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Earning update: Mindray, GSIT

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GSI Technology Logo

GSI Techonology
As I talked in my previous post (a while ago), this is the little semi-conductor (very fast SRAM) stock (Nasdaq: GSIT) I bought a year ago at its IPO. Since its IPO it reported two disappointing quarters at first, more recently it reported two decent quarters (Fiscal Q4, Fiscal Q3). But I sold it this morning due to the following:

1) Lack of liquidity: the daily volume on this stock is thin because of lack of institutional support. Basically if I want to sell, the day after earning report is a good time because of the volume spike.

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Proud to be a Berkshire Shareholder

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My wife used to joked with me: you always tout some stocks when you buy, then after it crashed, you will say it’s a crap (XFML, Heelys, LFT, Crocs).

I think I won’t say that for Mindray, and hopefully no hard feelings for BRK, either.

Sold Mindray MR
I sold my remaining Mindray (MR) shares just now, here are the reasons:

Mindray was doing OK up to this point. But I think it may have overpaid for the DataScope patient monitoring business. It paid 202 million, while the business has revenue of 162 m last year. The unit was not profitable according to one analyst, which I believe because I also did a little research myself. The cost structure of DataScope is higher than Mindray; the US medical device market is tough and will be tougher in the credit crisis. Note the hospitals usually need to borrow from banks to finance the new medical devices.

On other hand, at $31.88, the stock is not cheap (PE ttm of about 45). The company expects to grow revenue and earning by 40% this year.

Bought Berkshire BRK.B
I bought one share of Berkshire Hathaway (BRK.B) at $4349.89. This is Buffett’s company. If you have read my blog for a while, you know I have great respect for the Oracle of Omaha. Its main business (insurance) will be tough in the near term, but Warren has did some smart acquisitions lately (the Israel company, and a domestic diversified company, I could not remember the names but believe it or not, sometimes those unknown companies made a lot more real money than Crocs)…Although he scaled down the equity investing (relative to the big purchase mentioned above), he has continued to make money in stock market, notably the $3 billion profit from PetroChina last year.

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Swap Mindray for Syngenta

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I sold some Mindray stocks (MR) last Friday and today, and I bought some Syngenta (SYT), the European agriculture company. I think it is a more reasonably valued stock (compared to my across street neighbour Monsanto), in this ag (soft commodity) boom. The thing I want to make sure is it does not bust very soon.

Syngenta field logo

The reasons why I sold Mindray:

1) Before and after it announced the acquisition of DataScope patient monitor business, the stock price dropped quite a bit (note this is quite normal in acquisition);

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Mindray buys into US market

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Mindray (NYSE:MR) continued its US market expansion today, as it agreed to buy the Patient Monitoring business of DataScope (Nasdaq: DSCP) for $202 m (see this Reuters news). My gut feeling is this is a fair deal. Mindray paid about 1.25 times sales revenue for the unit. According to Reuters: “The (DataScope) unit had total revenues of $161.3 million in calendar year 2007, approximately the same as those generated from Mindray’s home China market.”

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RIM, Mindray

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Crocs broke my heart; RIM made my day.

While CROX continued his downward spiral, today Research in Motion (RIM, Nasdaq: RIMM) is up 8% on the news it will beat its forecasted subscriber growth. Now I regret I did the swing last week, in which I cashed in some gain, and reduced the number of shares (RIMM) I hold. I only have a small position of RIMM, and I did not go ahead and chase it today. Thought its exposure to US market and the slowdown of US economy is still a concern. I understand the company is diversify both geographically and productwise (from business to consumer, the Blackberry Pearl).

I decided to get some Mindray instead. As the unoffical rule says: the stock goes down after Major bought it. Yes, it did: I bought at $34.87, and it’s about 34.20 now.

