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
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Latest China Small-Cap Report Is Puzzling

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (TheStreet) -- In early March, when I finally came to the conclusion that China MediaExpress (CCME) was likely to have accounting problems (before the stock was halted), the first thing I did was sell all of my China small-cap stocks.

It seemed clear to me that if the market lost faith in a company that was audited by Deloitte, backed by Starr Investments and covered by Global Hunter, that less-credible stocks were bound to suffer. As a result, I sold stocks that I liked and I sold stocks that looked too cheap. I keep following a few names where I am tempted to go long, but since everything seems to just keep going down, I have basically sat and waited.

Yesterday, one stock that I liked, SkyPeople Fruit Juice (SPU), was the subject of a short-sellers report by Absaroka Capital, which drove the share price down by 20%. Given that I visited the company, its distributors and retailers in January, I thought it might be useful if I weighed in with my views.

First, I was puzzled that anyone would bother writing a short report on a $2.50 stock that has little to no stock borrow for shorting. From a stock-price perspective, it seemed to be the equivalent of kicking a three-legged dog, just for the fun of it, and not for profit.

Even before delving into the body of the report, the report summary can be found to contain a number of statements that are easily contradicted. The authors note that they "struggled" to find SPU's products on store shelves. They must not have struggled much because, for me, I simply hopped a cab to Wal-Mart (WMT) and walked to the juice section where I saw their products displayed on a middle shelf close to international brands such as Dole. After struggling to find Wal-Mart, the authors did manage to find SkyPeople's product, but noted that it was on a bottom shelf, which is typically reserved for slow-moving goods. I easily found individual bottles on a middle shelf at arms reach, and I noted from the authors' photos that the particular products they were filming were cartons of juice in big boxes. It seems logical to put big boxes on lower shelves.

Stock quotes in this article: SPU, CCME, SHZ 

Select the service that is right for you!

COMPARE ALL SERVICES
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.
DOW 16,262.56 +89.32 0.55%
S&P 500 1,842.98 +12.37 0.68%
NASDAQ 4,034.1610 +11.4670 0.29%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

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