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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: JHalperin who wrote (41336)	2/4/2011 10:06:34 AM
From: Jurgis Bekepuris	Respond to of 78530

I have a pretty large position in GFRE, so though the stock is pretty cheap, I have not been adding. There have been some short accusations against GFRE too, but so far they have not been taken seriously. Nobody knows whether there will be a big bear raid on GFRE some time or if it will be spared. If the company is clean, the price is very attractive. If it's not or even if there is a concerted bear-smear campaign, the price will plunge. You have to evaluate for yourself what kind of position you are comfortable holding. After yesterday a number of value investors threw in the towel on Chinese small caps. I did not, but I understand their reasoning. I also think that the shorts are helped by supply-demand imbalance. The number of US-listed Chinese small caps is increasing all the time while the percentage invested in such companies across mutual funds and possibly private investors is not rising at all. Most funds are still USA focused and even the Chinese focused funds are mostly not buying USA listed small caps. Also remember that Chinese indexes were level to down last year, so the momentum crowd also left Chinese equities. So the supply-demand balance is not good for bulls. If China liberalized listing on Chinese exchanges, the situation would change a bit, but right now small caps have very tough time to list in China so they go for the pretty bad market here.

To: JHalperin who wrote (41336)	2/4/2011 12:03:44 PM
From: Spekulatius	Respond to of 78530

re GFRE - >>GFRE is selling at 5x forward earnings, has a sqeaky clean balance sheet (no AR or inventory issues), has a share repurchase program and Big 4 Deloitte is looking them over.<< As far as I know, GFRE has announced a share repurchase plan but has not done any purchases yet. Why? Deloitte is reviewing their procedures. This is not the same than auditing their financials: per press release Sept 10: The objective of Deloitte’s engagement is to assist the Company with an independent assessment of the managerial, operations and internal controls of the Company. The independent assessment will cover the areas of the Company's Corporate Controls, Anti-Fraud Program and Financial Reporting and Disclosure Controls. In addition, Deloitte will provide suggested recommendations to improve any internal control weaknesses, if identified. I am not aware of any results from this audit either. Correct me if I am wrong. The way I look at it, GFRE has failed to follow up with anything they said they would do last year in September. "Watch what they do, not what they say"!....is my rule. Red flag, imo.