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  • Should You Buy Sina, The Chinese Twitter? [View article]
    Renren is another competitor not mentioned
    Jul 9, 2012. 10:55 AM | Likes Like |Link to Comment
  • 1 Gold And 2 Silver Stocks I Find Very Attractive At Their Current Levels [View article]
    Not convinced. The author is citing a lot of quarterly developments and some company specifics like mergers or production increases.Not adequate to make an investment decision. Look at the forest not the trees.

    What the investor should really ask himself is:
    - Am I bullish on gold-silver prices?
    - What level of operating leverage and risk do I like?
    - Has the management the flexibility and competence ?
    to deliver on production and operations
    to make the right big bets like hedging decisions or M&A
    to do well in a bull as well as in a bear market

    Recent M&A transactions are already be priced and and only increase risk (because of potentially bad execution of the merger)
    Jul 9, 2012. 10:31 AM | Likes Like |Link to Comment
  • Diana Shipping: Safest Shipping Play, Trading At A Discount [View article]
    Yep. I already had a cursory look at shipbuilders.
    Well, most of these companies are either diversified, part of Chaebols, also do military ships, or are very close to the government in other ways.

    I heard that military ships in SE Asia should do great. China still has to or at least wants to upgrade its military, it is a good economic stimulus (all bridges have already been built ;) + if China
    gets in real econimic and social trouble, nationalism is a way out.

    What is 20+ scrapping?
    Jul 9, 2012. 09:27 AM | Likes Like |Link to Comment
  • Diana Shipping: Safest Shipping Play, Trading At A Discount [View article]
    Thanks. That was a great answer.
    Two follow-up questions.

    - Do you think that DSX will then just buy the ships and put them on the side? Or are marginal cost still low enough to have a positive EBITDA?

    - Seriously, are there any sectors which could profit directly from an impeding boom of ship scappings and mothballing? I was looking for some ship-scrapping companies, but they all seem to be unlisted Indian or Bangladeshi companies. Maybe something like: China Metal Recycling? Or are there companies that are taking care of unused ships? I guess the best guess would be to bet on a decrease in the price of scrap steel. But how to do that?
    Jul 9, 2012. 08:49 AM | Likes Like |Link to Comment
  • Why MasterCard Is Undervalued [View article]
    I am sceptical. Sure Mastercard has nice long-term growth rates, based asaik on developing countries, but so has i.e. Telefonica in South America.

    At first sight the company seams to make nice (bloated?) profits while having at the same time a valuation which is quite high given valuations in the rest of the stock market.

    I can imagine that with new developments like paypass stock prices might go up for a couple of more months. However, sooner or later, prices will come down.

    Lets face it. We are getting closer to a global recession and in such a scenario a Chinese white-collar worker or a Mexican college student will have other concerns then getting credit cards to do online shopping.

    What is more there are developments on the edge like Bitcoins which can make the whole business idea of Mastercard/Visa/... obsolete.
    Jul 9, 2012. 08:42 AM | Likes Like |Link to Comment
  • Diana Shipping: Safest Shipping Play, Trading At A Discount [View article]
    Some general questions on the shipping industry:

    1. I read in the annual report, that Ships are valued on the books reflecting prevailing charter rates. This means if rates get too deep for too long an asset impairment must be done. This weakens credit ratios and might lead to credit covenants being broken.

    Are there a lot of companies facing that risk? Combine that with a cash burn rate and one might come up with a league table, of who gets bust 1st, 2nd, ...

    2. What happens exactly if a shipping company goes bankrupt? Will companies be restructured (debt-equity swap) or will companies be liquidated?

    3. What happens with ships of liquidated companies? I guess charter contracts are still valid. Afterwards they go to the banks they were pledged to. Sure they will try to sell them. What if that is not possible? Will they be dismantled and reycled?
    (Maybe there are some shares of Indian steel recyclers. Could be a good investment ;)

    4. How could a company with a strong balance sheet like Diana profit from such a situation? If charter rates are low, why buy additional ships?
    Jul 8, 2012. 07:32 AM | Likes Like |Link to Comment
  • Renren And The Chinese Social Network Scene [View article]
    This is really a fascinating and engaging discussion. Great how a thought-provocing article can trigger such a constructive conversation. I looked a bit deeper into the company and some peers. I made the following observations. Some of them are negative.

