Vipshop: We Are Not Buying The Financial Statements (Mithra Forensic Research)

http://seekingalpha.com/article/3172676-vipshop-we-are-not-buying-the-financial-statements?ifp=0

Mithra Forensic Researchmithraforensicresearch.com 

Long/short equity, growth, contrarian, activist investor

Vipshop: We Are Not Buying The Financial Statements

Top Idea  |  May. 12, 2015 5:00 AM ET  |  10 comments  |  About:

Disclosure: The author is short VIPS. (More…)

Summary

Vipshop has enjoyed share price appreciation of 45% in 2015 year-to-date.

Forensic models suggest that the firm has manipulated sales, receivables, profit and other asset accounts.

In several instances, the company’s financial statements are contradicted by management’s own disclosures.

May 11, 2015

Vipshop: We Are Not Buying Your Financial Statements

TABLE OF CONTENTS

Executive summary

VIPS has recorded consistently impressive results since its IPO

A reliable fraud indicator warns that VIPS is a potential manipulator

The multiplier effect: if VIPS uses cash from related parties, it can Gross them up to report even higher fake sales

This is downright Gross

Inventory: what’s mine is mine, and what’s yours is also mine

Lefeng and ovation: sweetheart deals on Valentine’s day?

Logistics investments: the last mile may be the last straw

CAPEX: aren’t we already swimming in excess capacity?

As RPTs grow, so grows ‘Other Receivables’

Held-to-maturity: is this another name for Related Party Loans?

Vipshop: We Are Not Buying Your Financial Statements

China’s leading discount ecommerce retailer has been flagged as possible manipulator by reliable forensic accounting quant models. Our qualitative analysis of the company’s financials also reveals possible improper GAAP accounting and financial anomalies that suggest that the quant models are indeed correct. In our opinion, VIPS may have grown its 2014 gross profit by $573M by possibly diverting funds to related parties to be used to transact fake sales. Continue reading

SEC Charges ITT Educational Services, Top Executives With Fraud; For-profit educator allegedly hid poor performance, financial impact of student-loan programs

http://www.wsj.com/articles/sec-charges-itt-educational-services-top-executives-with-fraud-1431442507

SEC Charges ITT Educational Services, Top Executives With Fraud

For-profit educator allegedly hid poor performance, financial impact of student-loan programs

The Securities and Exchange Commission said it has filed fraud charges against for-profit educator ITT Educational Services and two top executives. ILLUSTRATION: BLOOMBERG

CHELSEY DULANEY

Updated May 12, 2015 11:54 a.m. ET

The Securities and Exchange Commission on Tuesday said it brought fraud charges against ITT Educational Services Inc. and two of its top executives, alleging that they misled investors about the looming financial impact of two badly-performing student-loan programs on the for-profit educator.

According to an SEC complaint filed in the U.S. District Court for the Southern District of Indiana, the company, Chief Executive Kevin Modany and Chief Financial Officer Daniel Fitzpatrick concealed from ITT’s investors the poor performance and magnitude of ITT’s guarantee obligations for two student-loan programs. Continue reading