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Political Commentary

Welcome to the Political Commentary section of shortsellingadvocacy.com. The purpose of the information available in this section is to highlight issues that Manuel Asensio believes are important to investor advocacy. The section includes a variety of sources, including reports by Manuel Asensio and Asensio & Company, Inc. ("Asensio") and various articles from the mainstream press. While profit was an important motivation for much of the Asensio work product, Manuel Asensio maintained his interest in facilitating price valuation for the sake of investors. As a result of his activist short-selling, Manuel Asensio communicated with journalists, regulators and legislators to protect investors from overpriced securities. Manuel Asensio believes that he had a responsibility to publicize his research discoveries for the benefit of the securities industry. Manuel Asensio strove to uncover the truth about companies involved in dishonest promotional activities, exposing problems with promotional gimmicks and hype. For the convenience of shortsellingadvocacy.com's readers, we present the Commentaries according to chronology. We hope that these resources help promote investor protection and advocacy.



April 28, 2008. Sprott's Timminco dealings openly questioned
Three articles were published last week that discuss Sprott Asset Management Inc.'s dealings in Timminco Limited's stock and their affect on the proposed Sprott IPO.

The Toronto Star was the latest to publish. Its report was authored by independent market analyst Bill Carrigan. The Toronto Star referred to Barron's article on Timminco as "negative and well researched." Mr. Carrigan summarizied the Barron's article as stating that Timminco's invention "existed only on PowerPoint slides." He also writes about Eric Sprott's "big Timminco holding." And concludes "I have no desire for any exposure to the stock (Timminco), either directly or indirectly, through the Sprott IPO."

Andrew Willis of the Globe and Mail alleges “strong investor support” of Sprott’s IPO in his article. The Globe noted that Sprott owns 19 percent of Timminco but failed to translate that figure into a percentage showing how material Sprott’s Timminco holding is to its total assets under management and their 2007 revenues.

The Financial Post story did explore Timminco’s significant impact on Sprott's 2007 revenues and IPO prospects.

In his April 24th article, “Timminco’s plunge painful for Sprott,” Barry Critchley states that Sprott’s Timminco holding at its peak was worth about “8% of the $6.9 billion in assets that [Sprott] manages [collectively].”

Sprott’s gains on Timminco contributed to more than 25% of all investment returns for Sprott’s assets in 2007, according to the recent article in Barron’s.

The Financial Post’s final conclusion was “Timminco, one of its [Sprott] biggest winners, may turn out to be a dead weight.”

In recent days, multiple media outlets have published information and raised issues helpful to investors about Timminco and Sprott's Timminco dealings.

Meanwhile, the Globe and Mail continues to exalt Eric Sprott’s public legacy without investigation or criticism and omit matters of substance being addressed by Reuters, Dow Jones, Bloomberg, Barron’s, The Toronto Star and the Financial Post. Instead the Globe fabricated a story about Timminco’s short sellers claiming that they, who are fully independent and completely uninvolved in Sprott’s Timminco dealings and Timminco’s claims or Sprott’s IPO, are a part of the story.

The Globe has published a bibliography full of articles related to Sprott and his upcoming IPO. On February 21st, the Globe published a lengthy feature profile, “Inside Sprott,” on Eric Sprott and his “amazingly successful” fund. That was followed by “A knack for picking the winner” on April 8th with the introductory line “Eric Sprott is a Guinness Book of Records unto himself.” The Globe then called Sprott a “guru” and Timminco his “market darling” on April 21st in “From hot stock to target.”

The Globe and Mail now appears conflicted in its coverage of Eric Sprott's Timminco dealigs and, as a result of this apparent conflict, Timminco. Unfortunately this conflict is preventing its Canadian readers from getting the benefits of its reporting resources.

No reporting has yet to disclose wheter Sprott purchased any of its Timminco shares before, or what part of its holdings it bought soon after, Timminco's March 15, 2007 announcement. This March 15th press release launched Timminco’s astronomical, and unproven, technology and potential earnings claims.

With the attached coverage of Sprott’s IPO appears the Globe has yet to diverted from its conflicted point of view.

Click here to read The Globe and Mail April 24, 2008 article titled "Sprott IPO steams ahead" by Andrew Willis.

Click here to read the Financial Post April 24, 2008 article titled "Timminco's plunge painful for Sprott" by Barry Critchley.
 
