LOL John Paulson and his “Support” of Sino-Forest

June 14th, 2011 Bloomberg headline:

“SINO-FOREST SAYS PAULSON ‘VERY SUPPORTIVE’ OF COMPANY”

June 19th, 2011 Bloomberg headline:

“PAULSON REPORTS SELLING 34.7 MILLION SINO-FOREST SHARES”

DOH! In case you’re unaware, John Paulson was the largest shareholder of embattled supposed Chinese forestry company Sino-Forest ($TRE.TO, $SNOFF), which has been accused of being a fraud by research firm and short seller Muddy Waters.

Although it appears, on the surface, that Paulson just threw a big pile of SOLDTOYOUSUCKA at Sino-Forest longs – saying that he supported the company and then selling his shares – if we dig a little deeper we can make some sense of the situation.  The actual contextual quote, from Sino-Forest’s CFO, was:

““I’ve spoken to them and they are very supportive, giving us suggestions and issues that we need to address,” Chief Financial Officer David Horsley said yesterday in an interview.”

It seems obvious that Sino-Forest failed to adequately address Paulson’s concerns, and that he had no desire to wait around for answers.

-KD

disclosure: I bought a very tiny position in SNOFF today, fully aware that the stock may go to zero in the near future.

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