This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Short-Seller Cuts Through China Red Tape

Stocks in this article: CSKI SOLF

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Today, Bird sees the world of Chinese small-caps as a kind of no-man's land, where dishonest executives can submit misleading statements to U.S. regulators without fear of punishment on either side of the Pacific. Individual investors are vulnerable and in most cases unaware of the special dangers associated with RTOs, he says.

He found inspiration for his work in the spring of 2009, when he came upon research by Manuel Asensio. Asensio is now managing partner of Mill Rock Investment Advisors, a firm that espouses a balanced approach to investments, but he is perhaps best known as the vocal short seller who runs, a Web site that speaks of a "unique combination of proprietary trading and public advocacy of its positions."

Asensio was then boring into a small-cap called China Sky One Medical (CSKI). Based in Harbin City, in northeastern China, the company had merged into a U.S. shell in 2006 and had uplisted to the Nasdaq in 2008, SEC records show. The company described itself as a purveyor of ancient Chinese homeopathic remedies updated for modern consumers.

In several notes published on his Web site, Asensio had attacked China Sky One Medical's products, a cornucopia of curatives and diagnostic tests: dental ulcer sprays, cough-suppression suppositories, anti-depression "granules," magnetic hemorrhoid ointments, and myopia-correcting eye drops. The product line described on the company's web site also includes Angelica Nourishing Blood Syrup, for the treatment of "irregular menses" and "postpartum blood deficiency," and Jieyinling Lotion for Private Parts, for the treatment of "cervical erosion, gonorrhea, syphilis, and so on."

The skepticism rooted in Bird's own trench-level business experience kicked into overdrive. He soon found himself reading China Sky One's annual report filed with the SEC, its 2008 10-K.

Bird looks at financial documents with a nuts-and-bolts perspective. Early experience in the real estate business taught him the value of thorough credit checks. In the theater business -- he says he once owned a string of cineplexes in and around Austin -- he learned a bit about marketing and promotion. "We did popcorn and juju beans and soda pop by the gallon," Bird recalls of his work in theaters. "I know a little bit about high-margin garbage."

2 of 6

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs