Wednesday, September 2, 2009

Robert Hsu and TSM

On a cold January evening Mr. Hsu wrote to his China Profit Strategy paying subscribers:

In the current market, stock valuation and momentum become very important. Stocks that fail to maintain strong growth momentum will be vulnerable to sharp declines. In the face of slowing U.S. consumer demand for electronics and a weaker company outlook, I want you to sell two stocks that focus on the U.S. electronics market -- Apple (NASDAQ: AAPL) and Taiwan Semiconductor (NYSE: TSM). These are not the kind of stocks we want to be in right now and though I like these companies, I must advise you to sell them for now. We could very well come back when the dust settles for another go.

It was a cold January 24th 2008.

Now let's have a look at:
  1. What Mr. Hsu was saying a few weeks before
  2. What happened after January 24th
What Mr. Hsu was saying a few weeks before

January 10th

Taiwan Semiconductor (NYSE: TSM): Investment bank Credit Suisse recently published a report saying that Taiwan Semiconductor should be able to withstand the industry slowdown. The brokerage firm cited reasons such as valuations near three-year lows and its size and balance sheet strength. I agree with the Credit Suisse's analysis. Taiwan Semi will report its fourth-quarter earnings on January 31 before the market opens. Buy TSM under $13.

January 17th
Taiwan Semiconductor (NYSE: TSM) said that December sales increased 31% from a year ago to 30.0 billion Taiwan dollars ($923 million). Full-year sales for 2007 totaled 322.6 billion Taiwan dollars ($9.9 billion), up 2% from 2006. The increase in sales is a good sign for the company. Buy TSM under $13.

What happened after January 24th
Mr. Hsu did not wait for the earnings report on January 31st and told his subscribers to sell on January 24th.
He suggested (better, he ordered to buy it below $10.50) in his October 2006 issue of China Profit newsletter:
TSM is truly a world-class semiconductor company. After my visit to the company, I’m more bullish than ever about its prospects. Buy TSM under $10.50. I’m targeting gains of 30% over the next six months, and maybe more over time.

So Mr. Hsu was targeting at least $13.50 but TSM never passed $12...

On January 24th TSM closed at $8.64, a -17% for Mr. Hsu. But doing the contrary he said and buying that day would have given the opportunity to sell over $11 between May and June 2008 for the 27% profit Mr. Hsu missed.


jack said...

I used to subscribe to Robert Hsu and most of his pick were good by just guessing he is 60%+ winner but I only took the picks I liked after doing my own checking and seeing if the timing was right for me. I rank Mr. Hse a very good stock letter in China Profit Strategy and he also travels to China 4 to 6 times per year and I think that is worth something. I will renew at a discounted rate to his service because I feel Asia has better potential than the west over the next 2 to 5 years.

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