Some of the short-run stocks are driven by the transition expectations

Driven by transformation expectations, the Net-Qin share price rose more than 300% at the beginning of the year;

America's short institutions Muddy water Company, is clearly selected a day, launched on the Chinese stock Network Qin attack.

In the early hours of October 25, Beijing time, the company issued a heavy short report on the NetQin.

According to the plan, a few hours later, NetQin will hold the company "8 Anniversary conference."

NetQin's conference on October 25 as usual, but the company's CEO, founder Lin Yu in the conference appears a little tired. He said that the night before, he only slept on the couch for a few hours.

On the day of being short, NetQin shares were sold wildly and the share price was halved.

Without the accident, the NetQin may announce its transformation strategy in this press conference: transition to a platform. Since the company's transformation has better expectations, the previous Net Qin's share price has risen from the 6 U.S. dollars this January to 25 U.S. dollars.

The muddy waters of this attack, apparently carefully premeditated.

It is noteworthy that in the Qin Dynasty, while the air raids, some investment agencies to buy a large number of network Qin expressed support. This "multi-empty War" adds a cloud of value to the company.

"NetQin is a 0"?

In the October 25 press conference, the original direction of communication is already not the media attention. Everyone is waiting, the Net Qin to the muddy water short will make how to respond.

In the face of doubt, Lin Yu to the short of Muddy waters as the waves of the Pacific, "10 minutes to form a wave, 10 minutes of wind and waves can be past." Network Qin Product Operation Vice President Yang Yi is more ridicule: "I have a sore throat today, because last night drank a cup of muddy water, was choked a bit, but the problem is not big." ”

Muddy Water Report on the Network Qin's accusation is very stern. The report said: NetQin's revenue 72% is fictitious, we believe it is only "0", the future of the NetQin and its past as bleak. Several core issues of the report are as follows: 1, the number of users of the Network Qin, 2, the Network Qin's operating income and cash on account; 3, the important customer of the Network Qin is an empty shell company; 4, the Network Qin software is unsafe.

The report resonates with some domestic consumers.

One of the most intuitive feeling is that with the net Qin Xuan said 55% of the market share, people found that their side is hard to find the users of the NetQin, not to say for the NetQin pay.

Immediately thereafter, ZTE, Huawei and other Nets Qin once "small partners" have also been skimming off and the Network Qin's cooperative relations.

With the domestic public opinion a question of the response is different, foreign investment institutions are very network Qin, and large holdings.

The first to express support is the U.S. investment company sent Jay. On the day of the October 25 encounter short, Jaffray report that muddy water research results and Jaffray and other third party research, and maintain the Network Qin "overweight" rating, the target price of 27 U.S. dollars.

"Based on our survey of 500 smart-phone users in China's first-tier cities, NetQin accounted for 11% of the Chinese mobile security market, rather than the 1.5% per cent reported by third parties," Jaffray said in the report. After our survey of Verizon US retailers, the attachment rates of the NetQin mobile security software was 15% to 30%, rather than the 2% to 3% reported by the third party. ”

In the criticism of the Qin dynasty, such a voice did not get too much attention in the domestic media.

Subsequently, investment agencies Canaccord Genuity, Topeka, Macquarie also issued a report, reiterated the support of the Network Qin. Under the influence of many institutions, the Net Qin stock price began to rebound, at one point, the lowest point rose about 60%.

Some investors analysis of the encounter to do Skynet Qin's plate, found that the October 25 Net Qin stock turnover rate reached 94.6%. "The Stone Hammer Soft Buddha" Analysis said: "By muddy water short, nearly 95% of the original shareholders sell the stock is normal, I am very surprised, how there is such a big buying?" Why the agency buys, this question is worth the investor ponder. ”

"Inheritance" and "Original Sin" in the era of Saipan

Time back to 2011, in the mobile phone security market at that time, NetQin was another scene.

At that time, Nokia was still the mainstream of the mobile phone market, and the Network Qin, which applied to Nokia's Symbian system, was a Nokia Platinum partner pre-installed on Nokia's multiple handsets. As of December 31, 2010, NetQin and seven mobile phone manufacturers established a cooperative relationship. In addition, in the era of Saipan, the Network Qin and mobile also maintained a close cooperative relationship, and occupy the mainstream brush machine market position. May 2011, the Network Qin successfully listed in the United States.

