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Up Fintech Holding Limited (NASDAQ:TIGR) took a hit the week ending October 29, 2021, falling by 27% to $6.47. So far this month, the stock is down 38.9%. From our point of view, this was not entirely unexpected. To us, It was more so a foregone conclusion that, given the due diligence we performed in 2019, when we first pointed out that Up Fintech was operating without the proper license(s) required for Chinese citizens to trade foreign securities – mainly a brokerage license

This was in addition to our contention that the company was walking a fine line with regards to China’s anti-money laundering laws when  customers who are Chinese citizens make fraudulent claims to their local banks about the use of funds, so that RMB could be exchanged for USD and deposited into TIGR’s overseas trading account.

While the company may say that they are not telling customers to do that, our first report on TIGR  provided evidence of a customer service rep instructing our investigator how to fill on an application to open account for the purpose of trading foreign securities – basically to alter the reason why he wanted to convert RMB to foreign currency.

Our warnings went unheeded, and the stock went ballistic, rising from $4.00 at the time of our initial report on October 16, 2021 to an all-time closing high of $36.72 on February 16, 2021, or an 818% return. That’s not too shabby for a company that we believe should have garnered the scrutiny of most investors, and especially those in the world of activism. Through that ascent we continued to warn investors that we believed investing in TIGR was playing with fire. During the stock’s descent from the highs, we published a final exposé on July 26, 2021, when TIGR still traded as high as $17.75.

Now, it appears that the company cannot escape the fact that most of its revenue is coming from Chinese citizens trading in froeign securities.

Articles in China, including quotes from the China central bank, confirm that “Cross-border online brokerages are driving in China, without a driver’s license.

“They’re conducting illegal financial activities,” Sun Tianqi, head of the Financial Stability Department of the People’s Bank of China (PBOC), said in a speech, according to a transcript released on October 27, 2021.

There is an important lesson to learn here, especially when dealing with US listed China-based stocks: you need to pay attention to the risk factors in SEC filings even if they sound boilerplate. In the case of TIGR, the filings clearly stated that the company didn’t possess a brokerage license in China, but that they believed, through their lawyers’ stamp of approval, that their business structure bypassed the need for a license. However, it’s our contention that it doesn’t matter what kind of workaround the company believed it had, because it is based in China and the majority of its revenues are derived from trading activity of Chinese citizens.

On October 30, 2021, in a likely attempt to perform some damage control, TIGR quickly announced the moving of its operations to Hong Kong, where they have obtained a brokerage license. But it doesn’t matter. All that matters is that over 80% of their revenue is coming from business with Chinese citizens, like was the case when New Zealand was the company’s  offshore homebase. Investors and regulators ignored the problems the company encountered with the New Zealand anti money laundering division – concerns laid out in our research updates.

The final piece of the puzzle came together after publishing our final report on TIGR offering evidence from the website that substantiated our conclusions.  We showed how TIGR’s website facilitated the circumvention of  currency conversion rules. The pages were redacted from the site, but we were sure to perform a video capture in anticipation of the redaction.

It amazes me how lazy Wall Street and hedge funds can be when investing in companies that are CLEARLY illegal, yet they want to believe the narrative of management over the truth.  As a matter of fact, it is their fiduciary duty to go out of their way to understand and take risks seriously.

The above reminds me of the Natural Health Trends Corp. (NASDAQ:NHTC) debacle. The company is a multi level marketing company for nutritional products. At one time, we believed NHTC was operating illegally in China, and wrote several reports on the matter. Like TIGR, they too used their lawyers to give a stamp of approval for their own set of work-arounds. It took several years for investors and the market to see that we were right, and for China regulators to suspend their operations in China.  In fact, in the case of NHTC the stock exhibited a similar pattern to TIGR’s after our initial bearish report on September 15, 2014, at $10 per share. It climbed 342%, before imploding in March 2020, hitting a low of $2.52 in March 2020.

Another company that we covered, Yuhe International Inc (OTC:YUII), had their own set of risk factors that we identified in June 2011.

The company itself  disclosed how its projects could have been challenged by government agencies since they had not obtained relevant approvals with respect to construction, permits and leasing. Further non-boilerplate language described how investors could have been left at a disadvantage due to past incomplete disclosures that, as stated in the company’s SEC filings, could have adverse impacts on share price. The icing on the cake was YUII disclosed the commingling of company funds with employees’ bank accounts. It was actually quite unbelievable that auditors gave their stamps of approval. Ultimately, the stock price plummeted to nothing, and YUII got delisted.

So here are a few lessons to learn before you start allocating money into investments you might not fully understand:

  • Lesson 1 – Don’t invest in China unless your willing to do deep dive due diligence
  • Lesson 2 – Don’t believe the words at face value that are in SEC filings or rely on the wall street analyst reports and hedge fund investments, especially for US listed China based securities
  • Lesson 3 – When you see a risk factor that seems out of the ordinary, don’t ignore it.

~Maj Soueidan

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Conference Call Transcript Highlights

On August 17, 2021, Tss Inc (OTC:TSSI)‘s second quarter conference call contained some verbiage hinting to 2022 being a year that beings operations back to normalcy after supply chain disruptions experienced earlier in the year. The company is a data center facilities and technology services company.

While the Q2 results press release briefly touched upon how 2021 supply chain disruptions affecting the company’s results would abate going into 2022…

“Our first half of the year was impacted by a lower level of reseller business and supply chain shortages that have occurred throughout the industry. We are seeing a significant improvement in pipeline and orders across all of our business streams for the back half of the year and anticipate a significant improvement in our operating results as we deliver a large degree of upside in the third and fourth quarters.” said Anthony Angelini, President and Chief Executive Officer of TSS. “Our current projections show us returning to profitability in the second half of the year. The momentum of our business is strong, and we believe that our positioning for growth over the next several quarters will catapult us significantly as we roll into 2022.”

…it was some key Information Arbitrage takeaways from the conference call that caught our attention in an even larger way:


  • There are a number of trends that we believe will begin to improve our revenue opportunities, primarily 5G and the related business with the telecom industry.
  • And as we work through these changes, we anticipate that our level of integration services will increase during the third quarter.
  • We anticipate higher quarterly revenues from the facility business in the remainder of 2021 and as our customers begin to replace older deployed modular units and continue to refresh and upgrade their MDC base.
  • We are seeing improvement toward the end of the year and rolling into 2022.
  • I also said we expect and are seeing significant turnaround in Q3 and especially Q4.
  • We expect to end the year with revenue in the mid- to high $20 million range and adjusted EBITDA at $1 million and probably a bit higher. This represents a second half of at least $1.6 million of adjusted EBITDA.


The conference call arbitrage was important because, as investors slowly figure things out and become more comfortable with the direction TSSI is poised to go, they have bid shares up from $0.44 at the time of the release to $0.69, a 57% increase.

If you want to learn more about Information Arbitrage and how to identify it, listen to this podcast here where Maj speaks with Planet Microcap on the subject, which starts at around the 8 minute mark.

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Tobias Carlisle on Mean Reversion


“…so Joel Greenblatt had this website where he had “magic formula stocks”. And I knew that because I had done some research, the magic formula is looking for:

1. Cheap on one hand using enterprise value to EBIT, which is a similar metric to the one that I use.

2. And then it’s looking for return on invested capital, on the other hand, and combining them together.

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When you test it, it does really well, beats the market. So I published a book in 2012, called “Quantitative Value“. We tested that, and it really does beat the market…”

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