April 23, 2008. Timminco¹s convoluted dealings and "furious" insider selling comes to light.
Timminco Limited (TSX: TIM $18.23) insiders’ creation and use of a new company called AMG Advanced Metallurgical Group N.V (AMS: AMG 44.92E) to sell approximately US$400 million of stock in their interest in Timminco is the subject of an article in today’s Canadian press. The stock sales were executed in Amsterdam. Before providing details of the transactions the article states that the “Fact is the people who control the company (Timminco) are highly conflicted and have been liquidating their position furiously.”

The article attempts to unravel the relationship between Safeguard International Fund LP, Timminco, AMG and Heinz Schimmelbusch. The article notes that “it's clear that Mr. Schimmelbusch, a shrewd financial engineer if nothing else, wasn't sure enough of the outcome to hang in fully, having effectively sold Timminco shares well below where they are today (although he still has some interest in the company). If he felt it was worth starting to sell at much lower prices, investors should know about it.”

The article in today’s Globe and Mail finds that “Over the years, Safeguard gradually increased its interest in Timminco by lending the struggling company money. The debt, however, could be converted into stock on the cheap - about 40 cents a share for the most part.”

Not included in the report is an analysis of the timing of the Timminco insider stock purchases and a series of then undisclosed material actions made throughout 2006, which led to the current situation. The actions, which included comparably brief experimentation followed quickly by the building of a pilot plant, were not fully publicly disclosed until after these $0.40 insider purchases were executed.

The article notes that “it seems that Mr. Schimmelbusch et al. were not quite as convinced about Timminco's promise.” That article points out that these insiders have their largest stake in Safeguard, followed by AMG, and finally Timminco through their AMG position. According to the article, the insiders’ AMG liquidation materially reduced Safeguard’s AMG “ownership to 40 per cent from 92 per cent. Further sales of AMG shares, post-offering, cut Safeguard's ownership to 26 per cent.”

The Globe and Mail article was authored by a chartered financial analyst.

Click here to read “Timminco saga has its problems” published in the Globe and Mail on April 23, 2008.
 
April 22, 2008. Q-Cells acknowledges having no relevant information on Timminco.
Yesterday Falk Reimann of Q-Cells AG (FRA:QCE 69.86€) acknowledged that Q-Cells cannot provide Timminco Limited’s (TSX: TIM $22.15) investors or the media with any verifiable information on Timminco’s R&D or capital expenditures, variable cost, cost of goods sold or pricing data in order for them to make any judgments concerning the value of Timminco’s shares. Furthermore, Q-Cells could not comment on Timminco’s potential to generate earnings or ability to deliver material acceptable to Q-Cells or its other customer’s profitably. Q-Cells has not agreed to help investors determine if Timminco’s published earnings projections are fair, reasonable or attainable.

Specifically, Q-Cells has not provided any party with any information about the source or cost of Timminco’s raw materials, the number of times that Timminco puts its material through its process, the amount of labor, energy and slag it uses each time Timminco puts its material through its process nor the cost of this labor, energy or slag, or the amount of silicon that is lost during the production process. Furthermore, Q-Cells has not provided any investor or reporter with any opinion concerning Timminco’s patent application including omitted relevant prior patents or publications.

Finally, Mr. Reimann acknowledged that Q-Cells is not involved with Timminco’s production process, capacity utilization, disclosures on individual batch purities, raw material procurement or selection of materials to be reprocessed, stockpiled for future refinement or selected to be delivered to one customer or another.

Investors should be aware that Q-Cells’ controlling shareholder, Good Energies, has directly invested in at least one technology based metallurgical solar grade silicon company, which unlike Timminco is not burdened with a legacy commodity silicon plant. This investment was made at a valuation of less than 5% of Timminco’s entire current market value.

Timminco is a 30 year old producer of commodity grade silicon. It produces 50,000 MT per year. The industry produces over 5 million MT per year. Timminco has repeatedly used Q-Cells in its attempt to gain creditability for their claim to have successfully eliminated 97% of the industry leading solar grade silicon suppliers’ capital expenditures while at the same time reducing variable cost by approximately 50%. Timminco makes these claims while having spent less than 1% of its competitor’s research and development expenditures and cutting development time by 90%. Furthermore, Timminco claims that its process is new. However, Timminco’s recently available patent application reveals a crude high temperature oxidation process that uses turbulence and large amounts of slag and omits significant prior art that itself is known to be uneconomical.
 
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