But in just a year's time, the mobile phone market has changed dramatically. 2012, the domestic smartphone market "blowout", Android and Apple system quickly replaced Symbian, become the mainstream smartphone market, and once helped the Qin market, Nokia has been declining. On the other hand, with the "China cool" and other domestic brands of mobile phone strength, parallel imports of brush machine market is shrinking, these have helped the Network Qin access to users of the channel has undergone great changes.

In the muddy water report, the Net Qin's profit ability raised the strong question. It believes that, with 360, Tencent, Jinshan and other companies all free anti-virus software, the Network Qin pay model can continue?

NetQin avoided this in response. In an interview with the media, Lin Yu said that NetQin's definition of a paid user, not only refers to users who pay for the NetQin, but also includes users who consume through games, advertising and search, and the muddy Water report does not differentiate.

Snowball Netizen "Shang" put forward another possibility-the company "original sin" can not be dissected. He wrote: "NetQin itself belongs to the background program, in the upgrade of the database will automatically pay, so most users do not know that they are paid users, but muddy water can not understand this mysterious and irregular market, the listed companies themselves can not be said, this behavior is immoral, but it is legal." ”

In his view, the Network Qin company in the financial issue of the emboldened, also explained that the Net Qin "not bad money": "Why Muddy water an attack, the Net Qin first reaction is to announce the cash, because this is it the most have the confidence of things." ”

In the 97-page response, the company announced deposits from banks in China, and announced that it would transfer $100 million to an account opened in Standard Chartered Bank to show the authenticity of the company's cash flow.

be short in the transition

In a series of challenges, NetQin is also in transition.

Since 2012, the Network Qin launched a dense acquisition action, the acquisition of corporate mobile services in the country is well-informed, the shares of MediaTek's subsidiaries and letter Rui-Chi, a wholly-owned acquisition game distribution company Fei Liu nine days, but also to buy the mobile marketing technology sail Yue information. There are comments that all these acquisitions have "mobile" concepts and do not see the overall direction.

This year, the Network Qin introduced a body sense balance car, looks like with Xu Ming to the melon melon that some similar, the price is 9980 yuan.

The company, which started with security software, has become more and more hungry, starting to play games, do audio-visual searches, and finally announce a "platform". If it is not because of muddy water, the "platform strategy" of the Network Qin will be the focus of the 8 anniversary press conference. On the line to answer questions, Lin Yu said that the future will be based on the NQ Live platform, the development of mobile security, gaming, advertising, search and enterprise mobile services in the 5 direction of business.

With the launch of a series of acquisitions, as well as the proposed new strategy, NetQin's share price has climbed steadily. In January this year, NetQin's share price was only about 6 US dollars, and by October this year, it had reached more than 25 U.S. dollars, compared with a rise of more than 300% in the early years, the first in the stock.

The soaring share price also provides a perfect opportunity for the short sellers. Muddy water issued short report, the Net Qin stock price once less than 9 U.S. dollars, during the period, short people naturally earn pots full of pot.

In an investment forum, netizens "Aqidesign" said: "If the fry to 100 of dollars and then burst the results of the news, more people die more miserable." This is the value of shorting institutions. ”

What about the future of NetQin? There is a considerable divergence of views at present.

On the one hand, Cassen Block, the founder of Muddy Water, said that the NetQin would be retired within a year, and that, according to media reports, the controversial female investor in Hong Kong, long-time, chairman and chief investment officer of West Beijing, also bought a large network of Qin, while Wall Street's top law firm Shearman & Sterling The LLP accepted the employment of NetQin and assessed the allegations of Muddy Waters, which, in the opinion of some in the industry, are willing to accept the Commission, showing its positive attitude towards the netqin.

There are still some investors, always to the Network Qin maintained strong support.

On the Snowball forum, a netizen who had been in favor of "long" shared his investment experience, in his view, in the era of mobile internet explosion, even if the Qin dynasty can not "eat meat", or at least "drink soup", perhaps the netqin is not as good as they advertised, but it is not as bad as the muddy water blamed.

In the face of skepticism, the CEO said: "There is a process of company development, just as a child is Lin Yu." Today, if our brand and visibility and Tencent, Baidu, 360 similar, the previous section of NetQin should not be just a 1 billion dollar company, perhaps already tens of billions of dollars of the company. ”

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Muddy water style short in the United States generally

Muddy water is a US shorting agency that has gained a reputation as a domestic investor since 2010 because it has shorted many of its shares in precision.

To put it simply, shorting means borrowing shares from a third person to sell first, and then buying the same number of shares to return when the share price falls. As a result, short sellers can profit by falling share prices.

