Story: A fired financial Controller, Charlie Situ, reported to SEC regarding LDK\'s discrepency on inventory. LDK drops like a rock.
LDK makes the statement that there is no discrepency and asked for independent auditing immediately. The whole process takes a couple of days, and therefore for momo, it is a greate opportunity to short, so they did.

Key point: Can Silicon scraps be regarded part of the inventory or not? SITU thought it could not as it is scraps; LDK thought it could be as it can produce wafer after filtering and processing.
Barron has no idea on this process and therefore its article is just typical Wall Street\'s basher.
Hsu made the comments that they are not satisfied with LDK\'s management, however, LDK has responded as prompt as possible. And its CFO has been to US last Thursday just for this issue. Independent auditing is not a business of 1 day, so what Hsu is expecting? lol.

There is nothing wrong to regard silicon scrap as part of inventory, as indicated in LDK2007Q2 report. The price of silicon is ranged from $30-$300/kg (which contains all kinds of silicon), the reported inventory was 600 ton with $130 avg price. Regarding the quality of silicon and whether it could be used to make high quality wafer, I am sure the technical person has a lot better knowledge than Situ. If you read the document of LDK IPO as well as the Aug conference call, it has been stated clearly that LDK masters the tech. to take advantage of silicon scrap.

Observation & Speculation:
A couple of friends and I are playing LDK from its $33 price range in July. It is a highly manipulated stock, and for any rally, it has very deep pull back to shake weak hands. We succeeded in most of the trade, including the biggest pull back on Aug 16, and estimated its next pull back region is 48-50. We linquidated our position at 48, including all the calls option. However, we never see any real pull back since then. In the last OE, LDK was in price of 58-59, and we are very confident on its closing at 50-55 in OE after observing the open interest change (50/55/60 put OI starts diminishing to 0 while calls OI are increasing, and many more), but we are wrong again. This time, after 50/60put OI becomes to 0, it increased again dramatically; in addition, in the intraday chart, every time when someone hammer LDK down $1-$2, a big mouth suddenly buy all the low price shares and push it back to higher. You know where it was closed in the last OE.
My speculation: Some MM (Pifer? CIBC? lol) want the Maximum Pain and therefore sold many calls,and bought back their written puts. However, a bigger MM did the opposite.

I am 100% sure that in the last OE, some MM lost a lot! And I am guessing they find the Situ. They played the WS trick, to kill the bigger MM who fooled them in the last OE. lol

Personally I like LDK and believe this is just a drama. Retail investors became the toy and sacrifice of the war...

Expectation:
Last friday, it was closed 51. Reason is simple, if any good news come out, short will die over the weekend. they covered.
Today, they short again, reason is simple again, LDK\'s independent auditing will take 2-3-4-5 days, but not 1 day, they can short with no risk.

But one more thing I am sure is: some big mouth is eating. And one gap up will kill all shorts sooner or later..

This is the most interesting observation I have found in stock market. Follow your intuition, and don\'t played by WS again... We are here, to conquer WS:)