A Chinese Frankenstein, Fallen Angels, And A Pitch To Buy T-Note

Speaking of China… Here’s a very long, very detailed, and super intriguing analysis of Alibaba’s (BABA) most recent 20-F (link here). BABA’s financials are a riddle, wrapped in a mystery, inside a giant convoluted 920 entity globe spanning Chinese Communist Party entangled esoteric financially leveraged turducken ponzi-looking thingamajig….

Seriously, there’s some strange things going on over at Jack Ma’s chinese empire. The entire piece is worth a read if you’re into this sort of thing (I am). Here’s a section from the post.

We covered the incestuous relationship between Wazu Media, Jack and Simon Xie in last year’s Finding Inner Peace in Dharamasal  20-F post. I’d encourage you to re-read it…..it’s pretty entertaining even if I do say so myself.  

In a nutshell, Simon got Jack to spend US$ 1 Billion of US Shareholder’s money on “Wealth Management Products” to use as collateral so that an unnamed Chinese banker would make Simon a loan to buy a minority interest in “Wasu Media”.

There’s no change described in the structure of this absurd deal in this year’s 20-F. Simon still owes the US$1 Billion to the unnamed Chinese banker and he’s still paying the interest on the loan using the money from his other loan directly from Alibaba.  The money drawn on this RMB 2 Billion Line of Credit given to Simon Xie (to pay the interest on the Billion US dollar loan keep this thing afloat) has increased by another RMB 400 Million to RMB 1.137 Billion. So it continues to bleed.

So Alibaba is on the hook for both the principal and interest. Tell me again, one more time, why we need Simon Xie involved?

This example is not even close to being the biggest head scratcher. There are many many more… BABA is a hedge fund hotel, trades at 12x revenues, and is currently teetering on critical support. Puts maybe?

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Disclaimer: All statements are solely opinions and are for educational purposes only.

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