TIMBER!!!!!!!!! (TSE:TRE) (PINK:SNOFF)

NEW YORK - Sino-Forest which is a forest plantation operator in the People Republic of China saw its stock get axed down today by a poorly written but well researched report. The report was so badly written that perhaps Noam Champsky, editor here at The Markets Are Open will get a new job after all the dust settles. The report was full of sentence fragments, improper use of past and present tenses as well as many other grammatical mistakes. Essentially the report was one extraordinarily long run on sentence. Aside from the difficulties of reading the report and the companies need for an editor, the report appeared to be quite compelling and well researched.

The company listed at the top of the report that they had a position on the shortside. We do not view this as a problem. This point was discussed because some people believe this report was self motivated. There is nothing wrong with profiting from a good deal of research and there is even less wrong with exposing it to the public. What would be wrong is lying. What also would be wrong is for them to say they had information that could take-down the company but not expose it. This is no more condemning than an analyst saying to buy the stock.

The company, Muddy Waters put its money where its mouth was. The name originates from a Chinese Proverb which states that fish are easier to catch in Muddy Waters. It appears a big fish was caught today. Muddy Waters Report claims that Sino-Forest is a multi-billion fraud similar to that of Bernard Madoff. The stock was halted in trading in Toronto today, but it dropped 60% on its other listed exchange. The Muddy Waters report shows that it would be nearly impossible to sell the amount that Sino claims. The report also shows pictures (usually run-down) of places where the company allegedly does hundreds of millions of dollars of business.

The assets on the Sino-Forest balance sheet, especially "timber holdings" does appear to be opaque but not exactly suspicious in itself. Its inventory turnover does appear to be efficient but again not suspicious in itself. If there was a fraud it would likely be hard to tell from accounting records which are falsified. The only way a fraud could be figured out is by doing the research this company did.