Mentioned in Video:
🧨 #PeakFintech (PKKFF on the OTC Markets, and PKK on the CSE) is a Canadian #Fintech company focused on emerging markets that was up-listed to the NASDAQ for about 3 weeks before getting de-listed. In this episode, I provide an update on the de-listing, the #shortreport by Grizzly Research, and my updated thoughts on whether Peak Fintech Group stock is still one of the best stocks to buy now.
About three weeks ago, I talked about a company called Peak Fintech Group, ticker symbol P K K F
F on the O T C markets and, for about 8 seconds, ticker symbol T N T on the NASDAQ. For a while
now, Peak Fintech has been one of my favorite stocks because it's a data-driven Fintech company
that connects small and medium-sized businesses to lenders and financial institutions in an emerging
market. That's a winning combo if I've ever heard one. Well, since I've made that episode,
the stock has been de-listed from the NASDAQ, had a short report come out against it, and triggered
a separate trading halt on the Canadian stock exchange, where its ticker symbol is P K K. What a
wild ride. Actually, the first thing I want to do is apologize to you. It sucks when you get excited
and buy into a stock, only to immediately have all this bad stuff happen and my timing on that video
was terrible. I know there are people who are excited about AND invested in this company because
of me and I do take that seriously. I know how hard trust is to earn and how easy it is to lose.
So, in this episode, I'd like to cover what the absolute heck is going on with this stock, whether
the short report has any merit, and thoughts about its NASDAQ de-listing. Your time is valuable to
here's the bottom line upfront. Just like last time, I still love this company and have the
same roughly two-year price target of $21 dollars per share. And, just like last time, I'm still not
a financial advisor so nothing I say on this channel should ever be taken as financial advice.
So, let's take an objective look at the company, the NASDAQ delisting, and the short report to see
if anything has actually changed. Peak Fintech is a Canadian Fintech company with operations in
mainland China. In my opinion, there are two things that are special about Peak Fintech.
First, it's operating in a way that the Chinese government likes; it's business to business,
so it's not handling any sensitive consumer data AND it's focused on small and medium-sized
businesses instead of tech giants, which the Chinese government is trying to reign in.
Second, because it's not a Chinese company at all, when you buy the stock, you get the stock,
not an ADR like Alibaba, Pinduoduo, Nio stock, and so on. American Depositary Receipts, or ADRs,
from China are the stocks that have that added risk of de-listing if the Chinese government
decides to do so; not that I really think that would happen, but my point is that Peak
Fintech isn't a Chinese ADR stock, to begin with. It's a Canadian stock, which leads us
right into their de-listing from the NASDAQ at the end of September, after getting listed just
three weeks earlier. This is a press release from Peak Fintech where they address what's going on.
Peak’s application to list on the NASDAQ was made under the Multi-jurisdictional Disclosure System
(the “MJDS”), which was jointly adopted by the SEC and the Canadian Securities
Administrators. The MJDS is intended to make it easier for companies on both
sides of the border to list their respective securities on exchanges in both countries.
The SEC notes that the MJDS allows eligible Canadian companies to register their securities
and fulfill their periodic reporting requirements by use of documents prepared in accordance with
Canadian requirements and reviewed by Canadian Securities Administrators. So, my guess is
those Canadian requirements and guidelines are what Peak Fintech has been following for their
financial reporting and this MJDS system allows them to list on the other side of the border
without worrying about two sets of paperwork. Well, guess what — the SEC here in the United
States recently changed their disclosure guidance for companies with operations in China. So,
this updated guidance is what caused the snag on the NASDAQ, even though the stock is still trading
just fine on the over the counter markets as P K K F F and on the Canadian stock exchange as P K K.
Because I'm a glutton for punishment, I went ahead and read the new SEC guidance
to see if these snags are legit or just an excuse and they seem pretty legit to me.
The new SEC guidance says that when the majority of a company's operations are in China,
which is definitely true for Peak Fintech, they have to report all the different kinds
of risks associated with that. China has often restricted the access that
U.S. regulators have to information they need to investigate companies.
Current regulations in China limit or prohibit foreign investment in Chinese companies
operating in certain industries. China’s legal system is substantially different from the
legal system in the United States and may raise risks and uncertainties concerning the intent,
effect, and enforcement of its laws, rules, and regulations, including those that restrict the
inflow and outflow of foreign capital. Legal claims, including federal securities law claims
against China-based Issuers, or their officers, directors, and gatekeepers, may be difficult
or impossible for investors to pursue in U.S. courts. China-based Issuers must fully disclose
material risks related to their operations in China. The list goes on and on and if the
Canadian Securities Administrators didn't start to require these same things at the same time,
Peak Fintech wouldn't have known to include all that language. So, Peak Fintech has voluntarily
withdrawn its Form 40-F filed with the SEC while it works to comply with recent disclosure guidance
provided for companies either based in China or with the majority of their operations in China.
Could there be more to it than this? Yes, absolutely. But does this seem
like a perfectly reasonable paperwork issue given that Peak Fintech files with Canadian regulators
and got tripped up by separate American regulators that just changed their reporting requirements?
Yeah, that seems like a reasonable paperwork hiccup that's on Peak Fintech to solve
and I do think that's really what's going on. I'm saying that because soon after their de-listing
from the NASDAQ, Grizzly Reports released a short report on Peak Fintech and that report tells a
completely different story. That report came out on October 4th and dropped the stock by over 20%,
causing a separate trading halt for it on the Canadian exchange in the process.
Yikes! Here is my personal rule on short reports. The better the timing, the worse the report.
