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Joseph Levy

 
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  • China: Where Micro Cap Growth Opportunities Abound [View article]
    NPD has posted sub-par operating results in the last few years. Click on following link:

    spreadsheets.google.co...

    I don't believe it is a good idea for a Company to buy back its own stock when they are not reporting growth in sales and earnings. Generally, the average buyback share price turns out to be above the current stock price ... or expressed otherwise, the company ends up making a bad investment.

    If a company wishes to use excess cash, and can't use the funds to increase sales and earnings, I believe a wiser choice is to pay cash dividends to its shareholders, who at least get some type of return in a very low yield environment. NPD's cash and investments has declined from $330 million at 12-31-08 to $171 million on 06-30-10, without any benefit accruing to its shareholders, and this is another reason the stock currently trades closer to its 52 week low rather than its 52 week high.

    I agree China offers enormous investment opportunities for the future because of the above average growth by many companies in China; but NPD has not fit this growth profile in recent years and I see nothing that demonstrates this will change (improve) in the future. The problem may be the company's "management" and their inability to successfully grow their company in a very dynamic business environment (China). A company's management is one of its most important assets even though it is not quantified on a company's balance sheet.

    I agree with you that comparing CJJD and NPD is like comparing apples and oranges because of the size differential. However, looking at NPD shows that a drug store chain can become a relatively large entity in China, which I believe CJJD will achieve in coming years.
    Sep 11, 2010. 11:18 PM | Likes Like |Link to Comment
  • China: Where Micro Cap Growth Opportunities Abound [View article]
    Two other China companies I wrote about are SORL seekingalpha.com/artic...

    and

    HOGS:
    seekingalpha.com/artic...

    Worksheet reports for the two companies can be found at the following links.

    SORL:

    spreadsheets.google.co...

    HOGS:

    spreadsheets.google.co...
    Aug 26, 2010. 02:52 AM | Likes Like |Link to Comment
  • China: Where Micro Cap Growth Opportunities Abound [View article]
    The price fluctuations you noted occurred prior to the public offering on 4-22-10. Before 4-22-10 the stock did not trade very much (often times no shares traded on a day). Since 04-22-10 the stock price performance of CJJD has outperformed the general market stock market (US general stock averages were significantly higher around 04-22-10, being up on the average about +10% versus now being down around -4%).

    I believe the most important competitive advantage any company can have is superior management. To me the historical financial statements are the best report card on management that is available to investors in public companies and so far CJJD has reported excellent operating results during their very brief history.

    spreadsheets.google.co...

    The key will be if they can continue to report numbers as good or better in the future. As far as integrity, I have no special insight concerning the management of CJJD. Because of some past irregularities with China companies, I generally limit my investment commitment into any one China company to less than 2% of the total value of my hedge fund. In total, all my investments in China companies represent less than 10% of my funds total assets but I find the values I see in China companies very compelling.

    CJJD has US Auditors who provide Asian services. This firm has been around since 1918 and claims to be in the top 50 of US accounting firms. I am also relying on this to some extent.
    Aug 26, 2010. 02:42 AM | Likes Like |Link to Comment
  • Allied Motion: 'Record Bookings' Point to Brighter Future [View article]
    I'm dubious that the rebound in economies, both here and internationally, is directly related to government stimulus spending. Rather, I see it as normal cyclical activity (boom bust, growth contraction, normal business cycle, etc), which has happened throughout the history of capitalism. Personally, I rather the government stay out of trying to manage the economy except to provide stability to the banking system. To me it is hard to envision such gloom and doom at this time with emerging markets like China, India, Eastern Europe, Latin America all contributing much more in economic activity today versus 20 years ago. The developed countries like the US and Canada will benefit from their trading activities as these underdeveloped countries continue to grow in the future and markets for all kinds of products increase.
    Aug 18, 2010. 03:38 PM | Likes Like |Link to Comment
  • Allied Motion: 'Record Bookings' Point to Brighter Future [View article]
    Thanks.

