Be warned. We are activists, usually on the short side. We are biased.
We do our best to find and present facts, based on extensive primary research and using public sources.
​But we will profit if these stocks decline or, when we are long, rise in value.
We do not offer advice on how to trade a stock. We present our views.

Updated Report:

J Capital is short Microvast Holdings (NASDAQ: MVST)

More People Than Expected, Still a China Hustle​

  • On November 22, MVST’s chairman posted videos on his LinkedIn account showing significant activity in the Huzhou factory. We sent people to the plant to verify and found that the company does, in fact, have many employees, but, based on our research, nowhere near the 2,500 the chairman claimed. We are re-issuing this report to fairly and correctly address the company’s recent public statements.
  • We think the majority of MVST’s sales may be fake. MVST’s Chinese customers account for 57% of revenue in 2023, but the
    China factory is quiet and we believe produces little    .MVST China has disappeared from Chinese procurement lists, and local competitors say the company is not making discernible sales. We are skeptical of the revenue shown in local financial statements.​​
  • We suspect MVST knew a DOE $200 mln grant for a U.S. factory addition had been rescinded but failed to inform investors until the information hit Reuters months later, and MVST had no choice but to disclose.
  • We question the company’s reported backlog, currently $678.7 mln. Backlog growth is much higher than revenue growth. There was a $189 mln jump in Q2 2023, but the only visible addition came from a December agreement with REE Automotive -
    whose entire revenue is less than $1 mln. Regardless, based on the company’s track record, this could end up being a backlog of future losses.
  • MVST is a Chinese EV battery business that has failed. MVST, whose operations were almost all in China before the merger
    with Tuscan Holdings, nearly went bankrupt in 2019 but was saved by the SPAC. Tuscan had been seeking cannabis targets but settled on batteries.
Microvast's Huzhou facility: little activity. Photo by J Capital, October 9, 2023 2:48 pm

FEATURED REPORTS

January 24, 2023
June 8, 2023

YMM

A round trip for investors?

Photo of what we believe are shell companies at the YMM Guiyang headquarters. Photo by J Capital
Check out Anne's brief explanation of YMM on CNBC
  • ​YMM has the hallmarks of notorious Chinese round-tripping schemes. We believe transactions might be overstated by 6-10X.
  • Former salespeople have told us they set up shell companies to churn bank loans back and forth. These boomerang transactions would create the appearance of rising transaction volumes. The cash ultimately appears to get routed back.
  • The reported revenue and transaction volumes don’t line up with tax payments, commission revenue, or basic logic. 
  • We struggle to reconcile “Gross Transaction Value” with YMM’s revenue.
  • YMM’s acquisitions look highly suspicious. $185 million has been written off or impaired to date, with some investments impaired just months after they were made. We believe these write-offs potentially fill out and complete the round tripping.
  • We expect a phase-out of VAT rebates for trucking this year. Interviewees say they believe this will happen and that VAT will be unified by 2024. That would reduce gross profit by about 75% and create a heavy drag on cash flow. We think the margin degradation that would result from a phase-out has not been reflected in analyst estimates.
  • We think some of the short-term assets could also be inflated as a result of round-tripped cash. Short-term assets include ¥3.8 billion held by subsidiaries and VIEs in China.
  • Insider sales ahead of U.S. HFCAA accounting reviews by the PCAOB are a key red flag. The PCAOB says it has gotten access to inspect Chinese firms for the first time ever.

