Interesting debate on Chinese Reverse Mergers between Herb Greenberg and David Gentry, president and CEO of RedChip Companies. Its interesting because of my investments in Puda Coal (PUDA) and Liwa International (LIWA) that fall into this category though they appear to be of the higher quality. The Chinese reverse merger sector is just as scary as any microcap US stock. They've got issues, but it doesn't appear to be as widespread as Herb suggests.
Regardless, the investment total in my models has been kept low via diversification which is always the key when investing in small companies in the first place whether China based or not. The US isn't that much better then China regardless of what people think.
Interesting theater so its worth watching..... Have to agree with the guy from RedChip that Herb is focusing on the wrong stuff and not the hard facts. Has he been to China to view the factories or not? Claiming all reverse mergers are fraud is just a horrible generalization. Very few frauds have actually been identified to date and plenty of analysts have been to visit factories in China to research them.
Disclosure: Long PUDA, LIWA