and demand.”
NQ Mobile is now the largest position in five of six Oberweis funds, he said.
Beating Profit
The company posted profit that beat analyst estimates on Nov. 12, boosted by
sales of game software. Net income more than doubled to $17.4 million in
the third quarter, from $8.13 million a year earlier, NQ Mobile said in a
statement. The average of five analyst estimates compiled by Bloomberg was $
16.2 million.
“It says something that they released their earnings on time,” Oberweis
said. “I don’t think Pricewaterhouse would let them if they had
significant concerns.” PricewaterhouseCoopers LLP is the auditor for NQ
Mobile’s financial statements.
Block said in an interview with Bloomberg Television on Oct. 25 that NQ
Mobile will go the same way as Sino-Forest Corp., the Chinese plantation
company listed in Canada that filed for bankruptcy protection last year
after Muddy Waters said it exaggerated revenue.
“We welcome any third party the opportunity to check the company cash,”
Matt Mathison, the vice president of capital markets at NQ Mobile, said in
the Oct. 25 conference call. “The truth and the facts are on our side.”
Oberweis and his staff verified the bank accounts by going to Standard
Chartered Bank with employees of NQ Mobile. Bank employees printed out a
letter confirming the deposits and showed it to them.
“I found that, step by step, most allegations made by Muddy Waters are
really easy to disprove, the most important one being the cash,” he said.
“The money is there and this illusion that there is no cash is completely
false.”
To contact the reporters on this story: Matthew Kanterman in New York at
m*********[email protected]; Dune Lawrence in New York at [email protected]
.net
Oberweis Defies Muddy Waters by Doubling Down on NQ
By Matthew Kanterman & Dune Lawrence - Nov 19, 2013 1:38 PM PT
Jim Oberweis, whose China-focused fund is the best performer this year, said
he’s doubled his stake in NQ Mobile Inc. (NQ), betting that claims by
Muddy Waters LLC about the company’s finances are unfounded.
Oberweis Asset Management Inc. increased its holding to 1.8 million shares
of NQ Mobile, from 990,894 on Sept. 30, he said in a telephone interview on
Nov. 18 from Lisle, Illinois. This would make the firm the second-largest
shareholder with a 5.8 percent stake, according to data compiled by
Bloomberg. His China Opportunities Fund has returned 53 percent this year.
The share purchases, which follow those by fund managers including Altimeter
Capital Management LLC and Toro Investment Partners LP, show how some
investors are seeing consumer companies benefiting from China’s growing
middle class. Shares of the mobile-service provider have tumbled 42 percent
since Muddy Waters, the research firm founded by short seller Carson Block,
said NQ Mobile inflated sales and misrepresented cash balances. The company,
which has headquarters in Beijing and Dallas, has denied the claims.
“When you look at the business prospects, their position in the marketplace
, their ability to start to monetize and most importantly, the valuation,
the valuation, the valuation, the business begins to look pretty compelling,
” said Oberweis, who flew to Beijing after the Muddy Waters report was
published.
Carson Block said by e-mail yesterday that he stands by his sell call on NQ
Mobile.
’Massive Fraud’
The first sentence of the 81-page report by Muddy Waters on NQ Mobile on Oct
. 24 said: “NQ is a massive fraud.” The report went on to say that at
least 72 percent of NQ’s purported 2012 China security revenue is
fictitious.
NQ Mobile denied the allegations, holding a two-hour conference call on Oct.
25 with analysts and investors in which it detailed its financial statement
and answered questions about Block’s accusations.
NQ Mobile’s market capitalization has dropped to $695.4 million as of Nov.
19 from $1.2 billion on Oct. 23, the day before Block published his sell
recommendation. The decline sent valuations to 10 times estimated earnings,
down from a multiple of 18 last month.
The report also alleged that Tianjin Yidatong Technology Development Co., NQ
’s largest trade debtor, is controlled by NQ and not an independent company.
Yidatong’s owner Xu Rong said in an interview that the Muddy Waters report
isn’t accurate, and that her company has no relationship with NQ Mobile
besides a contract to process online payments from mobile subscribers.
Beating Competitors
“I met personally with Xu Rong,” Oberweis said. “She knows what is going
on, she understands the business, she is very clear. My guess is she was
friends with the NQ people and was able to leverage that relationship to
make some money.” This relationship doesn’t constitute a fraud, he said.
Oberweis’s China Opportunities Fund (OBCHX) has beaten all competitors in
2013 and over the past five years, according to data compiled by Bloomberg.
He invests in small-capitalization companies. The “magic formula” has been
buying into entrepreneurial companies in industries serving China’s
growing consumer market, he said.
Altimeter Capital increased its holdings to 6.1 percent of shares
outstanding from 1.5 percent, becoming the largest shareholder in NQ Mobile,
according to a regulatory filing on Nov. 13. Toro Investment owns 4.9
percent and Chinarock Capital Management disclosed a 5.5 percent stake.
Stake Doubled
Oberweis’s China Opportunities Fund more than doubled its stake in NQ
Mobile to 540,000 shares as of Nov. 18 from 260,000 on Sept. 30, the fund
manager said.
In the past two weeks, Oberweis has added to holdings in 21Vianet Group Inc.
(VNET), which operates data centers in China, and Hong Kong-listed China
Modern Dairy Holdings Ltd. (1117), which he visited on his recent trip there
. His father owns, and his brother runs, Oberweis Dairy Inc., which has a
chain of stores in Chicago and St. Louis.
While the technology and dairy industries are very different, they both
benefit from growing consumer demand, according to Oberweis.
“People don’t understand the growth potential,” he said. “They’re
focused around the rising spending power of the middle class in China, and
there’s a mismatch between supply and demand.”
NQ Mobile is now the largest position in five of six Oberweis funds, he said.
Beating Profit
The company posted profit that beat analyst estimates on Nov. 12, boosted by
sales of game software. Net income more than doubled to $17.4 million in
the third quarter, from $8.13 million a year earlier, NQ Mobile said in a
statement. The average of five analyst estimates compiled by Bloomberg was $
16.2 million.
“It says something that they released their earnings on time,” Oberweis
said. “I don’t think Pricewaterhouse would let them if they had
significant concerns.” PricewaterhouseCoopers LLP is the auditor for NQ
Mobile’s financial statements.
Block said in an interview with Bloomberg Television on Oct. 25 that NQ
Mobile will go the same way as Sino-Forest Corp., the Chinese plantation
company listed in Canada that filed for bankruptcy protection last year
after Muddy Waters said it exaggerated revenue.
“We welcome any third party the opportunity to check the company cash,”
Matt Mathison, the vice president of capital markets at NQ Mobile, said in
the Oct. 25 conference call. “The truth and the facts are on our side.”
Oberweis and his staff verified the bank accounts by going to Standard
Chartered Bank with employees of NQ Mobile. Bank employees printed out a
letter confirming the deposits and showed it to them.
“I found that, step by step, most allegations made by Muddy Waters are
really easy to disprove, the most important one being the cash,” he said.
“The money is there and this illusion that there is no cash is completely
false.”
To contact the reporters on this story: Matthew Kanterman in New York at
m*********[email protected]; Dune Lawrence in New York at [email protected]
.net
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3 楼
那么多好股票，你为什么要买它，如果这是你炒股的套路，这种股票也是你的最爱，你
这次赚了，下次就得赔上去，而且会赔得更多。
这次赚了，下次就得赔上去，而且会赔得更多。
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