GEO Investing

Yuhe International Inc. (YUII), a Chinese chicken breeder whose business model is based on quick turnaround, took only three days to acknowledge it had been bested by two short sellers in rural Pennsylvania.

The investors, who run GeoInvesting LLC, issued their first negative report about the firm on June 13, saying an announced acquisition of 13 breeder farms never happened and that a $12 million down payment may have been misappropriated.

Yuhe, which says on its website that it’s the largest supplier of day-old broiler chickens in China, denied the report the next day. Three days later, on June 17, after GeoInvesting posted recordings of its phone calls with the man who supposedly sold the breeder farms, Yuhe executives admitted on a conference call that disclosures weren’t accurate and said the $12 million ended up in a separate private firm, where it was used to buy other farms. Yuhe shares plunged 71 percent to $1.21 on the Nasdaq Stock Market before trading was halted that day.

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