LI TSX

Behind the Latest Lithium Promote

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  • American Lithium (NASDAQ: AMLI, TSXV: LI) appears to have siphoned >$100 mln to parties we think are related, most of which appear undisclosed.
  • Our review of official documents indicates that AMLI paid several million to companies controlled by the founder’s daughter, an optician.
  • AMLI bought assets from notorious promoter Jason Christopher Shull, who was later blocked by Canadian regulators from transacting in several listed companies.
  • Using official documents, we reveal many significant payments to controversial figures such as Talal Yassin, Edward Reisner, and Anders Nerell. All three have been implicated in promoting penny stocks embroiled in controversy, including in cannabis and mineral exploration.
  • AMLI is spinning out a uranium asset in Peru that we think will never be mined. Experts believe extracting the uranium, which is mixed with lithium, is very difficult to do safely, nor has this type of deposit ever been mined at scale.​
  • Regulators have not granted a mining permit to the Macusani asset, which is plagued by environmental problems and protests by the local community. We question whether the spinoff is to distance AMLI from social and environmental fallout.
  • AMLI has paid large sums to marketing companies like Native Ads and Promethean Marketing that contract with penny-stock executives to pump their companies’ shares. Promethean’s owner was charged by the SEC in a “long-running fraudulent scheme." Native Ads uses sites it discreetly owns to promote the share prices of small cap stocks and was involved in promoting accused fraud Standard Lithium.
  • Don’t be fooled twice: the company founders have a long history of promoting stocks that surged in price then crashed: the ones we tracked dropped by an average of 87%.
  • AMLI has just acquired 9.9% of Surge Battery Metals (NILI CA), which looks like another related party. Surge is a hugely loss-making company with significant board overlap.
  • In November 2022, the Ontario Securities regulator ordered that company CFO Philip Gibbs be prohibited for one year from acting as a director of any reporting issuer because he had “misled investors.” Gibbs remains company CFO.
  • The type of lithium deposit in AMLI’s marquee project, TLC, is laced through clay and has never been commercially exploited.
October 7, 2021

FFIE

Move Over, Lordstown:
at Faraday, EV Stands for "Embezzlement Vehicle"

​We don't think Faraday Future (FFIE), an EV SPAC, will ever sell a car. So far, it's nothing but a bucket to collect money from U.S. investors and pour it into the black hole of debt created by its founder, China's best-known securities fraudster, Jia Yueting.

Jia is the Chinese equivalent of Elizabeth Holmes. But just as she might be able to raise money if she fled to China, so Jia has moved to the United States, where there's a new pool of gullible investors.
July 22, 2022

LKE ASX

Remote Chance
May 28, 2020

NG TSX

Pipe Dream
December 18, 2020

CBAK US

The Undead: Why CBAT Has Zero Value
Lake Resources (LKE ASX) “Lake” is one of several lithium explorers planning to use an unproven direct lithium extraction (DLE) technology to remove lithium from brine. If Lake can get the DLE technology to work then it plans to build a $1 bln processing facility in a remote location in the Andes.
Lake is claiming to produce “cleaner lithium.” We believe, however, DLE will still use large amounts of water and produce toxic waste. Lake has failed to get an operational pilot plant on site three years after promising it would. Lake insiders have successfully sold $8.1 mln in stock in the last year. Lake granted 41.5 mln options to financial institutions that published favorable research on the company. Insider share sales have followed a pattern of Lake announcement, followed by favorable research, stock price rise, and then insider sales. Investors had been expecting the delivery of the pilot plant to site and a definitive feasibility study (DFS) by the end of June. Instead, they got the resignation of the CEO and Managing Director Steven Promnitz without a replacement.
For the last 15 years, we believe NovaGold’s management team has systematically misled investors with subjective presentation of information about a deposit so remote and technically challenging that the mine will never be built. During that time, management has been treating this 12-person concept company like an ATM, awarding themselves base salaries that rival those of the CEOs at Newmont and Barrick and total compensation packages comparable with those at Rio and BHP. If the information from the company’s feasibility studies were presented in a more honest light, investors would understand that the Donlin deposit, of which they own 50%, is not feasible to put into production at any gold price.

We think management misleads investors with custom metrics designed to deceive, directing investors to presentations which claim the deposit will require $6.7 bln in capital, however, the feasibility study clearly shows this number is $8 bln (already, we believe, far too low). The proposed natural gas pipeline central to powering the project is dead on arrival. The terrain around the Donlin deposit is among the most inhospitable on the planet. Based on recent cost-per-inch/mile data we obtained from ICF, we show the costs of the pipeline (if someone were even to attempt to build it) are likely in excess of $3 bln, two to four times higher than management’s previous forecast. One engineer we spoke with who worked on costing the pipeline told us he doesn’t  know of any engineering company that has the experience to build such a complex pipeline.

Management has a long history of over-promising. The Galore Creek project, once promoted as the company’s key asset, was quietly sold at a loss in 2018 after revised capex estimates increased by 5x.

​In short, this is a stock promote, not a mining plan.
CBAK Energy Technology Inc. (CBAT) represents the barely re-animated corpse of CBAK, a Chinese reverse merger that lost all its manufacturing assets to default in 2014. In 2015-16, CBAT raised $113 mln from investors to build new factories—and, we will show, appears to have simply taken a lot of that ...
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​Cartoon by Johannes Leak
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