So just who buys these things? (RINO, DGW, CVVT, CHC, ABAT, YONG, HEAT)

Given the obvious red flags surrounding all Chinese companies that have snuck their way onto US exchanges through the reverse merger back door (something the SEC is finally waking up to, read more here), one question to ponder is who in the world was (and is) actually buying these pieces of trash? Some, like CAGC apologist, Jesse Glickenhaus, are delusional, others seem far more professional.

One investor in many of these deals is a firm in Switzerland known as Sustainable Asset Management, or SAM Group. This firm offers investment products designed to appeal to a certainly Western liberal sensibility. Yes, the old canard of “socially responsible” investing has returned, under the guise of  “sustainability.” At least the investors who put money into such funds to assuage their misplaced Western liberal guilt, can sleep well knowing that even though they are likely to lose money, they have done “good” for the world. Certainly firms like SAM have latched onto a trend, and have raised significant sums to invest in just such a manner. But can transferring capital from investors to Chinese crooks really bring about any social good? Perhaps the focus on “sustainability” blinds the managers at SAM to actual due dilligence?

Based on the most recently available 13F, SAM was a huge investor in RINO International (RINO), holding over 1.6mm shares at one point and being caught in the RINO collapse. SAM liquidated all of their RINO shares in the last quarter of 2010. Any takers on a bet that they only sold after RINO was halted? Read more about RINO here.

SAM is the largest outside investor, holding over 10% of the outstanding shares in Duoyuan Global Water (DGW), sister company to GMB‘s now delisted Duoyuan Global Printing (DYNP). Even after DYNP was exposed as a scam, SAM added to its position in DGW. Read more on DGW here.

SAM holds over 8% of China Valves Tech (CVVT) a Ping Luo promoted stock and the subject of a thorough debunking by Citron Research, available here. SAM is the second largest holder of CVVT. The folks at Sustainable also own over 1.3mm shares of another Ping Luo favorite, China Hydroelectric (CHC).

SAM owns over 3.4mm shares of Advanced Battery Technologies (ABAT), making them the third largest holder. Amazingly, SAM managed not to buy any shares in ABAT’s sister Chinese reverse merger battery company China Lithium (CLTT), with which it shares an address in NYC’s Garment District.

Sustainable also holds over 1.4mm shares of Yongye Int’l (YONG) making them the fourth largest holder. YONG is one in a long line of scandal plagued small cap Chinese fertilizer companies going back to Bodisen Biotech (BBCZ), and now including China Green Agriculture (CGA) and Gareth‘s own, halted, China Agritech (CAGC).

SAM appears to have been building a position in another Chinese reverse-merger wonder, SmartHeat (HEAT) in the last quarter of 2010. They bought 700,000 shares, making them the number nine holder.

When the new 13F filing comes out, investors can see whether or not SAM has learned the lesson. Investments in Chinese dreck are not so sustainable after all.

The content contained in this blog represents only the opinions of the author. The author may hold either long or short positions in securities of various companies discussed in the blog. This commentary in no way constitutes investment advice, and should never be relied on in making an investment decision, ever. This blog is not a solicitation of business: all inquiries will be ignored. The content herein is intended solely for the entertainment of the reader, and the author.
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2 comments

  1. ROTFL!! This is what one of their analysts have to say about his experience at SAM. (http://www.sam-group.com/htmle/about/career/voices.cfm)

    Can someone translate these?

    “I started my career at SAM Research as an intern, working towards the completion of my master’s thesis on the relationship between corporate sustainability performance and a wide range of corporate financial performance metrics.”

    “Initially, I generally worked on how we integrate sustainability considerations into our fundamental valuation process, before focusing on actual equity analysis.”

    “On the other hand, I am required to continuously think about the sustainability issues that are likely to surface going forward and how these will impact the companies under my coverage.”

    “In my role as Senior Portfolio Manager, I am responsible for running sustainability equity portfolios. ” OOPS!!

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