Monday, January 26, 2009

Robert Hsu's Asia Edge - New Layout, Old Junk

Mr. Robert Hsu's marketing department just renewed the Asia Edge website look and feel.

Unfortunately, Mr. Hsu should have changed his buy and sell criteria, since in the last year he demonstrated he was only able to lose money and his current portfolio is crap.

Mr. Hsu's $3.000/year paying subscribers are currently suffering. Just to let you know in detail (but without infringing any copyright) here is the anonimized version of the Asia Edge Portfolio:

C?? -25.33%
E?? 0.00%
F?? -42.68%
G??? -15.22%
H?? -11.89%
N??? -21.38%
S?? -7.03%
S?? -12.76%
S?? -6.06%
S?? -25.83%

In addition to the current portfolio, I am now going to focus on the latest trade by Mr. Hsu: CEL.

Mr. Hsu bought CEL on November 28th 2007 at $31.34.

New Buy: Cellcom Israel Ltd.
Our new buy this week comes from an economy that we have never invested in before: Israel. Usually Israel makes headlines for all of the political strife happening in the Middle East, so many investors aren't aware that the country has a strong competitive edge in today's information economy. Believe it or not, the tiny country is developing into a high-tech center. Israel is forging ahead technologically and establishing a name for itself in industries like software and generic drugs.
The country also has a highly educated and disciplined workforce. With its tech edge and skilled workers, Israel's GDP is growing at a rate of about 6% per year. Even though it's a small country without much in the way of natural resources, it's using its strengths to get ahead in areas that are critical in today's era of global trade and information exchange.
Our new play on Israel is an established company that started in 1994, but didn't go public until this past February. Cellcom Israel (NYSE:
CEL) is the largest mobile phone operator in Israel. The company provides a variety of services, from talk and text messaging capabilities to advanced cellular content and data transfer. Cellcom also sells handsets and offers landline and roaming services.
A lot has changed in the Israeli mobile industry since the company was founded, but Cellcom has managed to keep up with the rapidly evolving market. In the 13 years since Cellcom first opened its doors for business, the mobile phone has gone from an Israeli luxury item available only to the privileged to a "must-have" for everybody.
And Cellcom has done a good job of providing mobile services for all of the new cell phone owners in Israel. Today, the company provides services to more than 3 million subscribers. That represents 34% market share in its home country!
The company also has a unique home-field advantage -- its deep commitment to Israeli culture enables Cellcom to understand its customers' needs better than foreign competition. Cellcom leverages this strength to increase its subscriber base and customer satisfaction. The company is known for its stellar customer service and strives to make every customer interaction pleasant.

Cellcom's Strong Financials
Early this month, Cellcom reported terrific third-quarter earnings, boosted by cost cuts and higher revenue from data and content services. Net income doubled (increasing 105%) to $67 million or 68 cents per share from $33 million or 34 cents one year earlier. Meanwhile, total revenue increased a healthy 7% to $392 million.
The company's subscriber base grew by 57,000 to 3.02 million people at the end of September. Its number of 3G subscribers also climbed, reaching approximately 281,000 -- up an impressive 33% from the previous quarter. Cellcom's customer base is now larger than that of its major rival, Partner Communications, which has only 2.8 million subscribers.
Cellcom also said it plans to pay a dividend of 67 cents per share or a total of $65 million on December 3. Given Israel's tame inflation rate and appreciating currency, I believe Cellcom's strong earnings growth will continue.
I also like CEL because it has rallied sharply during the recent market correction. This is a sign of strong momentum, and I believe this strength will continue thanks to its cheap valuation (its P/E ratio is only 14!) and an attractive 8.8% dividend. I want you to buy CEL under $35. I expect it to hit $46 in the next four to six months, giving us profits of 30% or more.

Ready for the profit of 30% or more? Here it is:

CEL moved quite sideway until July 2008 when it also reached $36.

Mr. Hsu was writing at that time: Buy under $35

Even in his June 24th 2008 conference call with his paying subscribers, Mr. Hsu explained that CEL was in the Top 5 Stocks of his Asia Edge and China Profit portfolios.

Far from setting a stop and far from understanding anything at all in the 2008 crisis, Mr. Hsu waited until January 21st 2009 and a close price of $20.99 before telling his poor subscribers to sell.

This turned out to be another great lesson about how to go from an imaginary profit of 15% to a realized loss of 33%. Didn't Mr. Hsu say "profit of 30% or more"?

Well done, Mr. Hsu.

1 comment:

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