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
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Latest China Small-Cap Report Is Puzzling

I was surprised that the authors received such detailed feedback from Wal-Mart sales managers regarding product sales because when I asked the same questions, I was told adamantly that Wal-Mart won't release that kind of information to anyone, period. In fact, Wal-Mart employees wouldn't even allow me to photograph inside the store without advance written permission. (But I did sneak a few photos when they weren't looking.)

As for my visit to the factory near Xi'an, the equipment I saw was obviously new and imported from Italy, which is at odds with the authors' view that the equipment was old and out of service. I saw robust production of bottled juices and juice concentrate and a level of inventory that seemed appropriate.

I could continue with quite a few more examples, but I am expecting management to provide a detailed rebuttal sometime soon, so I will leave that to them. As for responsiveness, SPU gets an "A+." When faced with fraud allegations, some companies choose to "go dark" and simply avoid investors by hiding behind an IR firm. This is always a troubling sign and, to me, indicates that worse things are yet to come. I am currently in Shanghai and don't have contact details for SPU management with me, so I simply called the general phone number listed on Google Finance and left a message for the chairman. He called me back within 15 minutes and was happy to answer all of my questions.

If this were 2010 again, I would currently be pouring money into shares of SPU, feeling confidant that I could successfully and effortlessly rebut much of the authors' arguments. However, we now live in the post-CCME world and there is enough skepticism in the market that I am hesitant to jump in. Even though I liked the stock at $4.50 (prior to CCME and the onslaught of China hit pieces), I am hesitant at $2. As I have written in the past, even if I can debunk 90% of the arguments made by the authors, that doesn't provide an ironclad guarantee that there isn't a problem somewhere.

2 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

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

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
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!
SHZ $0.10 0.00%
SPU $1.15 -9.40%
AAPL $124.49 -1.50%
FB $82.16 -1.20%
GOOG $548.46 -0.65%


DOW 17,776.12 -200.19 -1.11%
S&P 500 2,067.89 -18.35 -0.88%
NASDAQ 4,900.8850 -46.5560 -0.94%

Partners Compare Online Brokers

Free Reports

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