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John Polomny is an individual investor and speculator seeking unique, overlooked, and well researched opportunities and speculations from all over the world.
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  • Taking A Flyer On A Chinese Bromine Producer 0 comments
    Nov 26, 2012 12:30 PM | about stocks: GURE

    I have been purchasing shares of Chinese bromine and crude salt producer Gulf Resources (NASDAQ:GURE). The quick story is that I have been watching this company for a couple of years as it has fallen due to lower sales and earnings along with getting caught up in the "all Chinese companies listed in the west are frauds" undertow. Although the company has had lower revenues and earnings, due it says to the overall economic weakness in China, it has maintained profitability. If the financials are to be believed the company has cash on hand that equals the market cap of the company ($41M vs.$43M.). Of course many will say that the company does not have the cash and that if it did it would be buying back shares. I am not going to get into that debate. So far the company has not been proved to be a fraud.

    The catalyst for this trade is the recent upward movement in Chinese bromine pricing. The price is up around 8% in the last couple of months. The price can be followed here:

    I am using this as a speculation on Chinese bromine pricing getting better and a consummate increase in sales and earnings at Gulf Resources. I am using a 25% stop on this trade to protect against a further deterioration in the Chinese economy and any kind of fraud allegation that might pop up in the near term. This is called a speculation and is high risk but I think with a near term increase in Bromine pricing could be in line for a decent move. This is not advice do your own due diligence.

    Disclosure: I am long GURE.

    Stocks: GURE
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