Market Overview

Prescience Investment Group Is Bearish On Yongye International


Shares of Yongye International (Nasdaq: YONG), the Chinese agricultural products maker, traded almost 3% lower today and Prescience Investment Group is out with a note saying investors in the stock should be “extremely cautious.”

“We believe that YONG's business activities are riddled with undisclosed related party transactions and that its revenue and profit may be overstated in its filings with the SEC. Further, we urge the NASDAQ and the SEC to look into Yongye's largest sources of revenue in an effort to protect public shareholders and defend the integrity of US financial markets,” Prescience said in a note.

On its web site, Prescience says “We specialize in extensive, investigative research on difficult-to-analyze or obscure public companies in order to develop unique insights and identify singular investment opportunities. We seek out abnormally large disparities between what businesses are intrinsically worth and what they sell for and invest accordingly, long and short.”

In the note, the firm says Yongye is “vastly overstating” revenue derived from one of its largest distributors and noted there is potential for KPMG, Yongye's auditor since 2009, to have been deceived.

Prescience said its fundamental value for Yongye is 53 cents a share, well below the $4.10 per share the stock closed at today. The stock's price has almost been cut in half this year.

Yongye makes and sells fulvic acid based liquid and powder nutrient compounds for plants and animals.

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