OMG ONP!
Orient Paper Inc. [ONP] has been in the mix of daytraders’ chatter the past few weeks. It all began with a report from Muddy Waters (a hedge fund, not the late musician) that claimed ONP was conducting fraudulent accounting practices. The stock nosedived a few weeks back to about $4. The same roller coaster ride occurred a few days ago and again today. Each time the stock seems to be making lower lows and lower highs. Today’s sell off is based on rumors that some analyst may suspend its rating for the company until an investigation is completed to either verify or disprove Muddy Waters’ claims. I read a good article on SeekingAlpha.com today that mentioned the fear of Chinese small cap stocks and also a hypothesis about how American based hedge funds are giving these companies the good ole’ wall street f*ck. I also read a recent 8-K form released by Orient Paper to counter Muddy Waters’ allegations. I watched this recent video from Doug over at Wall Street Media Company about his trip to Orient Paper’s headquarters and saw how large of an operation this company conducts as well as its expansion plans. Lastly, I did some browsing around and read other articles concerning the recent allegations. It all checks out for me and I think the fraud allegations are bogus. If you’re a speculative investor this one is for you. If Muddy Waters is found guilty instead ONP should go up to $7-8.
Disclosure: Long ONP at $4.42. Remember I have to hold for 30 days too. This is not an endorsement for you to purchase ONP. Please know that risks are inherent in investing in Chinese small cap stocks.
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Mr. Nice Geek » OMG ONP Part II — November 8, 2010 @ 6:15 AM
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