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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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Fourth quarter 2007 update

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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.

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Is the Chinese bull market over?

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(Update Nov. 17) Shuipi of ChinaTimes(水皮华夏时报) wrote this interesting piece on his newspaper.

(Original) It looks like it, from the highs at 6,200 in early Oct to 5,200 now. But wait a minute, recently the US stock market suffered big loss because of the sub-prime meltdown, and weakening of the dollar. How could the mess in the US drag down the Chinese stock market?

Well, one can say we are in a global economy now, the ripple effect of US sub-prime meltdown means the US business and consumer will watch their wallet more carefully, which is bad for Chinese exporters. We all know the Chinese economy depends a lot on exporting to the US.

China Mobile logo

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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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CROX not so fantastic quarter

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Crocs (Nasdaq:CROX) reported a solid quarter yesterday. It also raised its own year 2007 guidance, but the number is not enough to exceed the street’s “sky high” expectation. The stock already got crushed in the after hour and pre-market trading. It’s likely it will suffer for a while. But I think the fundamental of the business is intact. From my observation in China, this thing just got started…let’s see what Olympics can do for this next year.

Another interesting story about Crocs. When I told my wife that I will have big “paper loss” on CROX stock today, she said why didn’t I sell it yesterday. Yeah, I agree I was a bit too optimistic about the stock. She also said the Crocs should sell few shoes as the weather becomes colder. Very much true. I think that’s one reason the company guided conservatively for the Q4 (and 2007 full year) results.

Seasonality is more an issue for international growth because Europe and Japan, the main growth area currently, is usually colder than US in winter. Unfortunately Australia and Brazil can not make up that…

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Baby thrown out of bath tub

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These days it’s not easy for investors who hold US stocks, because the market has been in declining mode after the sub-prime woes. Do you still remember the DOW 14,000? That was July 19, as I wrote a post “IS Dow 14000 relevant“. Well, relevant or not, the Dow has retreated and it’s now under 13,000.

As individual investors we can not precict the market, nor should we fight against the market. But as general market declines, usually there are some good stocks go on sale. For examples, the Crocs (CROX) and Mindray (MR). Both companies reported good earnings, got a pop, and now went back to the pre-earning price. Some possible explanations: CROX got dragged down by the weak US consumer sentiment, Heelys HLYS’ crash; for Mindray, I really could not find a good reason other than short term investors move money to WuXi Pharma Tech (WX). Both companies (CROX and MR) had some insider sell activities too.

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