Special event opportunity on a trashy China Junket: $MOMO.

The most important value factor, and one that will always be a key differentiator, is "Trust."

I am an Uglystock hunter, not a fool.

I have recently noticed a slew of nominally cheap and attractive China based "value stocks". As someone who has built a career warning against abuses linked to China VIEs, I find myself facing a dilemma.

On the one hand, I am drawn in by appealing valuations and corporate actions—special dividends paired with insider buybacks—along with low P/E ratios, attractive book values, and cash yields. On the other hand, I know damn well that i man marching on a mined field filled with traps and explosives.

I have had to splash myself with cold water to regain composure. After all, we are dealing with Chinese issues. Call it "prejudice" or "unfair bias," these stocks require extreme caution and in-depth forensic analysis. If it looks too good to be true, it probably is. The fact that many Chinese stocks have plummeted by 80% over the past five years, lost market share in their industries, yet still buy back shares and pay "special dividends" seems suspicious.

Perhaps there’s something I’m missing; maybe I’m just too rigid and fearful.

Or, should I be more flexible to take advantage of the undervaluation?

My spidee-senses remain on high alert.

- Hello Group (MOMO)

Trades below net cash; execs have announced a special dividend and share buybacks, valued at half book value and at a 5x P/E. On Dec 19th Hong Kong based Athos Capital acquired 12M shares at $6.65 per share. Athos was co-founded by Matthew love Moskey and Friedrich Bela Schulte-Hillen, and focuses on event-driven investment strategies in Asia pacific region.

Speaking on " event-driven" opportunities, Hello Group has declared a special cash dividend of $0.28/shares set for April 30, 2026 for shareholders of record as of the close of business on April 10, 2026.

Athos will likely collect up to $3.3M plus potential upside capital gains if the crowd join in and ride the stock higher.

Red flags:

Stock is down 60% in 5 years. Company was accused of fiddling with its users numbers and was fined for operating numerous unregistered related-party VIEs.

In 2018, the research firm Spruce Point Capital identified several red flags :

In November 2017, Momo's primary VIE, Beijing Momo, was charged by the SAIC with "Filing corporate information with the intent to conceal the truth and falsify." This coincided with the resignation of three Momo directors for "personal reasons."

Momo has nine undisclosed first-level subsidiaries and 114 undisclosed second-level subsidiaries, which could enable the management to conceal benefits or obscure the real nature of operations.

The company owns at least two undisclosed talent agencies and engages in related-party transactions. Spruce Point investigators visited a top agency and found a residential building with a sign that read "home delivery, just walk in," raising questions about the actual scale of operations.

Another unidentified VIE was involved in and possibly operated an illegal onshore gambling site called Pokermaster 德扑圈, which was shut down earlier this year.

Shortly before the Momo acquisition, several limited partnerships were added into the Tantan VIE structure—just before the resignation of Momo directors—raising concerns about who was receiving payments.

We also found irregularities with payments made to pre-IPO investors, suggesting potential insider enrichment.

Spruce Point observed discrepancies where Momo's statements, performance metrics, and financial data conflicted with third-party sources or responses from individuals they interviewed in the live video ecosystem.

Also, $MOMO has been accused of hosting prostitution-related activities, leading to bad press and government pressure.

Needless to say, Spruce Point warnings have indeed proven prescient, as the stock has fallen like a boulder rolling down a mountain, destroying shareholder value along the way.

$MOMO is trading below net cash and at deep discounts to NCAV, a classic Net net like stock. But the reputational risk and past dealings simply can't be ignored or misjudged for opportunity. The stock looks cheap for good reasons. $MOMO is a VALUE TRAP.

I don't have sidelined capital like Athos Capital, nor the liquidity of Renaissance Tech to play on the special dividend rollout. I don't even have $1 on my name-my wife takes all my money-to play on short term events opportunities. But if you do, feel free to consider.

But remember, I am an idiot, not a fool. So, do not listen to me and do your own due diligence.

( Not investment advice, Wall Street will always betray you, just ask my ex-girlfriend. )