It is a shame to see that Advanced Battery Technologies has been de-lised from trading on the NASDAQ and is now on the pink sheets. The inner workings of how this was allowed to happen are still a mystery all we know for certain are the vague press releases issued by the exchange and those issued by ABAT. It goes without saying that as shareholders with long positions the author / authors of this site have taken a substantial paper loss, despite all of that we maintain the value of the research that we have done and this rebuttal – the facts stand, the original research done by Variant View, Eiad Asbahi, Prescience Funds, Sahm Adrangi and Kerrisdale Capital is extremely biased, erroneous and misleading.
1 – The primary concern for most of Chinese companies is whether or not we can trust their numbers. Without actually being a forensic account and having all of the receipts and statements in front of us, it is virtually impossible to come up with any definitive answer. In our first section we will discuss the absolute poor quality of research that went in to finding ABAT distributors and sales channels – VVR and Asbahi gave a very limited only partial view of the facts as they wanted to present them.
2 – The question of related party transactions is a common thread for those who are screaming fraud in the Chinese short charade. In the case of ABAT, this is probably one of my favorite sections – take a simple employment lawsuit and twist the story around until the company comes out looking like a criminal enterprise of which should appear in a James Bond film. The evidence is so incredibly circumstantial and far flung it is laughable – with their wonderful imagination, there is clearly a bright future for VVR and Asbahi as potential screenwriters.
3 – Much of the cause for question rests upon whether or not ABAT is capable of making the numbers they claim – as Eiad Asbahi states, “they are either turn around experts, or liars”. Rather than taking a bottom up approach by analyzing the company, the following section uses a top down approach looking at the industry to see if ABATs numbers make reasonable sense within the wider context of the industry as a whole and if so what is driving that industry. The amount that ABAT would have to sell in order to make their numbers is shockingly low.
4 – I am loath to play this game, picking apart pieces of research and trying to poke holes in it to prove that the company is legit. This is a tedious process and in my mind is no better than those who stitched together the original research that claimed the company was a fraud. If I learned anything from grade school is that tit-for-tat arguments rarely accomplish anything. However, I feel that there is some need to show that the pendulum swings both ways – a pre-ordained hypothesis will typically find it’s own evidence – if your goal is to prove fraud, you will find it.
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