Releasing a short report right after a stock gets de-listed from a major exchange? That's
pretty great timing for a short report. You're basically kicking someone while they're down and
then claiming you won the whole fight. Remember the short report on Nikola by Hindenburg Research?
That report happened right after Nikola announced a 2 billion dollar deal with General Motors.
That's horrible timing for a short report, right? But that didn't matter because it had multiple
actual smoking guns in it. The other thing you should realize about short reports like this one,
like the one against Ginkgo Bioworks, like the one against Draftkings, and so on, is that the authors
of the report can take their short position, tell everyone they like about the report,
release the report, and then cash out on their short position one week later when the report
works, even if it's loaded with lies. And loaded with lies is exactly the feeling you'll get if you
look at the difference between the disclaimers in Hindenburg's report on Nikola and Grizzly's
report on Peak Fintech. Grizzly's disclaimer is MUCH longer and, in my opinion, gives everything
away in the first line: this report and all statements contained herein are the opinions
of Grizzly Research and are NOT statements of fact. All caps and underlined by them, not me.
I won't read you this entire report but if you'd like the balanced view in a nutshell, here it is.
First, both the short report by Grizzly Research and Peak Fintech's response to the report
are linked in the description below. That should give you most of the resources you
need to make your own conclusions without my biased opinion in favor of Peak Fintech.
I'll also link my full deep dive on the company from right after it got up-listed to the NASDAQ
in the top right-hand corner of your screen right now and in the description below as well,
in case you want more background info on the company. Like I say in that deep dive,
Peak Fintech is made up of multiple subsidiaries that basically act as different business units
that work together depending on the nature of the business-to-business transaction they're
trying to facilitate. The short report focuses on Peak Fintech's acquisitions or equity in
Heartbeat Insurance, Jinxiaoer, and Asia Synergy Financial Capital or ASFC. The report says a lot
of stuff like: To our amazement, PKK’s scheming extends beyond investments in hollow entities.
Our research uncovers that PKK does not even own its subsidiaries. Words like amazement and
scheming don't lend a lot of credibility to what should be a fact-based report.
And, to no one's surprise, Peak Fintech's CEO Johnson Joseph responded in kind.
Basically, when Peak Fintech makes acquisitions, they prefer to acquire the assets, IP, clients,
management, and employees. That way they get all the benefits and avoid any potential skeletons
that may be hiding in the company or associated with the brand. That's what they did in the case
of Heartbeat Insurance and Jinxiaoer, which is the loan brokerage platform I talked about in the
previous episode. When Peak Fintech acquired the platform, it already had generated 15 billion RMB
or around 2.3 billion dollars in loan requests, so what Peak Fintech bought was a working piece
of financial technology that would help facilitate their transactions. The one other point about the
report I'll mention is that it alleges that the relationship between Cubeler and Peak Fintech
is self-dealing. If you don't know what Cubeler is, it's the technology platform that powers Peak
Fintech's entire business hub. As of October 1st, Peak Fintech announced that it officially acquired
and now owns this platform, which is a pretty big deal. It would be like Tesla building on top of a
battery platform it didn't own and then finally getting the rights to it. The result is Tesla is
now way less risky because it's building on top of stuff that it owns entirely. Same for Peak Fintech
with Cubeler. Because Peak Fintech still owes royalties to Cubeler, they're now paying royalties
to a company they own, no matter how they decide to pay it. That's not really self-dealing in my
opinion. One thing I will say is that I wish Johnson Joseph was a little more formal in his
responses to the short report. When you read his responses, it's clear that he thinks it's a waste
of time, but the truth is it's never a waste of time defending your company and its stakeholders
against claims of fraud, insider dealing, and so on. This was a great opportunity to highlight
some of Peak Fintech's strengths, including the decisions management has made to get it this far.
As you can tell by how I run this channel, I feel a little extra professionalism goes a long
way. Just my two cents. Comment below or tweet me at ticker symbol you with your two cents.
Let me know how you feel about Peak Fintech, its NASDAQ de-listing, Grizzly Research's short
report, and Johnson Joseph's response to it. And definitely keep letting me know how you feel about
the timing of my deep dive into the company. That feedback helps me learn and grow as well.
As for me, I still think Peak Fintech is a huge winner as a Fintech company in an emerging market.
Based on everything I've read, the de-listing was an honest paperwork hiccup between them,
the Canadian Securities Administrators they file paperwork with, and the SEC's new guidance
for companies operating in China. I'm really excited for them to re-list on the NASDAQ soon
and I know they're actively working on it from their monthly Form 7, which they file with the
Canadian stock exchange every month. And of course, when they do come back to the NASDAQ,
I plan on adding Peak Fintech into the $100,000 dollar public portfolio I'm starting when this
channel hits 100,000 subscribers. The goal of that portfolio is to use all the research
and data I've been going over since I've started this channel to show how I would grow an account
starting from a clean slate, knowing what I know today. Just like some investors compare their
performance to the S&P500, I'll be comparing mine to ARKK, ARK Invest's flagship innovation fund,
over a 5-year time horizon — or until I have to admit defeat. Either way, the goal is to provide
a fun and interactive investing experience for my awesome community. If you want to learn more about
that project or the other holdings in my personal accounts, check out my portfolio reveal episode,
where I share pretty much every investment I've made since I started the channel – including
Peak Fintech. I'll leave a link to it in the top right-hand corner of your screen right now and
in the description below as well. I think you'll really enjoy it. Until next time, this is Ticker
Symbol YOU. My name is Alex, reminding you that the best investment you can make… is in you.
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