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Strategies & Market Trends : Value Investing
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From: MCsweet8/12/2011 2:49:06 PM
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I think I have either a totally brilliant contrarian play or a totally dumb idea:

CCM. Medical/hospital company leasing medical equipment and looking to run private hospitals. NYSE listed. Price of 4.10 from a busted IPO. PE of 10ish, below book, with good level of cash (which will be spent on expanding its business), share buyback last year, expected earnings growth, partnering with GE medical, and special dividend of 0.18 at the end of this month.

Now in case I possibly have you interested, here's the catch. It is a Chinese company (the private hospitals are in China) and audtior Ernst & Young has said that the CCM's accounting unit had a lack of appropriate staff with required knowledge of US accounting, which means that the company did not have effective internal control over financial reporting. Supposedly this is a fairly common problem for China-based companies listed in the US (at least according to the Reuters blurb).

IPO sponsors were JPM and Morgan Stanley, so it is not a reverse merger. I'm in for some. Having IPO sponsors and a due diligence process there is much better than just a reverse merger (although no guarantee). What convinced me is that the company has/is spending real money on shareholders the past two years. Money talks ...

MC
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