Just few months ago, I was looking at this co (formerly known as Prince Frog) when short-seller issued malicious report last year. The price has since crashed from $6 to $2 and, today, the price is $1.47. I share similar concern as you and have no clue how I could validate (tough nut to crack) and trust its reported performance. At dirt cheap valuation, it’s perfect timing to see the character of the management and how they deal with such situation; surprisingly, the company has $900 over million in cash yet only $3.3 million were utilised for share buyback and they were done last year. What happen to this year? I guess the market is expecting them to ‘show the money’. Personally I have avoided this stock as nothing, esp the behaviour, really caught my attention.
On detecting accounting shenanigans, some IQ members have asked similar question before, you can read them here and here for our mistake in 361 Degree, a Chinese entity listed in Hong Kong.
Lastly, that depends whether which one is underpriced to its intrinsic value. If you’ve read Adam’s analysis on Yahoo!, he had opted for the parent company, Yahoo! because that Alibaba’s stake alone is equal to Yahoo’s whole market capitalisation. Literally, he’s getting Yahoo! business for free.