    - Renren has a lot of money. Even though this is positive because it gives the company some staying power it is by no means singular. I looked at zynga, groupon. These guys are still sitting on a lot of cash. I guess it is the same with Chinese competitors.
    This means: There is no real edge about it in the sense that attractive competitors or complementary companies will go bust and one Renren is then the only bidder to buy them up for cheap. No consolidation game

    - The executives, board members, alliances. True the people are impressive. The BYD founder, Softbank being the largest shareholder ... All true .... But what about competitors. I did not check, but the calibre of their guys should be similar. Right or wrong?

    - From the technology side, the integration of sevices, .... Renren is suppossed to be the best in the world. They are like Zynga, Groupon, Youtube and Facebook - all in one. However is it really like that? Is mobile really the future? How much does being the most sophisticated really improve ones odds? Is integration really that important? Look at Amazon: They have Audio Sales integrated. However Apple Users still use I-Tunes and not Amazon.

    - I really do not like the Groupon part of Renren. They burn a lot of money on it (a lot of the YoY losses / downturn is from Nuomi). However even the market leader Groupon loses a lot of money. Why should Renren do better? Is this even a viable business model?

    - The age structure of the users: In Germany we had StudiVZ. Maybe somebody heard of it. It helped to make the founders a fortune, by selling it to other people. The network is now slowly dying. There is the theory that people grew out of this network and decided to migrate to facebook because it was more "mature".

    - However to me still the biggest question is: Can social media be made profitable? Facebook is still pure speculation. Even if it does not fail financially, it might become low margin, just like Amazon.

    I am curious if you will be able to discern my concerns.
    Jul 8, 2012. 07:32 AM | Likes Like |Link to Comment
  • Renren And The Chinese Social Network Scene [View article]
    I just looked at the report that was mentioned in the other blog:
    http://bit.ly/N2KQTN

    It is about brand values. The brand name of Renren is calculated as being USD 2.6bn, the one of Qzone as USD 11.2bn, and Facebook as #1 29.1bn.
    Jul 5, 2012. 10:02 PM | Likes Like |Link to Comment
  • Renren And The Chinese Social Network Scene [View article]
    This seems to be an interesting post where a marketing guy looked at the different social media companies from a marketers perspective:

    http://bit.ly/Lsx8fT
    Jul 5, 2012. 10:01 PM | Likes Like |Link to Comment
  • Renren And The Chinese Social Network Scene [View article]
    @doctorgreenback: You seem to know a lot about this company. I would be very happy to see a longer blog article of yours about Renren. This would allow you to go into some more detail, to tell us your sources (so that we can look up stuff) and to explain us what the operational things you tell us might translate into financials
    If I understand correctly you are not as bullish about the gaming part as the advertizing part, right? Can you give some more details on that?

    @ Paulo Santos. I am unsure if your assertion about the money-stealing is right or not. I have heard about the bad corporate governance of Chinese companies but that was mostly related to "related-parties" dealings between SEOs and their listed subsidiaries. Can you point to some examples to substantiate your point?

    @all: There are strong signs that the Chinese economy is decelerating. doctorgreenback mentioned it. Lets assume that the Chinese central banks interest rate cutting does not work.
    What would this mean to Chinese tech stocks? How did Western peers do during the 2008/2009 crash? (I had a quick look and saw that the Nasdaq did as bad as the Dow, which surprised me, since the Dow includes all the financial comps and the car manufacturers).

    I also thought about what Renren could do with all the money.
    Could there even be an opportunity for Renren with all their cash to buy up distressed competitors or complementary companies that will go under in a China-crash (because of a weaker balance sheet)? So that the downturn would even turn out to be something positive?
    Jul 5, 2012. 05:07 PM | Likes Like |Link to Comment
  • Renren And The Chinese Social Network Scene [View article]
    I want to say thanks a lot to the author. His article is really good and helpful!

    However he should not forget about the USD 1bn cash pile of Renren, that make up two-thirds of the Share value of the company. This may slightly change the picture.
    Jul 5, 2012. 02:58 PM | Likes Like |Link to Comment
  • Renren And The Chinese Social Network Scene [View article]
    Hi Paulo, thanks for the article and also the link to the McK study.
    One correction however. You are saying the market values RenrenĀ“s business at USD 1.7bn. This is not exactly true, as Renren sits on a pile of cash of USD 1.0bn. So actual Operating EV is at around USD 0.7bn, which yields a EV/Sales of 5.4 given annualized Q1 Sales of USD 31.2m. forward-looking the EV/Sales is surely much lower. Or in other words, USD 2.6 of the share price is cash, so one can only lose 40% (unless the CFO steals the money, that is)

    But anyway, why not buy both companies? Losing on myspace and winning on facebook would not have been such a bad deal, right?
    Jul 5, 2012. 02:38 PM | Likes Like |Link to Comment
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