Author: stlplace

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Stocks

Gateway Computer

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(Update 14Feb07) SeekingAlpha has a consumer survey on Dell, HP and Gateway.  

Gateway computer? What’s that? We all know Dell, HP, IBM or Lenovo thinkpad, but not Gateway. Well, I remember Gateway computer because around 1997 and 1998, the PCs in my school are all Gateway branded. Gateway is a PC maker started in Iowa farms in 1985 and got big in 90s. Its consumer PC and laptop are sold in Best Buy and Circuity City nowadays. The company did not do well in recent years because of its own mistakes and the intense competition of PC industry. Now with the release of Windows Vista, it get a chance to turn around. I am summerizing some of the plus for Gateway:

1) It has more products for consumers (than business). The expectation is consumer will adopt Vista faster than the Business.

2) In last Friday’s Q4 result it announced additional cost cutting measures (bad for employees), saving additional $25 m. Good for investors.

3) Last but not least, it did pretty bad lately. I am not sure if it hit bottom yet but its 06 Revenue only slightly exceeded 05. And its Q4 06 revenue is light compared to same Q 05. At this moment, any positive will be good news.

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Fun

The Grammy Goes to Dixie Chicks

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I was a bit surprised to see Dixie Chicks won the “album of the year” award. I was happy because it’s a band I like. I got the “Taking the long way” CD last May when it was just out with lots of controversy. I guess the CD sales will soar and the price will go up 🙂

For the Dixie Chicks trio, this is especially rewarding after been virtually shut out from main stream media after the UK concert  incident. I don’t want to talk about politics here. But I think in career, in investing, or in business, we will get written off by other people from time to time. The sweetest feeling is later on we prove ourselves through the hard work. This is not revenge; this is redemption.  

Categories
China Stocks

The Trend of World Assets

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This is an interesting statistics of the world assets by geography, courtesy of My Money Blog. I remember from Jeremy Siegal’s recent book “The Future for Investors”, one trend is the emerging middle class in developing countries (Brazil, China, India etc.) are going to buy assets from the “baby boomers” in the developed economies. In other words, maybe 20 years from now, 5% of Microsoft will be owned by Chinese and Indians. This also reminded me one more number, the saving rate in China is 50%, and the US saving rate last year is -2%. Note the interest rate in China is quite low, and investment options are not plenty. The Chinese domestic stock market is taking off lately, but I think many people will buy foreign equities if the Yuan (RMB) become a hard currency.

This is even more interesting considering many foreign funds are buying Chinese stocks lately.

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Business Stocks

Dancing with Wall Street

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There are many benifits for a company to go public, otherwise why so many Chinese companies came to the Wall Street in recent years. But on the other hand, if a company came to public just for the sake of “listed in NYSE or Nasdaq”, there may be something wrong here. There are many rising stars and fallen heros among Chinese Internet companies in past few years, after Sina, Sohu and Netease came in the dot com era. Some of the notable ones include JOBS, SNDA, and BIDU. In all these cases the CEO of the company seemed worked too hard for Wall Street, and then made big mis-step.

I think for the long term, companies will be better served if CEOs can step back from the impatient Wall Street for a while. Just like in the dance, they should be the leaders, rather than let the Wall Street lead them. That is of course assume they know what they are doing.  

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IPO

Hedge Fund Fortress IPO

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This is probablly the hottest IPO this year (so far). It went up 89% on its debut. But I did not jump into it because: 1) I don’t have much cash; 2) Hedge fund is the business I don’t know too much about.

I am not against shorting stocks, trading options and other exotic stuff; but these are the areas I don’t feel comfortable (math, lots of math) and don’t plan to learn it at this time. I am just an old fashioned guy, and my role model is the guy in Omaha. One of his rule is “buy the business you can understand; and the business that generates lots of cash and does not change too much over the years, e.g., Coca Cola and Gillette”.

Interestly, Mr. Duan Yongping, the legendary figure in China electronics industry, is also learning Buffett’s philosophy these days.  

