Doesn't get much more interesting to watch than this.
Soon after Muddy Waters makes some big allegations about Sino-Forest Dundee Securities analyst Richard Kelertas tells us what he thinks of the report:
"Carson Block, the now notorious author of the Muddy Waters report that aimed to take down Sino-Forest Corp., held a conference call on Monday night to support his research. On Tuesday, Dundee Securities analyst Richard Kelertas, who vehemently disagrees with Mr. Block’s allegations, decided it was fitting to do just the same.
Mr. Kelertas didn’t mince his words. From the get-go his goal was to explain “why Muddy Waters’ research is a pile of crap,” and he went about his attack by addressing specific issues that Mr. Block has raised.
The two key topics were Sino-Forest’s "authorized intermediaries" (AIs), and the documents that Mr. Carson allegedly uncovered from China’s State Administration for Industry and Commerce (SAIC).
Regarding the AIs, Mr. Block has said that they are used to concoct revenues and that they make it hard to track cash flows. In his rebuttal, Mr. Kelertas noted that AIs are common for companies that operate in China, and that Siemens has more than 2,000 of them. That still doesn’t answer why four of the AIs haven’t been named, but this wasn’t his point. Mr. Kelertas wants investors to know that AIs are nothing to be scared about and that they aren’t something the company created to conceal any wrongdoing.
As for the SAIC documents, Mr. Block refers to the ones he obtained in an attempt to prove that the company has lost money in certain areas and that many of its assets are overvalued. However, Mr. Kelertas noted that each of Sino-Forest’s subsidiaries must file a different SAIC, and that they must all be obtained in order paint a clear picture of the company because each report tells a different piece of the total story.
Mr. Block has also mentioned that the SAIC documents don’t match Securities and Exchange Commission documents. That happens, Mr. Kelertas said, because the SAIC files don’t aggregate all of the different holding companies like the SEC ones do.
Mr. Kelertas was resolute in his support. “We’ve spoken to the company on about 20 occasions since this has broken,” he said.
And unlike Mr. Block, who only recently started looking at Sino-Forest, Mr. Kelertas said he has covered the name since 2004 and has known the company since 2000. Moreover, he noted that since David Horsley left the board of directors to become chief financial officer in 2003, Sino-Forest’s level of corporate governance has been very high. "
For the rest of the article:
http://www.theglobeandmail.com/globe-investor/investment-ideas/streetwise/muddy-waters-report-on-sino-forest-a-pile-of-crap-dundee/article2050629/
I'm glad I don't have to pick a side on this one. I watched Mr. Block in a couple of interviews and I'm pretty sure I wouldn't let him hold $5 for me. On the other hand every company he has "outed" showed him to be credible.
More to come in the next few weeks to be sure.
Soon after Muddy Waters makes some big allegations about Sino-Forest Dundee Securities analyst Richard Kelertas tells us what he thinks of the report:
"Carson Block, the now notorious author of the Muddy Waters report that aimed to take down Sino-Forest Corp., held a conference call on Monday night to support his research. On Tuesday, Dundee Securities analyst Richard Kelertas, who vehemently disagrees with Mr. Block’s allegations, decided it was fitting to do just the same.
Mr. Kelertas didn’t mince his words. From the get-go his goal was to explain “why Muddy Waters’ research is a pile of crap,” and he went about his attack by addressing specific issues that Mr. Block has raised.
The two key topics were Sino-Forest’s "authorized intermediaries" (AIs), and the documents that Mr. Carson allegedly uncovered from China’s State Administration for Industry and Commerce (SAIC).
Regarding the AIs, Mr. Block has said that they are used to concoct revenues and that they make it hard to track cash flows. In his rebuttal, Mr. Kelertas noted that AIs are common for companies that operate in China, and that Siemens has more than 2,000 of them. That still doesn’t answer why four of the AIs haven’t been named, but this wasn’t his point. Mr. Kelertas wants investors to know that AIs are nothing to be scared about and that they aren’t something the company created to conceal any wrongdoing.
As for the SAIC documents, Mr. Block refers to the ones he obtained in an attempt to prove that the company has lost money in certain areas and that many of its assets are overvalued. However, Mr. Kelertas noted that each of Sino-Forest’s subsidiaries must file a different SAIC, and that they must all be obtained in order paint a clear picture of the company because each report tells a different piece of the total story.
Mr. Block has also mentioned that the SAIC documents don’t match Securities and Exchange Commission documents. That happens, Mr. Kelertas said, because the SAIC files don’t aggregate all of the different holding companies like the SEC ones do.
Mr. Kelertas was resolute in his support. “We’ve spoken to the company on about 20 occasions since this has broken,” he said.
And unlike Mr. Block, who only recently started looking at Sino-Forest, Mr. Kelertas said he has covered the name since 2004 and has known the company since 2000. Moreover, he noted that since David Horsley left the board of directors to become chief financial officer in 2003, Sino-Forest’s level of corporate governance has been very high. "
For the rest of the article:
http://www.theglobeandmail.com/globe-investor/investment-ideas/streetwise/muddy-waters-report-on-sino-forest-a-pile-of-crap-dundee/article2050629/
I'm glad I don't have to pick a side on this one. I watched Mr. Block in a couple of interviews and I'm pretty sure I wouldn't let him hold $5 for me. On the other hand every company he has "outed" showed him to be credible.
More to come in the next few weeks to be sure.
