It was a short while ago (last Nov) Alibaba did its high profile IPO in Hongkong. Now it’s back in the news again. Don’t get me wrong, Jack Ma (Ma Yun), the founder and Chairman of Ali, was always in the news. I remember a few years ago (when the company was private) he said Ali pays 1 millions Yuan everyday, that’s not a small number and people thought Mr. Ma was bragging. Oh, well, bragging or not. Alibaba’s IPO was very successful, and it created a few hundred millionares (stock option holders) in its employee bases, from what I read last Oct.
Fast forward to March 2008. It reported a good quarter but stock continued to drop (see Sramana Mitra at Seekingalpha). And there is a rumor about class action lawsuit coming (news in Chinese).
(Alibaba 1688.HK 6 month stock chart, full size pic here).
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.
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.
The miserable performance of CROX erased much of my 2007 gains. But thanks to the rebound of Mindray (MR), I am still be able to be above water
Some random thoughts of Q4 and year 2007 stock performance:
1) Crocs (CROX): I agree with my friend StrengthTrader, Crocs is a fashion product. It’s almost unbelievable for Crocs to become popular in much of the world in such a short time. At least it grew much faster than Nike did 20 years ago. But will Crocs be as big as Nike some day? I don’t know. The market thinks it will NOT (traded at PE of about 20, the company projected 35 to 40% revenue growth in 2008).
2) Mindray (MR): benifit from the global spending of healthcare. Although the US market did not turn out to be as successful as we like, other interntional markets especially South America made up the slack.
I placed a market order before the market open. The last time I did something similar is two years ago when the Ninetowns reported that their customers (Chinese goverment) would no longer pay them for the software. They would get a free version instead.
But HLYS did worse in terms of the stock. It closed at 21.99 yesterday, and opened 13.38 this morning. I lost more than $7 per share (bought it 20.95 about two weeks ago).
It seems I haven’t learned my lessons in 2 years. Seriously I felt lucky this time because the gain in other stocks covered the loss. Actually I did made some money on HLYS too (a while ago), today I gave it all back
Both the CEOs of NINE and HLYS are on my “CEO Hall of Shame” list now. We should all be careful when we put our hard earned money to the stock market: look for good CEOs, real good CEOs.
BTW, I saw 5 analysts downgrade the HLYS today. This time I agree with the analysts.
Here is the results from PR NewsWire. To summarize:
Net sales from continuing operations for the second quarter 2007 of $30.4 million were up 16.4% over the $26.1 million for the second quarter of 2006.
North American sales of $11.8 million in the second quarter 2007 increased 8.2% from 2006. European sales of $12.8 million in the second quarter 2007 increased 33.1% from the second quarter 2006. Rest-of-world sales of $5.8 million in the second quarter 2007 were up 3.9% from 2006.
I am listening to its conference call, it seems the Q3 and 2007 outlook are good.
On a separate matter, Ninetowns (NINE), the stock I traded a few times, dropped to $3 level as its operation continued to deteriorate, and its CEO and main shareholder (appears) cashing money at the expense of small shareholders. I’m glad I no longer have that. In my mind, management integrity is as important as management competence, if not more.
I bought some NINE (Ninetowns) shares for the 3rd time last Dec. for two reasons:
1) It’s getting into B2B business. A successful example of B2B in China is Ma Yun’s Alibaba, which has done well (at least generated lots of buzz), and is planning to go IPO in Hongkong this year.
2) Duan Yongping, the founder of BuBuGao, the successful investor who won the bid to have lunch with Warren Buffett last year, bought sigificant shares of NINE last year.
Bought a little SNCI today. It’s a company makes hearing aids. I read it from Kiplinger’s Personal Finance August Issue in the weekend. Did a little research including reading its annual report. This is my speculative play, I put my bet on it because I think some of the positives include:
1) The company sold its unprofitable unit (Tympany) recently. Meanwhile, it’s trying to expand distribution and retail channel.
2) US baby boomers (people born from 1946 to 1964) are near retiring age. As we know, older people are big customers of hearing aids.
3) There are lots of consolidations in this industry lately.
I don’t take this is a China play, although on my flight from PVG to ORD in the May, I met an engineer who works for an OEM supplier for hearing aids (in Suzhou). It seems hearing aids market is at infancy stage in China.
I also sold the NINE (Ninetowns) today: took my second loss this year, the first is XFML.
1) Don’t jump into an IPO on its first day. Do some research if you really want to jump.
2) A controlling shareholder is also the CEO: usually not good for small shareholders.
3) One customer (Chinese goverment), one product (custome declaring software), be very worried.
I was on shopping spree on stocks lately. Since I bought the Panera Bread (PNRA) last Friday, this Monday I bought some Telestone (TSTC), a Chinese wireless equipment maker; on Tuesday I bought some Ninetowns (NINE), a China based software company not new to me because I lost money on it in the past
These are two speculative plays. Telestone recently moved from Amex to Nasdaq, and it is posed to benifit from the 3G services adoption and Olympics in China. Ninetowns’ software business is stablizing after one year and half’s transition period; it also is building up B2B services through tootoo.com and globalmarkets aquisition.
I only took a small position on these two as they are a bit speculative right now. As you may see from their stock prices (about $9 for TSTC, and about $5 for NINE). I am going to hold them for longer time. I was reading Philip Fisher’s “Uncommon Profits in Common Stocks”, one thing amazed me is Phil will hold a stock as long as its fundamentals are good. I guess great investors like Buffett and Fisher all have great patience
I sold the remaing Symantec (SYMC) stocks today and I bought an old stock for me: the Ninetown Digital (NINE, recently changed name to Ninetown Internet). Here are my reasoning.
Symantec moved up quite a bit in past serveral months. It reported good earning in Q2, but missed a penny in Q3 due to some weakness in Europe. I think it’s a solid company and may do well in Q4. Note enterprise software companies usually do more sales in Q4 because of end-of-year spending (so is the Wall Street expectation, so don’t expect a big pop). Another reason is Symantec is just too big for me to understand, its main business is from enterprise (storage, security, compliance etc), not just the Norton Anti Virus or Internet Security for individual customers. By the same token, as the world No. 5 software company (by market capital, behind Microsoft, Oracle, SAP and Adobe), its stock just does not move too much compared to smaller software companies. I think it’s good for mutual funds or people who just want to get average return without doing much homework. Continue reading