Tuesday, July 5, 2011

Big Investor Actually Bullish on China RTOs

Interesting to see a hedge fund manager actually bullish on Reverse Takeover (RTO) China stocks. Peter Siris is a partner at Guerilla Capital Management and has been an investor in China stocks for a long time. What gives him street creed in the current environment is that he has been short several China stocks including Longtop Financial (LFT ) that recently blew up.

He didn't talk about Puda Coal (PUDA) in this interview, but he is an investors in the stock so he has done some due diligence on the company and likely visited them. PUDA should be announcing some news shortly on the $12 buyout offer from the Chairman. PUDA was a big investment in our Opportunistic portfolios so we're hopeful that Peter is correct. The $12 buyout would be much better than nothing, but we're still looking for a higher price.

After a very one sided market, its nice to see somebody like Peter on CNBC's Strategy Session backing up my theory that the surviving China stocks will trade up. Many of the announced manager buyouts will be completed this year according to him. He also expects 5 more announcements in the next few weeks. It wouldn't surprise me to see Lihua International (LIWA) to get an offer though I can't find any evidence that Guerilla is involved in this stock.

Watch the video. If anybody takes Muddy Waters at face value, you have to also take this point of view as well. Finally somebody providing the other side of the story. Peter actually had an interesting point on the auditors that I had not heard before. Supposedly a lot of the big investors chose the auditors so its more a matter of the auditors becoming overwhelmed then the company choosing an auditor to give them a favorable opinion.







Disclosure: Long LIWA and PUDA in client and personal accounts. Please read the disclaimer page. This post is for informational purposes only and should not be construed as personal investment advice. 





2 comments:

Anonymous said...

PUDA BETTER GET A BUYOUT OR ZHAO IS GOING TO PRISON FOR LIFE. HOWEVER, I TRULY EXPECT PUDA TO FINALIZE AN OFFER EVEN HIGHER THAN $12 WHEN ALL SAID AND DONE. THE LAWYERS ARE THE REASON FOR THE HOLD UP. I HAVE BEEN TOLD THE LAWYERS ARE EXPECTING NEXT WEEK TO BE A "PLEASANT WEEK" - SO THIS FITS INTO WHAT PETER SIRIS WAS SAYING ABOUT COMPLETED BUYOUT COMING UP.

Mark Holder said...

PUDA is clearly worth much more than $12 and the BOD should be sued accepting only $12, but I'm afraid that most investors will be happy to just get out with that price. My investors on IB are seeing only $3 in their accounts so I'm getting to the point that getting out with $12 would make my investors happy. Though I won't be happy with anything below $15. Something closer to the highs is justified and would likely make most investors satisfied. Its good to see an investor like Siris in PUDA as it gives me more confidence that US investors have some large firms pushing for a fair deal. Also, it wouldn't surprise me to find out that Siris got in on the secondary at $12. Clearly those investors won't be happy with just $12.

We shall see soon.