microman

Hot China Stocks: A Bubble to Avoid

A few comments on this short-sighted and poorly-researched article. First, the stocks listed have China operations, but are not necessarily ADRs/ADSs. Second, I trade these stocks regularly, and other than FEED, rarely see a spread more than a dime, let alone fifty cents. Third, the five stocks mentioned by the author are NOT created equally. Each needs to be analyzed separately. Fourth, one of the MANY attractive features of these stocks is the superiority of the growth rate compared to American stocks in the same or similar sectors. PE's "for a particular space" is too generic; such analysis needs to take into consideration growth rate, not just what sector a company is in. In fact, when considering the macro case for companies doing business in China, I would argue the point that DESPITE the recent runs on these stocks, only now are they starting to catch up to where they should be valued based on their powerful fundamentals. One caveat: It's probably a better approach to TRADE the US-listed China sector than to fall in love. I like the strategy of getting in them early (e.g. nobody has picked up on HQS yet), let them double, sell half, and let the rest ride for free.

Shengda Tech: A Cheap Chinese Smallcap

Shengda didn't present at Roth...any comments as to why? Also, I noticed that JLF is dumping shares of CXTI like crazy, yet not seeing such filings for SDTH...but yet we have a large short position. Wonder what's going on there.