Category: Stocks

Stocks

Stock Lesson VI

Reading Time: 2 minutes

It’s the earning season again. Many companies already came out with their 2006 Q3 (July to Sept) earnings. Some are good (Apple, eBay and Google), some are bad (Intel, Motorola and Yahoo). Some people are happy because they bought Google before the earning; some people are not because they bought Yahoo…

I don’t know why people want to bet on the earnings. But I played exactly this earning game when I was new to stock market. And the results is not pleasing at all. Betting on earning is pretty much like “guess the coin toss” because we as outsiders don’t have any edge. But for those brave hearts who really can not resist the excitement, here is my lessons and suggestions:

Tags earning, lesson, stock

China Stocks

Analysis of Home Inn and Jin Jiang

Post author By stlplace
Post date October 22, 2006
No Comments on Analysis of Home Inn and Jin Jiang

Reading Time: < 1 minute

I saw this Chinese article about Home Inn and Jin Jiang. The author obviously did a good job here. For those who can not read Chinese, Jin Jiang Star is a competitor of Home Inn (Ru Jia). Jin Jiang Group started this economy hotel chain in 1997 (note Ru Jia started in 2002). From Home Inn’s F-1 Form, I saw Jin Jiang, Home Inn and Motel 168 had 20%, 18% and 16% of the China economy hotel market share, respectively. I stayed at both the Xing Ya Star (2002) and Jin Jiang Star (2004), and they are both comfortable.

It’s interesting to see, although Jin Jiang is the “first mover” in China’s economy hotel market, and they have lots of experience in the industry, they are not the dorminant position or even No. 1 brand. One reason it grew from the Jin Jiang group, whose main focus is the high end market. I think they are serious about this segment now since Home Inn is doing the IPO.

By the way, you can see Home Inn’s road show video from IPO home.

Tags homeinns, Jinjiang

China Stocks

Staples and Walmart

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Jim Cramer mentioned Staples in his Mad Money program today. He is talking about Staples (SPLS) traded at a discount although it’s the best in the breed among office supplies companies (vs. Office Depot and Office Max) . A caller asked him the international growth prospect. Interestingly, I saw an advertisement board of Staples along Yan An Road express way in Shanghai (note: unlike previous photos, the following photo is clickable).

Do you know the lady in the ad? Hint, she is a famous TV personnel.

Separately, Walmart China is in the news because they are buying Trust-Mart (好又多), there are many English news source on this. Here is a Chinese one.

It’s interesting to see, besides Yum Brands (KFC, Pizza Hut & Taco Bell) and Starbucks (SBUX), those two US retail giants are counting on China for growth.

China Stocks

My take on Home Inns IPO

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I read the F-1 Form in the weekend. While I am not a financial analyst, I have the following comments.

1) Home Inns probablly has the best management or directors. Three of its directors, Neil Shen, James Liang, and Qi Ji are founders of Ctrip and have extensive experience on Investment, travel and IT industry.

2) Business outlook: the economy motel in China is booming, because of the increasing business and leisure travellers. There are 2 strong competititors: Jin Jiang Star and Motel 168. I stayed in Jin Jiang star and they are good too. I heard from Motel 168 from Taxi driver (later I found Wang Jianshuo mentioned it in his blog.)

3) Consumer experience: fair. It’s clean. But the rooms in Shanghai Pu Xi areas are ususally old and its condition are not great (sound insulation, bugs, etc.) The staffs are usually friendly (above average in China), but can not compared with the “customer first” attitude in the US.

4) Risks: The directors and management award about 650,000 shares of stock options on Oct 2 (before this public offering), while this does not dilute the stock too bad, it’s something they do for their own benefit. Of course the biggest risk is the China economy slow down. I am not an economist, but I know an economy can not run at this speed (10% growth annually) forever.

China Stocks

Stock lesson V

Reading Time: 3 minutes

I’ve covered the “buying” in my last post. I want to add a little more about “buying” here and then jump into “selling”. I think the quality of the stock (a company business, especially the management and the moat) is more important than the price itself in the long term.

For the managment of a company, I like to see a team of experienced, growth minded and honest people (remember Enron and WorldCom). As for the moat, it’s something Warren Buffett likes to emphasize), basically it’s the competitive edge of a company. For example, it’s difficult to break into cola market because Cokecola and Pepsi have established in the market very well. On the other hand, Google broke into the “web search” market because a few years ago Yahoo did not pay enough attention to this technology. Besides great product and service, good customer relationship is also important. Buying a stock of a good (solid) company gives you more “margin of safety”. Even if sometimes things go wrong, say a company missed a quarterly earning because of a one time event (say, Coke messed up with their product and made customer unhappy). They ususally recover from it later on, because of the good management and moat.

Stocks

Stock Lesson IV

Reading Time: 3 minutes

I started this “stock lesson” series because I want to write down some of the mistakes I made on the stock market in the past few years. I hope I can avoid making the same mistakes in the future; I also hope others can learn from my mistakes.

OK, back to the subject. I have talked about enough about “Grass is not always green on the other side”, find your own rythm (stocks and trade pattern), the investment goal and plan, all these good stuffs. Now comes the practical question: when to buy? when to sell?