Categories
China Stocks

New Oriental EDU Seconday Offering

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The following is from Reuters. I have not seen the final prospectus from SEC web site yet. 

“HONG KONG, Feb 9 (Reuters) – Investors and New Oriental Education & Technology Group Inc. (EDU.N: Quote, Profile , Research), China’s largest education group, and its investors have raised US$334 million after pricing 8.05 million American Depositary Shares at a 1.78 percent discount to its last closing price.

Investors including Tiger Global and the founder of New Oriental sold the shares at US$41.5 apiece.

The shares sold comprised 92 percent of existing shares and 8 percent of new shares, the source said.”

(Update 09Feb07) The prospectus is here. If you look carefully at the “selling shareholders” section, you will find “Tigerstep Developments Limited, a company incorporated in British Virgin Islands, is wholly owned by Bamei Li, mother of Michael Minhong Yu”. Yu’s mom is probablly the richest grandma in China 🙂 

Categories
Fun

Coffee at McDonald and Starbucks

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Call it gourmet coffee, premium coffee, or designer coffee, whichever way you want to call it. But I have seen the “Gourmet Coffee” bulletin board put up by McDonald to make fun of Starbucks’ price. I also noticed Starbucks is adding “drive through” windows and open new locations like crazy lately. All these, according to Todd Sullivan’s value play blog, is kind of related…

Separately, a short time ago I heard KFC and McDonald are creating “drive through” stores in China. So are we in “car and caffeine driven society” now?

Categories
China Stocks

Second Look at Huiyuan Juice IPO

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I noticed this juice thing is getting popular in China, just like the coffee did in recent years. In summer 2004, when I attended a bunch of formal dinners in Ningbo, juice is an option, as is the wine. Juice is also offered in the airplane. One thing I noticed that the orange juice in China is mostly “from concentrated”, probablly due to cost and taste reasons. So the demand and the growth is there. The problem with the company, from I read from FinanceAsia:

“Among the potential concerns, observers say, is the cost of buying juice concentrates and fruit puree, which increased by more than 50% in the first nine months last year. The company buys about 56% of this raw material from abroad, making it vulnerable to swings in international prices, particularly for oranges.”

Continue reading “Second Look at Huiyuan Juice IPO”
Categories
Business China

Chinese Solar Stocks are Hot

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First is the SunTech Power (STP), it came to NYSE a little more than a year ago. The stock almost doubled from its debut. The company is founded by Australian Haigui and based on Wuxi, Jiangsu province. This is the largest Chinese solar panel marker and it’s profitable.

Then comes the Canadian Solar (CSIQ). Don’t know why it’s called Canadian. Maybe founded by Canadian Haigui? Anyway the company is based in Suzhou, Jiangsu province.

Just before Xmas 2006 two new players joined the party. Solarfun (SOLF) is based in Qidong, Jiangsu province. The rumor is the founder came from SunTech Power. Trina Solar (TSL), is based in Changzhou, Jiangsu. TSL is hot in last few days (don’t know why, not my specialty).

Last but not least, here comes the JA Solar (JASO). From its prospectus it’s from Hebei. The CEO worked for SunTech Power before founding the company.

Categories
Stocks

Cashback Credit Card is Sweet

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But not all of them are equal. I am using the Citibank Dividend and the Discover Cashback card. The Citi card used to give 5% (now 2%) cash back for gas, grocery and 1% for everything else, with an annual limit of $300.

The Discover card is more complicated. It has a “ladder” rate and does 5% promotion every three months. Each year (start from the day card being activated), it gives 0.25% for first $1000, 0.5% for the second $2000, 1% for anything afterwards. Every three months or so, e.g., Jan 1 to March 31, it gives 5% cashback for airlines, trains and buses; and the 5% category could change to restaurant from April to June. Also Discover has more redeem options, in addition to cash, it can be converted to gift cards from various vendors.