Mindray will report Q4 2007 earning on 8PM EST March 5. (source)

Mindray product pic

Dial-in details for the earnings conference call are as follows:

Hong Kong: +852-3002-1672
US Toll Free: +1-800-299-9086
International: +1-617-786-2903
Passcode for all regions: Mindray

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I am not a believer

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of this market. First is this Amazon bouncing back thing. Then is the whole market went up big, on the last day of the month. My initial sense is another windows dressing like it did on Dec 31. Note for mutual fund, hedge fund,…they all have monthly performance to meet. So take this last opportunity to pump up the stock, and make them look good.

For me, I started a kind of new strategy, I called it “swing”. I bought back some Mindray (MR) which I sold last week, because I had a limited GTC order of $32.98 in my account. This afternoon I sold some Crocs (CROX) when I saw it tried to break $35. And I set up a limited buy order of $32.50 following the sale.

By the way, Crocs just started the SoleUnited(tm) program, which will recycle used Crocs and donate new Crocs to the needy in Africa.

crocs pic

My point is to lower the cost of the stocks I hold. Because I don’t know which point is too high, which point is too low, why don’t take advantage of this market and swing it? I yet to do it for China Mobile, I’m under water on that one now.

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Lessons from Longtop

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Well, Longtop did not turn out to be long top, it was a short top if you will. I sold most of the shares today (still 50 shares pending in Scottrade).

The problem with Longtop (LFT) is not fundamental, it’s rather valuation. In current market, I think an unproven Chinese financial software (IT service) company like Longtop can not sustain its bubble price at IPO.

Some lessons:

1) Be careful of IPO (maybe I got MR at pure luck, but I did not get it in the first day). Also be careful of all underwriters: from JP Morgan (NINE), WR Hambrecht (XFML, GSIT), and Goldman Sachs (LFT)…NINE and XFML are in my Hall of Shame list, will LFT join them too?

2) Again valuation. A good company does mean good stock. Look at Baidu during 2004 IPO to 2006.

3) Don’t averege down if I haven’t made any money from a stock, e.g., SBUX, LFT,…I think CROX is different because I made money on this one, and has some knowledge on it. In other words, if average down too many times, something must be wrong here.

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Peace of mind

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My wife joked with me that I ONLY got talktive and excited when talking about the stocks. I know that is largely true, and that was the case with yesterday evening’s gathering with my old friends. The good thing is unlike my wife, my friends are also interested in stocks.

For me, it is always interesting to learn some of the success stories and mistakes from others. But I still believe I learned most from my own mistakes: mistakes I made in the past, and continue to make now. Of course it would be better if we could learn from other mistakes, because the mistakes in stock investing or trading could be costly 🙁

If I could give my friends one piece of advice on stocks, that’s not going to be a stock pick, a good book, or where the market will go (will Shanghai composites test 4,500 before going up again?).

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Mindray recruiting new grads in Canada Germany

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Here is the link (see the left scrolling screen, in Chinese):

Many years ago, when I was a graduate student, I attended those information sessions in school (and ate many free pizzas). At that time all the companies are US companies, such as Emerson, GE, and Microsoft (Nasdaq:MSFT) etc. Now a Chinese company are coming to Canada and Germany. One can argue that Mindray (NYSE:MR) can not pay as high salary as Microsoft, but Mindray would give stock options (see below) for significant contributors. Very much like MSFT did in 1990s.

Forget the big drop of Chinese stocks lately (including Mindray); think how much Chinese companies have done in past 10 years…

Stock options: my friend in Shanghai sent me this Chinese article about the stock options incentive for Mindray employee. Mindray CFO Joyce Hsu also said in Q3 conference call that Mindray may have the highest rate (among Chinese companies), in terms of awarding options to its employees.

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Mindray investor day

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No I did not fly to Shenzhen, although I would love to be there. From the news, and the presentation, the developments are very encouraging. Too bad my account ran out of money yesterday, otherwise I was going to add my MR positions amid the across board sale of Chinese stocks.

Some highlights (I think) worth noting:

Mindary product pic

1) Change of products division names
In other words, this means broadening/expansion of products. Change Patient Monitoring Devices to Patient Monitoring & Life Support Devices; Diagnostic Laboratory Instruments to In-Vitro Diagnostic Business; Ultrasound Imaging Systems to Diagnostic Imaging Systems.

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