SinoTech Energy Limited (CTE) common stock trading was suspended by the NASDAQ on August 18th, 2011. NASDAQ requested additional information from SinoTech Energy in the matter of allegations made by alfredlittle, an acknowledged short seller of the Company’s American Depositary Shares (“ADSs”).
On September 21st, 2011 SinoTech announced that it has received a letter dated September 15, 2011 from The NASDAQ Stock Market LLC, stating that continued listing of the Company’s securities on the NASDAQ is no longer warranted but CTE may request a hearing and appeal the NASDAQ’s determination through to a September 22, 2011 deadline.
On September 23rd, 2011 SinoTech reported that certain company officers (including the CFO) resigned from their positions; the Company’s Independent Registered Public Accountant threw in the towel, also.
So you’re probably wondering (judging by the title of this piece) why we’re so anxious for CTE to resume trading on the pinksheets. The answer lies in a similar story with Chinese RTO, Puda Coal (PUDA). Here’s a briefing on that bit of history:
Puda Coal (PUDA) trading was halted on the AMEX market in mid-April, 2011. PUDA’s halt order was lifted on August 18th, 2011 and trading resumed on the Pinksheets for its common stock. On that first day, PUDA’s shares dropped to $1.50 in the first minutes of trading but later rebounded to almost $4, towards the end of the session.
There’s no mystery to why PUDA’s shares produced gains of over 100% in one day. Here are the symptoms:
1. Sell-off: most institutional investors, mutual funds & some hedge funds do not trade pink sheets or pinksheet stocks. They sold their holdings of PUDA stock by default. Other private investors, who were on edge to cut losses followed suit.
2. Buying: realizing gains, short sellers took no chances and began covering short positions. The stock rose with the rise in demand for PUDA shares (this is part of basic economics where rising demand corresponds with rising price, right?)
3. Day-traders jumped on board the PUDA express as volatility made this market ideal for trading. Traders helped exaggerate the huge rally ensuing the morning panic.
Of course there were other factors behind PUDA’s trading (for example, the company’s previously proposed buyout by the CEO) – we just summarized with the symptoms most quintessential.
More to the point of SinoTech Energy (CTE): We expect that CTE stock will follow PUDA’s legacy. Keep watch for when CTE is removed from the NASDAQ trade halt list, place CTE (remember, it will have a .pk extension at the end of the new ticker) on your watchlist, and wait patiently for the dust to settle after the first 15-20 minutes of trading.
Join us on this trading adventure.
Above mentioned companies:
SinoTech Energy Limited
No 19 Ronghua South Road
Beijing Economic-Technological Development Area
Tel: 86 10 8712 5555
Fax: 86 10 8712 5500
SinoTech Energy Limited provides enhanced oil recovery (EOR) services to oil companies in the People’s Republic of China. The company provides EOR services using lateral hydraulic drilling (LHD) technology that is designed to enhance production in oil wells and coalfields by increasing the quantity of the flow of oil and methane gas to the vertical wellbore from the surrounding reservoirs; and molecular deposition film technology, which increases oil recovery from mature wells by displacing the residual oil that adheres to sedimentary rock or sand in the oil reservoir.
Puda Coal processes and sells high-grade metallurgical coking coal to industrial sectors in China and is in the process of adding a coal mining segment in addition to its traditional coal washing business. Puda Coal is one of the largest non-state -owned cleaning companies in Shanxi Province with over 15 years of experience in China. Puda Coal is based in Shanxi Province, known as the “King of Coal” which supplied 22% of China’s coke and 20% of coal production in 2009. The Company operates in two major segments – its legacy coal washing business and coal mining operations.