Seems legit

An insurance agent who has been ringing alarm bells about Alibaba at his blog provides a handy roundup of salient concerns about the NYSE-listed company:

The first step in any twelve (12) step process is to admit you have a problem. Yes America, we’ve been snookered. We’ve been hosed, screwed, ripped-off, etc. once again […]

If you doubt my thesis, ask yourself the following, relatively long, drawn out, rambling “if/then” question below:

If you think my thesis is wrong, and you really, truly believe that:

  • The roughly US$8 Trillion, of rapidly expanding Caymans money, much of it Chinese, is really used for charitable, philanthropic purposes (To my knowledge Mother Theresa didn’t have any Cayman accounts), and:
  • Alibaba is a historic model of “asset lite”capital efficiency creating $87 Billion in incredible balance sheet value, most of which are “intangible” assets, in just four short years, and:
  • All of the “Jumbo Jet”, “Yacht”, “Industrial Goods”, “Loans”, “Knock-Offs” and “Busted Real-Estate” listings are legitimate “Fast Moving Consumer Goods”, and:
  • Alibaba’s “Singles Day” $25 Billion GMV (the equivalent “work” of 51 million people in one day….140,000 Sears/Kmart Employees x 365 days) is accurate/real, and:
  • Chinese Bankers have lost their competitive fire and are willing to let this golden goose procure financing exclusively off-shore, and:
  • The “On Shore CNY”/”Off Shore CNH” dual currency system, where the “Off Shore” supply is controlled as tight as a drum to create the illusion of real trade value, while the “On-Shore” supply is printed faster than the Deutsche Mark in the post WWI Wiemar Republic, is just a quirky, non-purposeful aberration of Chinese Monetary Policy, and:
  • Alibaba continually shows up on the doorstep of US Investment Banks begging for US$ when 90% of their business is transacted in RMB, and:
  • The Bookrunners (JP Morgan, Citi, Goldman, Morgan Stanley, Credit Suisse, et. al.) of the brand spanking new US$7 Billion plus Junk Bond issue (mis-priced at only 120 bpts. over US Treasuries) are selling 40 year “BABA Bonds” as an altruistic, joint, “hands across the water” gesture, without regard to compensation and fees, and:
  • The 600+ related, consolidated, entities scattered all over the planet, have nothing to do with money-laundering and are indeed the most efficient way to run this enterprise, creating millions of as yet undefined future jobs in America, and:
  • The “franchise” office of PWC Hong Kong can effectively audit and verify the financial statements of these 600+ related, consolidated entities, with a few dozen staff, for approximately the same fee that PWC US would charge to audit a large domestic, auto dealership, and:
  • Jack, Joe, Daniel and Maggie are somehow untouchable, cutting edge entrepreneurs, operating as rebellious, disruptors to the appall and chagrin of the helpless, powerless, Chinese Communist Party, and:
  • By management’s own account, Alibaba is the most profitable business in history, beyond anyone’s wildest imagination, and:
  • You believe that American Financial and Political Leadership is both smart enough and honest enough (i.e. ..they patriotically push the huge checks back across the table) to prevent any “systemic financial contagion that nobody could possibly anticipate” from ever again happening… it has been happening roughly every decade since I was a little boy.

Then, if all of that makes perfect sense to you, you’re telling me there’s a chance:

  • That the Chinese government […] would ever, ever, ever in a million years, want to give up HALF (80% if you count Softbank) of Alibaba, this crown jewel, the secret sauce, the cornerstone of their new Internet economy, to a bunch of ignorant American and non-Chinese Investors? Huh?….Really?…

Huh, indeed. Just the fact that Alibaba refuses to provide a breakdown (by product category, region, etc.) of the total GMV (gross merchandise volume) figures it announces with such fanfare, should suffice to raise some serious questions about what is going on behind the curtain.

Here are some bonus thoughts on Japan’s SoftBank (a major investor in Alibaba), whose boss¬†Masayoshi Son is quite a “character,” having at one point threatened to set himself on fire during a regulatory meeting.

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