🧨 CAN THEY SURVIVE? Peak Fintech Group Stock Update

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About three weeks ago, I talked about a company called Peak Fintech Group, ticker symbol P K K F
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F on the O T C markets and, for about 8 seconds, ticker symbol T N T on the NASDAQ. For a while
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now, Peak Fintech has been one of my favorite stocks because it's a data-driven Fintech company
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that connects small and medium-sized businesses to lenders and financial institutions in an emerging
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market. That's a winning combo if I've ever heard one. Well, since I've made that episode,
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the stock has been de-listed from the NASDAQ, had a short report come out against it, and triggered
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a separate trading halt on the Canadian stock exchange, where its ticker symbol is P K K. What a
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wild ride. Actually, the first thing I want to do is apologize to you. It sucks when you get excited
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and buy into a stock, only to immediately have all this bad stuff happen and my timing on that video
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was terrible. I know there are people who are excited about AND invested in this company because
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of me and I do take that seriously. I know how hard trust is to earn and how easy it is to lose.
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So, in this episode, I'd like to cover what the absolute heck is going on with this stock, whether
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the short report has any merit, and thoughts about its NASDAQ de-listing. Your time is valuable to
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here's the bottom line upfront. Just like last time, I still love this company and have the
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same roughly two-year price target of $21 dollars per share. And, just like last time, I'm still not
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a financial advisor so nothing I say on this channel should ever be taken as financial advice.
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So, let's take an objective look at the company, the NASDAQ delisting, and the short report to see
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if anything has actually changed. Peak Fintech is a Canadian Fintech company with operations in
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mainland China. In my opinion, there are two things that are special about Peak Fintech.
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First, it's operating in a way that the Chinese government likes; it's business to business,
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so it's not handling any sensitive consumer data AND it's focused on small and medium-sized
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businesses instead of tech giants, which the Chinese government is trying to reign in.
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Second, because it's not a Chinese company at all, when you buy the stock, you get the stock,
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not an ADR like Alibaba, Pinduoduo, Nio stock, and so on. American Depositary Receipts, or ADRs,
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from China are the stocks that have that added risk of de-listing if the Chinese government
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decides to do so; not that I really think that would happen, but my point is that Peak
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Fintech isn't a Chinese ADR stock, to begin with. It's a Canadian stock, which leads us
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right into their de-listing from the NASDAQ at the end of September, after getting listed just
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three weeks earlier. This is a press release from Peak Fintech where they address what's going on.
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Peak’s application to list on the NASDAQ was made under the Multi-jurisdictional Disclosure System
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(the “MJDS”), which was jointly adopted by the SEC and the Canadian Securities
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Administrators. The MJDS is intended to make it easier for companies on both
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sides of the border to list their respective securities on exchanges in both countries.
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The SEC notes that the MJDS allows eligible Canadian companies to register their securities
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and fulfill their periodic reporting requirements by use of documents prepared in accordance with
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Canadian requirements and reviewed by Canadian Securities Administrators. So, my guess is
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those Canadian requirements and guidelines are what Peak Fintech has been following for their
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financial reporting and this MJDS system allows them to list on the other side of the border
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without worrying about two sets of paperwork. Well, guess what — the SEC here in the United
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States recently changed their disclosure guidance for companies with operations in China. So,
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this updated guidance is what caused the snag on the NASDAQ, even though the stock is still trading
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just fine on the over the counter markets as P K K F F and on the Canadian stock exchange as P K K.
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Because I'm a glutton for punishment, I went ahead and read the new SEC guidance
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to see if these snags are legit or just an excuse and they seem pretty legit to me.
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The new SEC guidance says that when the majority of a company's operations are in China,
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which is definitely true for Peak Fintech, they have to report all the different kinds
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of risks associated with that. China has often restricted the access that
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U.S. regulators have to information they need to investigate companies.
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Current regulations in China limit or prohibit foreign investment in Chinese companies
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operating in certain industries. China’s legal system is substantially different from the
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legal system in the United States and may raise risks and uncertainties concerning the intent,
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effect, and enforcement of its laws, rules, and regulations, including those that restrict the
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inflow and outflow of foreign capital. Legal claims, including federal securities law claims
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against China-based Issuers, or their officers, directors, and gatekeepers, may be difficult
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or impossible for investors to pursue in U.S. courts. China-based Issuers must fully disclose
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material risks related to their operations in China. The list goes on and on and if the
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Canadian Securities Administrators didn't start to require these same things at the same time,
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Peak Fintech wouldn't have known to include all that language. So, Peak Fintech has voluntarily
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withdrawn its Form 40-F filed with the SEC while it works to comply with recent disclosure guidance
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provided for companies either based in China or with the majority of their operations in China.
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Could there be more to it than this? Yes, absolutely. But does this seem
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like a perfectly reasonable paperwork issue given that Peak Fintech files with Canadian regulators
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and got tripped up by separate American regulators that just changed their reporting requirements?
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Yeah, that seems like a reasonable paperwork hiccup that's on Peak Fintech to solve
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and I do think that's really what's going on. I'm saying that because soon after their de-listing
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from the NASDAQ, Grizzly Reports released a short report on Peak Fintech and that report tells a
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completely different story. That report came out on October 4th and dropped the stock by over 20%,
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causing a separate trading halt for it on the Canadian exchange in the process.
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Yikes! Here is my personal rule on short reports. The better the timing, the worse the report.
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Releasing a short report right after a stock gets de-listed from a major exchange? That's
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pretty great timing for a short report. You're basically kicking someone while they're down and
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then claiming you won the whole fight. Remember the short report on Nikola by Hindenburg Research?
