A special “sell signal”

Article Excerpt

SINO-FOREST CORP. $4.92 (Toronto symbol TRE) has attracted a great deal of news coverage in the past few days as it dropped from $20 to below $5. The price collapse follows the release of an independent research report that accused the company of fraud. We recommended Sino-Forest as a buy in December 2003 in Stock Pickers Digest, our newsletter that focuses on aggressive stocks. We recommended selling Sino-Forest three months later, for a gain of nearly 100%. We didn’t advise selling just because we had an opportunity to take a profit. In fact, we had developed qualms about the quality of information that the company was supplying to investors, and corporate actions it was taking. Speaking very generally, it’s always a good idea to sell and get out of any stock if you develop doubts about the integrity of the insiders. After all, there’s no limit to the ways that insiders can cheat investors if they set out to do so. No doubt we…