Today, Alibaba announced that the SEC has opened an investigation regarding accounting practices and possible violations of US Securities Laws. (i.e. "crimes").
As you, my dear readers know, I've commented, within this blog, on the IPO, and every subsequent investor call and significant 6-K & 20-F. I've been describing these "accounting practices" in detail for a year and a half:
9/30/14 Q2 - My Posts Re: Alibaba on Laura Logan's CBS News Page....Enjoy!
12/31/14 Q3 - Once upon a time...
3/31/15 Year End - Alibaba....a year in review
6/30/15 Q1 - Alibaba....the odyssey continues...
9/30/15/ Q2 - One of these things is not like the others...
12/31/15 Q3 - Oh what a tangled web we weave....
3/31/16 Year End - It's like Deja Vu....all over again....
As reported by Aaron Back of the WSJ: "As the adage goes, where there’s smoke, there’s usually fire. And the smoke is growing thicker around Alibaba." Closing with "Alibaba has enticed investors with the prospect of staking a claim to the Chinese e-commerce gold rush. With so many questions about governance at the company, it is doubtful they will be the ones to actually cash in." (Entire Article)
Specifically, the SEC is investigating:
"I'm shocked, shocked to find that gambling is going on in here!" ....as a croupier hands Renault his winnings.....
Many of us already know where this investigation is headed. ("know" as in the sense that we've seen this movie before and understand what's happening...not that we are privy to any insider information.) As is all too common nowadays, the only question remaining,is:
Who will be left holding the bag when the dust clears?
As investors, we can only hope that this time, the "Renault Defense" just won't hold up in court.
CNN Link:
http://money.cnn.com/2016/05/25/investing/alibaba-sec-investigation/index.html
WSJ Article - (Subscription required)
http://www.wsj.com/articles/alibaba-sec-probe-the-red-flags-fly-higher-1464208194?mod=yahoo_hs
- The accounting for Alibaba’s part-owned logistics joint venture Cainiao.,
- Its treatment of related party transactions in general.
- Its reporting of data on the annual Singles Day sales bonanza.
"I'm shocked, shocked to find that gambling is going on in here!" ....as a croupier hands Renault his winnings.....
Many of us already know where this investigation is headed. ("know" as in the sense that we've seen this movie before and understand what's happening...not that we are privy to any insider information.) As is all too common nowadays, the only question remaining,is:
Who will be left holding the bag when the dust clears?
As investors, we can only hope that this time, the "Renault Defense" just won't hold up in court.
CNN Link:
http://money.cnn.com/2016/05/25/investing/alibaba-sec-investigation/index.html
WSJ Article - (Subscription required)
http://www.wsj.com/articles/alibaba-sec-probe-the-red-flags-fly-higher-1464208194?mod=yahoo_hs
I enjoy the blog; you will be pelased to know out of 45 analysts covering BABA there is one (independent) firm with a SELL rating ... that's us! It's not everyone who has willful blindness in pursuit of a slice of the Ant Financial IPO...
ReplyDeleteDeep Throat -nice information - could you elaborate what the time lines for SEC probe are and what may the outcome ( worst case / best case
ReplyDelete)
Thanks for the good question....Sorry for the delay in reply....been busy.....I'm going to cover your question....along with a few others in my next post. Stay tuned.....
DeleteI honestly do not know what you mean about "knowing where this investigation is headed". Are you being sarcastic and referring to the SEC that was alerted about B. Madoff for years (years!) and didn't do anything until he turned himself in? Or are you saying that only a sell-side analyst could miss what's going on here and the SEC will unravel the entire con? My first impression was to assume you meant the SEC will find nothing.
ReplyDeleteThanks for the good question....Sorry for the delay in reply....been busy.....you're right Wintermute....my statement was a little vague....I'm going to cover your question....along with a few others related to it in my next post. Stay tuned.....
DeleteGreat job, DT-Ipo! you have given your readers, and me among them, a very good service indeed.
ReplyDeleteWhat do you think will happen with BABA on the next days/weeks?
take into consideration that I'm not familiar with the SEC and how they operate.
And why do you thing the stock didn't fall even more? Do you think it was already priced in?
Thanks
Tom
Thanks for the good question Tom...Sorry for the delay in reply....been busy.....I'm going to cover your question....along with a few others in my next post. Stay tuned.....
Deletewatching the stock today. funny how it has reacted. do you feel this has LC type outcomes in the future. I am thinking of finally getting in here myself. Thank you Bob
ReplyDeleteI really enjoy your blog and appreciate all the insight you've given!
ReplyDeleteIf this analyst is to be believed - http://www.zerohedge.com/news/2016-05-27/alibaba%E2%80%99s-sec-probe-what%E2%80%99s-missing-disclosure - they have done no research on Alibaba prior to the SEC filing. Nevertheless they say, based solely on Alibaba's description of the SEC inquiry, this appears to be something that should concern investors. Meanwhile BABA is back to price levels before the SEC announcement.
ReplyDeleteI would love to hear what you think about the Softbank sale today. And along that same line, if they have to buy back to billion in stock along with all their other purchases, I wonder just where they might really be on their cash position? You had suggested it in an earlier comment that to keep things have to happen to bring this into the light of day. The first, SEC looking into them which seems to have started, and then 2, them actually starting to run out of money. Thank you Bob.
ReplyDeleteThanks for the good question juan...Sorry for the delay in reply....been busy.....I'm going to cover your question....along with a few others in my next post. Stay tuned.....
DeleteLove the case study about BABA, however is here a way to get an alert when there is an update? Like this i don't have to check every day ? Warm regards from Belgium / Antwerp
ReplyDeleteThanks Bart. Here's a link from Blogger Help with instructions on how to set up a "follower" option. I don't post the list of followers for privacy reasons.
Deletehttps://support.google.com/blogger/answer/99761?rd=1