On Tuesday afternoon I decided to close my position in Basic Earth Science Systems (OTC:BSIC
) in order to free up more capital and capitalize on the breakout in Ninetowns Internet Technology Group (NASDAQ:NINE
). I continue to like BSIC’s valuation, but the stock appears to be stuck in the low $1.40s for the moment and NINE looks to be pushing a breakout by retaking its 50 day moving average on substantial volume. Therefore, I decided to sell BSIC at $1.415 and bought a moderate position in NINE at $4.00.
I will be working on a writeup for NINE over the next few days, but the most compelling part of this investment is certainly the company’s $119 million cash pot (as compared to a $141 million market cap). While the company has experienced some operating difficulties in the most recent quarter, the huge cash position significantly limits the downside risk of testing the waters of this breakout.
NINE 1-yr chart