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  "documentTitle": "TAL Education Group (TAL)",
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  "authorName": "Carson C. Block",
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  "presentationDate": "2018-06-13 00:00:00",
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  "notes": "This is a research note page detailing specific accounting manipulation allegations regarding the Shunshun / DFRL investment.",
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      "text": "The $90.8 million valuation fails our laugh test...with flying colors.",
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      "text": "In June 2016, TAL purchased a controlling stake in Shunshun / DFRL from a straw party at an implied value of $90.8 million. TAL purportedly paid this straw party $32.7 million in cash and stock... This transaction also yielded a $25.2 million fair value gain on TAL's initial 30% investment.",
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      "text": "Accounting rules around investments offer a perverse incentive for bad faith actors. If a company wants to inflate earnings, one option is to make a minority investment in another company, and then make subsequent investments at higher valuations.",
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      "text": "TAL states its first investment was in December of 2015... The transfer of this nonfinancial asset provided a small fair value gain of $1.9 million in 2015. Upon making this investment, TAL's reported the fair value for its 30% stake in Shunshun / DFRL as $10.5 million. This equates to an implied enterprise value of $35.1 million.",
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      "text": "37-42: Footnotes detailing specific SEC filings and source URLs.",
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      "text": "How to Succeed in Investing Without Making Money: Purchase Accounting Games",
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