    If you want a copy of my worksheet report on AMOT just email me at resgroweq@yahoo.com.
    Aug 17, 2010. 06:04 PM | Likes Like |Link to Comment
  • Is Apple Worth 8.4 X Research in Motion? [View article]
    In a follow up article on July 1, 2010 I did address that point and the information is repeated here:

    "A point raised by Apple supporters is that the market cap differential between the two companies has to do with Apple’s hoard of cash and investments, which totaled $41.7 billion at 03-27-10 versus only $3.3 billion for RIMM at 05-29-10. RIMM’s operating cash flow is strong and has been increasing. For the 12 months ended 05-29-10, they generated operating cash flow per share of $6.35 versus Apple’s $14.62 in the 12 months ended 03-27-10. RIMM’s cash and investments increased from $2.2 billion at the end of February 2009 to $3.3 billion on 05-29-10.

    Also, RIMM has been using cash to buy back its shares, which resulted in the share count dropping from 593.1 million diluted shares outstanding at the end of February 2005 to 558.2 million diluted shares outstanding as of 05-29-10. Meanwhile Apple’s diluted shares outstanding have increased from under 800 million diluted shares outstanding at the end of fiscal 2004 to 923 million diluted shares outstanding on 03-27-10. This difference in philosophy in buying back shares partially explains why cash and investments at RIMM have not grown as fast as Apple’s. Even if cash and investments were deducted from both companies’ market caps, the relative market caps differential between the two companies would still be approximately 7.9 to 1."

    I also explained in that article that RIMM has increased their R&D investments significantly in recent years, which should benefit them in the future. Also, RIMM's R&D expenditures (just north of 6% of sales) have actually been proportionately higher than AAPL's (just above 3% of sales) in recent years.

    Since I wrote the two articles comparing AAPL and RIMM each company has had their share of negative publicity (RIMM's security issues overseas and AAPL's product issues involving the iPhone and iPad). Only time will tell which company was a better investment based on their prices as of the date I wrote the first article. Being a better or worse investment is not necessarily a reflection of which is a "better company". Investors can overpay when buying a "great" company, which can result in the decision being a poor investment.
    Aug 5, 2010. 01:01 PM | 1 Like Like |Link to Comment
  • China's Big Appetite for HOGS [View article]
    I looked it over quickly. It was brought public in June 2010.They have a limited operating history. Their costs and expenses appear very low in relation to their reported revenues . This always raises questions in my mind as to the accuracy of the accounting for a company's income and expenses. Because of their limited operating history and the questionable relationship between income and expenses, I personally would not invest in OINK. That's not to say it won't turn out to be a good investment and only time will tell. I do believe HOGS is a much safer investment and it also offers very good potential for growth in the future. Hope that helps.
    Jul 27, 2010. 12:21 AM | Likes Like |Link to Comment
  • China's Big Appetite for HOGS [View article]
    I did a write-up on SORL in May 2010 and a link to the article is:

    seekingalpha.com/artic...

    If you email me at resgroweq@yahoo.com I'll send you our worksheet reports on SORL and HOGS.
    Jul 26, 2010. 09:45 PM | Likes Like |Link to Comment
  • China's Big Appetite for HOGS [View article]
    AMCF does not have enough reported history for me to give an opinion. It's a low margin business (gross profit % of 11.3%for the year 2009) and low reported operating expenses (S, G & A of just $4.6 million on sales of $124 million in 2009). I always have questions concerning the numbers and accounting for China companies. Therefore, I only invest in individual China stocks if they have a reported history of SEC filings covering at least a few years. Currently, the China stocks I own are: HOGS, SORL, PUDA and LTUS.OB.

    Sorry I can't be of more help.
    Jul 26, 2010. 01:12 PM | Likes Like |Link to Comment
  • Is Apple Worth 8.4 X Research in Motion? [View article]
    Whenever there are a lot of comments to an article I like to send back my thoughts. Today, I was out of my office all day and the same will be true tomorrow. Therefore, I will probably post my comments late on Wednesday. Thanks for your interest and while the consensus was against my analysis I do appreciate your comments (except for one).

    Best

    Joe
    Jun 28, 2010. 11:48 PM | 2 Likes Like |Link to Comment
  • Breaking Up Goldman: A History Lesson [View article]
    I agree.

    In my article “What to buy in China”, seekingalpha.com/artic..., I expressed my reservation about investing in individual Chinese companies. One can find many inconsistencies when reviewing the financial statements of certain China companies.