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That report happened right after Nikola announced a 2 billion dollar deal with General Motors.
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That's horrible timing for a short report, right? But that didn't matter because it had multiple
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actual smoking guns in it. The other thing you should realize about short reports like this one,
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like the one against Ginkgo Bioworks, like the one against Draftkings, and so on, is that the authors
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of the report can take their short position, tell everyone they like about the report,
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release the report, and then cash out on their short position one week later when the report
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works, even if it's loaded with lies. And loaded with lies is exactly the feeling you'll get if you
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look at the difference between the disclaimers in Hindenburg's report on Nikola and Grizzly's
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report on Peak Fintech. Grizzly's disclaimer is MUCH longer and, in my opinion, gives everything
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away in the first line: this report and all statements contained herein are the opinions
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of Grizzly Research and are NOT statements of fact. All caps and underlined by them, not me.
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I won't read you this entire report but if you'd like the balanced view in a nutshell, here it is.
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First, both the short report by Grizzly Research and Peak Fintech's response to the report
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are linked in the description below. That should give you most of the resources you
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need to make your own conclusions without my biased opinion in favor of Peak Fintech.
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I'll also link my full deep dive on the company from right after it got up-listed to the NASDAQ
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in the top right-hand corner of your screen right now and in the description below as well,
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in case you want more background info on the company. Like I say in that deep dive,
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Peak Fintech is made up of multiple subsidiaries that basically act as different business units
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that work together depending on the nature of the business-to-business transaction they're
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trying to facilitate. The short report focuses on Peak Fintech's acquisitions or equity in
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Heartbeat Insurance, Jinxiaoer, and Asia Synergy Financial Capital or ASFC. The report says a lot
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of stuff like: To our amazement, PKK’s scheming extends beyond investments in hollow entities.
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Our research uncovers that PKK does not even own its subsidiaries. Words like amazement and
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scheming don't lend a lot of credibility to what should be a fact-based report.
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And, to no one's surprise, Peak Fintech's CEO Johnson Joseph responded in kind.
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Basically, when Peak Fintech makes acquisitions, they prefer to acquire the assets, IP, clients,
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management, and employees. That way they get all the benefits and avoid any potential skeletons
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that may be hiding in the company or associated with the brand. That's what they did in the case
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of Heartbeat Insurance and Jinxiaoer, which is the loan brokerage platform I talked about in the
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previous episode. When Peak Fintech acquired the platform, it already had generated 15 billion RMB
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or around 2.3 billion dollars in loan requests, so what Peak Fintech bought was a working piece
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of financial technology that would help facilitate their transactions. The one other point about the
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report I'll mention is that it alleges that the relationship between Cubeler and Peak Fintech
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is self-dealing. If you don't know what Cubeler is, it's the technology platform that powers Peak
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Fintech's entire business hub. As of October 1st, Peak Fintech announced that it officially acquired
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and now owns this platform, which is a pretty big deal. It would be like Tesla building on top of a
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battery platform it didn't own and then finally getting the rights to it. The result is Tesla is
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now way less risky because it's building on top of stuff that it owns entirely. Same for Peak Fintech
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with Cubeler. Because Peak Fintech still owes royalties to Cubeler, they're now paying royalties
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to a company they own, no matter how they decide to pay it. That's not really self-dealing in my
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opinion. One thing I will say is that I wish Johnson Joseph was a little more formal in his
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responses to the short report. When you read his responses, it's clear that he thinks it's a waste
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of time, but the truth is it's never a waste of time defending your company and its stakeholders
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against claims of fraud, insider dealing, and so on. This was a great opportunity to highlight
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some of Peak Fintech's strengths, including the decisions management has made to get it this far.
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As you can tell by how I run this channel, I feel a little extra professionalism goes a long
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way. Just my two cents. Comment below or tweet me at ticker symbol you with your two cents.
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Let me know how you feel about Peak Fintech, its NASDAQ de-listing, Grizzly Research's short
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report, and Johnson Joseph's response to it. And definitely keep letting me know how you feel about
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the timing of my deep dive into the company. That feedback helps me learn and grow as well.
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As for me, I still think Peak Fintech is a huge winner as a Fintech company in an emerging market.
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Based on everything I've read, the de-listing was an honest paperwork hiccup between them,
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the Canadian Securities Administrators they file paperwork with, and the SEC's new guidance
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for companies operating in China. I'm really excited for them to re-list on the NASDAQ soon
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and I know they're actively working on it from their monthly Form 7, which they file with the
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Canadian stock exchange every month. And of course, when they do come back to the NASDAQ,
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I plan on adding Peak Fintech into the $100,000 dollar public portfolio I'm starting when this
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channel hits 100,000 subscribers. The goal of that portfolio is to use all the research
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and data I've been going over since I've started this channel to show how I would grow an account
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starting from a clean slate, knowing what I know today. Just like some investors compare their
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performance to the S&P500, I'll be comparing mine to ARKK, ARK Invest's flagship innovation fund,
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over a 5-year time horizon — or until I have to admit defeat. Either way, the goal is to provide
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a fun and interactive investing experience for my awesome community. If you want to learn more about
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that project or the other holdings in my personal accounts, check out my portfolio reveal episode,
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where I share pretty much every investment I've made since I started the channel – including
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Peak Fintech. I'll leave a link to it in the top right-hand corner of your screen right now and
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in the description below as well. I think you'll really enjoy it. Until next time, this is Ticker
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Symbol YOU. My name is Alex, reminding you that the best investment you can make… is in you.