Crazy market and GSIT

Another crazy day, the market traded mostly lower today, until 3:30 PM EST, CNBC reported Ambac will announce it raised capital earlier next week. It seems everyone just can not get enough stocks since then, all the US indices reversed the downward trend and closed higher.

For me, the feeling is like “hew”, my little portfolio turned from down more than $300 to positve! Amazing. I think this (bear) market is tough for the newbies. Honestly, I have been in market for almost 5 years, and I have learned the most in last 6 months.

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GSIT: no liquidity premium
GSIT, GSI Techonolgy is a small Very Fast SRAM maker. I have held a few hundreds shares since its IPO. The stock traded heavily today. I don’t know the exact reason. It could be some insiders are selling. Or maybe some institutions are buying. GSIT is one of my disappointment last year. Initially I hope to make some quick money on its IPO. But I was too greedy and end up owning it for almost a year. The company reported two bad quarters until most recent quarter, in which it beats expectation, and issued better outlook.

One of the drawback of owning small company stocks is liquidity: it’s so thinly traded, and it’s harder to sell when I want to sell. On the other hand, because its lack of liquidity, it did not go down like other stocks (e.g., RIMM) do, it will go up some time. Weird, right? But understandable.

Talkign about valuation, at current price ($3.00), the stock is under valued. It has about $1.8 cash per share, no debt (according to yahoo Finance). Year 2007 earning is about 0.20 (this maybe over stated by Y! Finance). Anyway my point is this is a dirt cheap stock consider its cash position and business value (SDRM is not going away right).

Of course, the pre-requsite is the management does not do self-serving or related party transactions. Ninetowns is cheap too, but its management simply put the cash to his own pocket 🙁

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