Global Hunter Securities, the comedic bottom tier shop just keeps on providing the laughs. GH, the former home of Chinese Reverse Merger High Priestess Ping Luo, and the shop that put out the hilarious Morons or Mega-Morons report, has done it again. Witness the report, dated the 15th of June from Global Hunter’s Joe Giamichael on Yuhe Int’l. (YUII), put out in response to a sharply critical piece from former YUII bulls Geoinvesting (read the Geoinvesting piece here). Here’s the juicy bit from Joe’s defense of troubled YUII:
Earlier this week Geoinvesting.com circulated a report on Yuhe, alleging that the company did not acquire 13 breeder farms from Weifang Dajiang Corporation and misappropriated $12.1MM in the process. The company responded yesterday morning, holding a conference call and investor Q&A to discuss the allegations and providing a number of documents to show that Yuhe did complete this transaction and was now the owner of those farms. While we find Geo’s call with the previous owner of Dajaing farms troubling, we believe that the company has begun to provide adequate documentation to prove that the transaction is valid. In our opinion, the initial response from the company was satisfactory, but we feel the burden of proof remains on the company to provide further documentation; including a notarized letter (or a follow up conference call) from Mr. Zheng confirming the acquisition and providing some explanation as to how such a significant miscommunication could have occurred. We are reiterating our Buy rating and price target of $16.
So Joe G understands that the evidence provided by Geoinvesting is troubling, and that the company needs to provide more proof to substantiate it’s claims, BUT he still thinks it is a buy and worth $16.
We won’t even begin to explain to Mr. Giamichael Yuhe‘s beginnings as a lowly shell called First Growth Investors, Inc. (FGIV). The Geo report describes quite well the now typical pattern of Chinese fraud. Cash that cannot exist given the scarce interest income and seemingly insatiable need for short term loans. Bizarre acquisitions with large cash deposits paid, but that may never have been consummated. The board interlocks with other shady Chinese companies, in this case HOLI, CVVT, and AERL.The sudden resignation of auditors. The ridiculous margins.
So we must ask, once again, what does it take for a company’s shares not to be a buy at Global Hunter?