    Instead, I suggested buying mutual funds that specialize in the Asia Pacific area (mostly excluding Japan). Some of the Matthews funds have done very well in this region. Also, by investing in a fund, you get diversification that protects you from the adverse impact of accounting irregularities on the shares of any one individual Chinese stock.
    Jun 24, 2010. 01:08 PM | Likes Like |Link to Comment
  • Breaking Up Goldman: A History Lesson [View article]
    The solution (breaking up Goldman) is easy; but how to do it is a tough one? When it comes to stocks (companies), I believe smaller is better. You have a better shot at winning if your interests are more closely correlated with the management/shareholders. The ideal is finding companies where management owns a good percentage of the shares. To revitalize capitalism, giant entities should be broken up into smaller companies. Look what the breakup of Ma Bell did for the telecommunications industry. Giant companies like Cisco, Microsoft, Intel, IBM, big financials such as Goldman, etc. seem to be peaking, treading water,sinking or getting a competitive advantage from Big Government. Had giant auto companies been broken up into smaller units, when GM peaked decades ago, that industry would be vastly different today. “Giants” should be broken up into a number of smaller publicly traded companies, with the shares of each new entity spun off to the stockholders of the parent company. I believe the sum of the parts, would in the long run, be greater than the value of the original “giant”. These smaller units would be more competitive and, in total, more innovative than the giant. Smaller companies have always been the engine of economic growth and jobs creation in the US. The problem is how to accomplish this. Getting the government involved in the process would be a complete disaster. Big government is like a cancer that saps life out of a body, in this case the economy. Government has been getting bigger, less efficient, and more corrupt as time passes. They are more and more beholding to powerful interest groups and lobbyists that are anti-competitive by nature. Does anyone believe politicians will ever act in a fiscally responsible manner at the expense of grabbing more power? I would like to see enlightened management (Steve Jobs type) take the initiative and adopt a policy of breaking up their companies and hope this would establish a trend to revitalize capitalism in the US. Of course, no one should hold their breathe waiting for such an outcome since corrupted executive power and cronyism runs rampant in the Board of Directors of “giant” corporations.
    Jun 24, 2010. 01:03 PM | 1 Like Like |Link to Comment
  • Breaking Up Goldman: A History Lesson [View article]
    Those of us who look closely at fundamentals and search for value (combined with potential for future growth), did not buy stocks selling at ridiculous multiples of analyzed sales and operating with large losses, even back then. What makes it shameful is that GS was considered the "cream of the crop" of investment bankers and had the smartest people in finance working for them. They were the leaders in the industry and were setting the standard. Unfortunately, they literally sold their clients "short" and profited handsomely from shamefully overpriced stocks that were anything but the long-term "growth stocks" marketed and hyped by them. Goldman acted in the same greedy and unethical way more than a decade ago as they are accused of today (for their actions during recent years). They have been sued numerous times for alleged improper actions since going public in 1999 and continuing up to the present time ...... and that will continue in the future as long as the culture of super greed exists at the company.
    Jun 22, 2010. 12:30 AM | 2 Likes Like |Link to Comment
  • What to Buy in China [View article]
    Thanks.
    May 19, 2010. 01:28 PM | Likes Like |Link to Comment
  • What to Buy in China [View article]
    I have put YONG on my list of stocks to follow. As noted in my prior comment it is trading like a winner. If they can meet the consensus forecasts (2010 Sales of $163.4 million and EPS $0.98;
    2011Sales of $230 million and EPS $1.49) the stock will go higher assuming "normal" market conditions. I use historical information merely to evaluate how management has performed over a period of years but there must be a catalyst for growth in the future for me to buy a stock. Therefore I'm not a pure value investor and I look for value at the time I buy a growth stock. I recognize the tremendous growth potential in China but the accounting issues still trouble me and therefore my preference is to invest in a limited number of individual China stocks and more in Mutual Funds with offices there and hopefully they are visiting the companies. While I am a long term investor mutual funds also give the type of liquidity that is desirable if there is a major market meltdown. If you want a copy of my worksheet report on Yong just email me at resgroweq@yahoo.com. Thanks again for bringing YONG to my attention.
    May 18, 2010. 06:07 PM | Likes Like |Link to Comment
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