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AutoChina International Shares Plunged: What You Need to Know

By Cindy Johnson | More Articles
March 15, 2011 | Comments (1)

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: AutoChina International Ltd. (Nasdaq: AUTC  ) dropped 10% in intraday trading today after another China-based firm announced its auditor and CFO had resigned.

So what: A CFO resignation is always disconcerting; an auditor resignation is a huge red flag. Both have just occurred at China MediaExpress Holdings (Nasdaq: CCME  ) .

Now what: China-based stocks often trade at a discount because of concerns that financial reporting standards are not as robust as in other countries. The resignations at China MediaExpress Holdings are fueling concerns of fraudulent financials for CCME specifically and China-based firms in general. For such stocks, investors are selling first and asking questions later.

Interested in more info on AutoChina International? Add it to your watchlist by clicking here.

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Fool contributor Cindy Johnson does not own shares of any company named above. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On March 15, 2011, at 5:32 PM, ETFsRule wrote:

    Wow, just one day after the CCME news. It seems a bit strange to me: auditors don't usually resign so close to the filing deadline, they usually quit as soon as fraud is uncovered.

    It seems pretty unlikely that a bunch of frauds would all hire Deloitte, as that would be a sure-fire way to get caught.

    It seems more realistic that upper management at Deloitte has decided to take a risk-averse strategy and has ordered a halt to all these audits of Chinese small-caps. Pretty sad.

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Related Tickers

5/25/2012 3:01 PM
AUTCF.OB $21.20 Down -0.27 -1.26%
AutoChina Internat… CAPS Rating: *
CCME.PK $0.02 Down +0.00 +0.00%
China MediaExpress… CAPS Rating: **

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