Greenblatt's Little Book That Beats The Market Message Board

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Strategies & Market Trends : Greenblatt's Little Book That Beats The Market

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To: Shane M who wrote (184)	2/20/2013 10:57:43 PM
From: Jurgis Bekepuris	Read Replies (1) of 218

I don't want to comment much on particular companies, since you mentioned that you don't particularly like discussing the details. However, with YZC my bigger concern would be fraud. Now, clearly not all Chinese stocks are fraudulent, but their high ROE/high margins are suspicious. I can't advise you what to do though. It is hard to detect fraud from outside. There may be some indications, but sometimes there might not be. Furthermore, it's difficult to distinguish fraud from graft (i.e. company using political connections to enrich itself and its management) and/or some other shady dealings. Some of these might enrich all shareholders (including you), some might lead to ruin. Disclaimer: I have been both on the winning side and losing side of Chinese companies with questionable accounting. I still hold CYOU/GAME/PWRD which have the common Chinese internet company problem - they don't directly own their Chinese subs. I have extra hesitation now when/if I buy stock in Chinese companies. If I had to invest in China, I probably would buy TDF or similar fund.

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