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What did the analysts see on Sino-Forest?

Short-seller Carson Block argues that maybe he knows some things other analysts don't about companies operating in China because other analysts don't spend as much time in China.

He told CNBC that analysts might miss problems because they don't go see the operations. (He makes the statements in the first video interview at this link.) Not so, says RBC Dominion Securities analyst Paul Quinn, who has followed the company since 2005.

"Over the last five years, I have visited Sino's Chinese forest operations on four separate occasions for about a week per visit," said Mr. Quinn. "I have seen Sino purchased trees and planted trees, manufacturing operations, other operations that purchase Sino's logs, Sino's nursery operations and tree-improvement project. I have been in numerous meetings with government forestry bureau representatives and Sino's operational staff."

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Further, Mr. Quinn has talked with other companies involved in forestry in China, "including: Weyerhaeuser, UPM, Cathay Forest, China Forestry, and China Grand."

He and other analysts will get another chance to visit Sino-Forest's operations and grill the company. As part of its defense against Mr. Block's attacks, which sent Sino-Forest stock down about 70 per cent in two days, the company is organizing another tour next month, and it will use technology to try to prove that it owns the trees the analysts will see.

"The company will be inviting analysts to join management on a tour of the company's plantations in July 2011, with details to follow. The analysts will be invited to suggest specific locations for the tour, and for each plantation visited, the company will present GPS references and the ownership documents," Sino-Forest said in a statement on Monday.

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