This seems like an easy question. I think we all want to buy low and sell high, so that we can make money. But how do we know whether a stock will go down or up when we buy it? Remember our good friend Warren Buffett once said “buy when others are scared; sell when others are greedy”. Fair enough. But there are some caveats on this one. I have done this: in Spring 2004 I bought some Nokia (NOK) stocks at $17.xx when it released earning below expectation. And I bought more at $14.xx a week later when it said it would miss the next quarter earning estimates too. The main reason is Nokia is a bit slow releasing those Flip phones which are more popular in the US market. They lost market share to competititors. So here is the mini lesson one: don’t try to catch a falling knife. When the earning is bad, and everyone is selling, why would I fight against the market? So what was my results? The stock went down as low as $11 before it recovered to $17 in one year. By that time I already lost patience and sold it at a loss.

Life Stocks

Stock lesson III

Reading Time: 2 minutes

Set a realistic goal, e.g., 20% return in one year. Don’t get too carried away from other people’s success and try to emualte it without learning its risk.

I have some hefty goals in the past two years. To be more exact, although I don’t have a number (for percentage gain), I know I have some wild expectations from time to time. When I bet on the earning reports of Netease (NTES) last November, I have two chances to make 10% gain but I was expecting more. Eventually I lost 20% instead because the actual earning report is not as good as wall street expected. Note the “Wall Street expectation”. We know the stock price is ultimately determined by the earnings (how much money the company make), but in the short term, it is also related to the Wall Street expected earning and the actual earning. If it beats (like Google did in last few years), the stock soars; if it misses, the stock tanks (like DELL did lately).

OK so much for the expectation. Back to the goal, besides the percentage gain. I think we also need to determine how much money we want to put in the stock market. This is important because we also need to pay bills (food, cars and house), and save for retirement. I like Jim Crammer’s “mad money” definition on this. Basically as the name suggests, we should only put the money we don’t need to use for a while (maybe 6 months to a year), a.k.a., the mad money into the stock market. I made mistakes on this because twice I had to sell the stocks because I need the cash for something. We should never let this happen. This is just a sign of poor budgeting. We should sell the stock only if “we think the stock price peaked, or we are confident there are other investment opportunites with better return/less risk”.

This planning and expectation thing also applies to other aspects of life very well. I think a lot times we feel disappointed about someone or something because we had too high expectation. Another good example, Saint Louis Cardinals won the 1st division series games against San Diego Padres this afternoon. Because a lot people expect Padres will win (low expectation for Cardinals), I feel very happy now.

China Stocks

Getting RMB in China

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Bring the green backs and exchange it at Bank of China or other banks is the common way. They do require the passport though. And sometimes the wait time could be long (I found out Friday is usually bad). But it is not very safe if you have large amount of cash. So I tried the Citi Bank card this time but they charge me 1% fee. There is a way to get around it.

Open a checking account from Bank of America (BOA) and get a Visa Check card. BOA has agreement with China Construction Bank (CCB). It is said that you can withdraw RMB using the Visa Check card (market conversion rate for USD to RMB) at CCB ATM machines. Better yet, if you open a checking acct from BOA, they will credit $50 or $100 depending on the account type. Pretty cool, huh?

CCB pix

Stocks

Stock lesson II

Reading Time: 2 minutes

Follow the crowd; follow the stock picker or gurus such as Jim Crammer without doing own research; follow the friends.

Following the crowd is dangerous because statistically majority of small investors lose money in the stock market (I know I am since got into market in late 2003). I think one reason for doing this is the “herd” mentality – most of us have it. We feel safe to buy the stocks when the market is up; vice versa. But as the famous investor Warren Buffett says “buy when people are scared; sell when people are greedy”. 1999-2000 dot com is a perfect example, many people made money on the paper but they did not get out, while some others (who did not follow crowd) did make real money.

So “follow the crowd” is out, how about follow Warren Buffett? It’s a good idea and it’s usually safe approach (because Warren makes safe bets these days, and sometimes he just sits on the cash). But remember Warren’s investment objective is not same as yours: he may expect a 10% return because he got 40 billion already. Another thing is we don’t know when he will sell. This applies to Jim Crammer’s mad money also well.

Follow the friends: I did this when I first started. I bought a stock called “LookSmart” after he bought (and I paid a higher price); I sold after he sold (and I sold for a lower price). Looking back, I think I was pretty stupid (not smart). It’s not that my friend’s pick is bad, the timing is an issue (because the friend can not be available 24×7). Also tangling the stock (money) with friendship is not a good pratice. We can talk about stocks, but do our own research and make own decisions.

The bottom line: only you know your own objective. Doing the stock research not only helps making wiser decisions; it could also be fun. Don’t blame the friends for our own mistakes.

China Stocks

Home Inn IPO

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I heard it first from Bill Bishop’s blog.

Home Inns (如家), China’s leading budget hotel chain, filed for an IPO about a month ago and is expecting to hit the NASDAQ sometime in September, assuming market conditions hold.

A few day ago I got more info From Pacific Epoch

Shanghai based hotel chain Home Inn plans to hold a road show in Hong Kong starting on October 9 and then in the United States on October 19, eNet reports quoting Home Inn CEO Sun Jian. Sun said that Home Inn plans to list on Nasdaq in the fourth quarter of 2006. Home Inn currently has 104 hotels with 11,754 rooms, ranking second among Chinese economy hotel chains. The underwriters for the IPO are Merrill Lynch and CSFB. Online travel services provider Ctrip (Nasdaq: CTRP) and Beijing Travel Group invested a total of 10 million Yuan in Home Inn in 2002. Home Inn has received investment from Sycamore, IDG and Susquehanna (SIG). Ctrip co-founder Neil Shen founded Home Inn.