Black Clouds over a Chinese maker of solar cells that has seen its stock tumble on reports of an inventory discrepancy, could provide momentous profitable gains in the coming days with audited disclosure of accurate inventory.
The recent bad news for (LDK) has seen it's share price halved due to market uncertainty over recent allegations that the company has overstated silicone reserves. With a recent article from Barron's the stocks share price dropped 25% today alone.
Depending on which news source you read or believe, Charley Situ, former financial controller at LDK sent a parting email to auditors, the SEC and various investment advisers. AP sources state that Mr. Situ was fired in late September, and at the early outset this looks to be a case of "Sour Grapes". Other sources state that Mr. Situ left the company, leaving investors to believe he departed on the "Moral High Ground" on ethical considerations. Whom (or what) to believe?
Key Catalyst:
LDK responded that management's own inventory count found no grounds for the allegations. The company also said an independent auditing firm is working on a separate count, although Lai declined to name that firm. LDK's regular external auditor is KPMG.
KPMG is a conservative, well managed & reputable firm. A report from them would be a "Blue Seal" of approval to the street and analyst that the allegations were misplaced and unwarranted. Such a report would send share of LDK back to trading at record highs in a very short time frame.
A negative report or a change in auditing firms would be seen as a potential and warranted lack of full disclosure and would likely cause share price in the near term to be halved again.
"IF YOU UNDERSTOOD a business perfectly and the future of the business, you would need very little in the way of a margin of safety," ~ Warren Buffett at Berkshire Hathaway's annual meeting in 1997.
In the 12 to 18 month time frame even a negtive report such as this would be priced in to shares providing a measured growth going forward. A strong, clear and comprehensive report would provide a strong catalyst for increase share price valuation.
We have taken a strong position that recent reports of fiduciary malfeasance is misguided and will provide a position of value for our portfolio.
The recent bad news for (LDK) has seen it's share price halved due to market uncertainty over recent allegations that the company has overstated silicone reserves. With a recent article from Barron's the stocks share price dropped 25% today alone.
Depending on which news source you read or believe, Charley Situ, former financial controller at LDK sent a parting email to auditors, the SEC and various investment advisers. AP sources state that Mr. Situ was fired in late September, and at the early outset this looks to be a case of "Sour Grapes". Other sources state that Mr. Situ left the company, leaving investors to believe he departed on the "Moral High Ground" on ethical considerations. Whom (or what) to believe?
Key Catalyst:
LDK responded that management's own inventory count found no grounds for the allegations. The company also said an independent auditing firm is working on a separate count, although Lai declined to name that firm. LDK's regular external auditor is KPMG.
KPMG is a conservative, well managed & reputable firm. A report from them would be a "Blue Seal" of approval to the street and analyst that the allegations were misplaced and unwarranted. Such a report would send share of LDK back to trading at record highs in a very short time frame.
A negative report or a change in auditing firms would be seen as a potential and warranted lack of full disclosure and would likely cause share price in the near term to be halved again.
"IF YOU UNDERSTOOD a business perfectly and the future of the business, you would need very little in the way of a margin of safety," ~ Warren Buffett at Berkshire Hathaway's annual meeting in 1997.
In the 12 to 18 month time frame even a negtive report such as this would be priced in to shares providing a measured growth going forward. A strong, clear and comprehensive report would provide a strong catalyst for increase share price valuation.
We have taken a strong position that recent reports of fiduciary malfeasance is misguided and will provide a position of value for our portfolio.
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