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What: Shares of China-based electric motors manufacturer Harbin Electric
So what: Not content with the severe drop caused by a negative research note last week, Citron Research piled on today with an even more damning missive. Among other things, Citron calls Harbin a "fraud" propped up by a "sham" buyout offer, and it posits that the stock is worth closer to $0 than the supposed go-private price tag of $24 per share.
Now what: I'm usually suspicious of these efforts by a small-time research firm to expose small-cap frauds, particularly when the firm is shorting the shares in question as Citron did with Harbin. But this particular whistleblower actually has a bit of a track record, having attacked Chinese software firm Longtop Financial Technologies
Harbin's CEO has reiterated his buyout offer along with a bank loan to finance it all -- but Citron says that the loan itself must be fraudulent. You decide who to believe while I treat this stock as toxic. The risks of either buying or shorting shares far outweigh any reward I could imagine at this point.
Interested in more info on Harbin Electric? Add it to your watchlist.
Fool contributor Anders Bylund holds no position in any of the companies discussed here. 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 is investors writing for investors.