Third-party research institutions such as muddy water companies that specialize in "slotted eggs" are common in the United States. Liang, a U.S. stock analyst, said earlier in an interview that shorting itself is a normal act of US capital markets and is a relatively extreme and more lethal means of monitoring besides the SEC, the exchange, audit firms, law firms and the media.

Though often criticized, the US financial reform bill still affirms the positive contribution of shorting power to capital markets.

Extension

Shorting has become a share of the pain

Since June 2010 Muddy Water Short of oriental paper, has accumulated dozens of overseas listed in the shares by the foreign short institutions, including such as Evergrande Real Estate, New Oriental, Qihoo 360 and other well-known domestic enterprises. Most of the companies that were shorted fell sharply, while others were delisted for financial problems.

These short events, has let the stock market crisis. For 2012 years, only the goods will and the gathering time 2 of the stock market in the United States successfully.

From Shell-listed companies to IPO companies

The first round of aerial-stock boom was in 2010, when shorting was mostly concentrated on small and medium-sized companies that borrowed from shell listings.

June 2010, the first time in muddy water to do aerial stocks. The oriental paper, which was shorted, is a papermaking enterprise in Hebei. The muddy Water report said that Eastern paper's asset valuations were at least 10 times times exaggerated, and 2009 revenues inflated 40 times-fold. The SEC's investigation into the Orient Paper continued until this year, when it eventually announced that it did not intend to take any enforcement action. But in the 3-year period, Eastern paper's share price has fallen by 80%, and muddy waters have been a lucrative bet.

Other short action, let the listed companies have been investigated, and even the fate of the city.

October 2010, muddy Water to do aerial summary dividend Agricultural international, was questioned less than two weeks later, the agricultural international suspension, after the withdrawal of the city. November, the muddy water short of the green Connaught Technology, resulting in the stock was suspended, in December, the city was returned. In the same period, shorting institutions such as mr.little, Brontecapital, and so on the West Blue natural gas, the journey world, the big coal industry, Xi ' an Bao and other short, also led to the collapse of the shares of these companies and eventually exit the market.

Into the 2011, shorting institutions to the short of stocks to expand to the IPO enterprise. In April of that year, it shorted the southeast, then southeast financing fraud by the U.S. SEC investigation. That August, southeast intermediation was officially delisting, the following year announced the company dissolved.

I Zhong Zhixin, the U.S. stock information director, said that unlike the small and medium market companies listed by the Shell, the southeast intermediation IPO was underwritten by Goldman Sachs and Deutsche Bank's top investment banks, while the audit was Deloitte, one of the four major accounting firms, and had a greater impact on the IPO company's shorting.

In the "Frozen period"

In the face of multiple shorting, and a number of companies have been investigated financial problems, the company has suffered a "frozen period." Many of the shares in the stock have been greatly reduced, the company's listing process is also affected. 2012, only the goods will and gathered time two companies successfully listed in the United States.

The unit also sparked a U.S. SEC lawsuit against five major accounting firms in China. In December 2012, the SEC accused Deloitte, Ernst, KPMG, PwC's four major accounting firms, and a Chinese branch in BDO, another firm, of violating securities laws, as they refused to hand over the audit documents of 9 Chinese companies to the US, which are facing a fraud investigation by the US side.

Shorting has also brought trouble to some intermediary companies. News has recently emerged that the two Chinese law firms involved in the business of the Sino-Forest company have been prosecuted in Canada by 11 financial institutions including Credit Suisse.

The company is increasingly active in dealing with shorting

In fact, more and more of the company in the short run after the encounter, began to learn to actively deal with, and strive to recover losses.

Zhong Zhixin wrote that the Thai-rich electric, Qihoo 360, the media, the three Chinese companies were short, with the firm counterattack, the final share price regained ground, return to be questioned before the level. Among them, the media is in the stock price warmer, received the Jiangnan Spring Union several major consortium issued the privatization invitation.

In the July 2012, New Oriental was short of muddy water. As new Oriental in the domestic brand and Word-of-mouth, the domestic force is very new Oriental voice than any previous stocks were short, and the new Oriental share price with the executive repurchase and a series of movements gradually rebounded.

In an interview with the Beijing News reporter, Zhong Zhixin said that since 2010, the stock has repeatedly been hit by the U.S. short institutions, and now the domestic companies to "short" have more understanding, we gradually become accustomed to, and gradually can be more positive response. Chinese companies are responding more and more aggressively to the question of shorting institutions.