Monday, August 31, 2009

Louis Navellier and ACN

This is the story of an old trade, the position was opened on December 2008 and closed on March 2009, but it is interesting to read so to better understand the real performance of Louis Navellier's $5.000/year services.

Mr. Navellier decided to buy ACN on December 1st 2008, when it closed at $29.06. He wrote the following words to his subscribers:
Bermuda's Accenture (ACN) is a familiar name in the U.S. and is the world's largest consulting firm. The company offers management consulting, information technology and systems integration, plus business outsourcing services. Consulting firms often prosper in hard times, when many companies need to reorganize and outsource labor. Accenture operates worldwide, in over 200 locations in about 50 countries, and has a wide array of government-based clients, including the U.S. Air Force.
Accenture's fiscal year ends August 31, and for its final fiscal quarter, its earnings rose 34% to $434.8 million or 67 cents per share, compared with $316.8 million or 50 cents per share in the same quarter of 2007. During the same period, sale rose 17% to $6 billion. New bookings for the quarter rose to $7.67 billion, a quarterly record. Looking forward, Accenture forecast net sales growth of 9% to 12% this fiscal year, on earnings per share of $2.85 to $2.93, for a low current P/E ratio of 10 to 11. Buy below $29.90.

There are two things to notice in ANC's chart:
  1. The actual price movements and buy below prices until sell date March 30th 2009 (see below for details)
  2. ACN's trend after Mr. Navellier sold it

December 8th 2008

Buy below $29.16

December 15th 2008

Bermuda's Accenture (ACN) won an $87 million contract for a new integrated tax system for the state of Maryland. The award was unanimously approved by all leading state officials, including Governor Martin O'Malley, Treasurer Nancy Kopp and Comptroller Peter Franchot.

Buy below $29.88

December 22nd 2008

Bermuda's Accenture (ACN) reported that its first fiscal first-quarter net income rose 26%, due to 6% revenue growth plus a lower net tax rate. The stock rose more than 10% last week on the news.* Accenture's first fiscal quarter, which ended November 30, delivered income of $479.9 million ($0.74 a share) up from $381.3 million (60 cents a share) in the same quarter a year ago. This beat analyst estimates of 68 cents a share. In addition, the company's effective tax rate fell to 26.6%, down from 34.6% a year earlier. Gross profit margins also rose, to 31.4% from 30.1%.

Buy below $32.93

December 29th 2008

Buy below $32.77

January 5th 2009

Buy below $34.82

January 12th 2009

Buy below $34.73

January 20th 2009

Buy below $32.82

January 26th 2009

Buy below $32.97

February 2nd 2009

Buy below $32.75

February 9th 2009

Buy below $33.98

February 17th 2009

Buy below $31.23

February 23rd 2009

Buy below $29.75

March 2nd 2009

Buy below $28.70

March 9th 2009

Buy below $27.93

March 16th 2009

Bermuda's Accenture (ACN) will release its fiscal second-quarter earnings on March 26. Last week, Accenture announced that it had teamed with Connecticut Light & Power Company, a subsidiary of Northeast Utilities, in a pilot program to test smart meters. This program will gauge residential, commercial and industrial customers' interest in peak time-based energy rates–meaning energy is cheaper when demand is less and more expensive when demand is high. The pilot, approved by Connecticut's Department of Public Utility Control, is scheduled to begin in June. With about 3,000 customers participating, this will be the largest customer-focused smart-metering pilot in North America.

Buy below $30.91

March 23rd 2009

Buy below $32.70

March 30th 2009

This week, I recommend that you sell Bermuda's Accenture (ACN) and British Virgin Islands' UTi Worldwide (UTIW). Both companies have essentially moved sideways since their purchase, and haven't exhibited the strength we seek in our Global Growth stocks. After lackluster earnings reports, it's now time to sell.
Now more than ever we need to make sure we hold only the top international companies since the potential for profits in the coming weeks is tremendous, so I don't want you to be stuck in a run-of-the-mill stock that is standing still. Cash out your positions in ACN and UTIW, and get behind our new buys instead.

Close price was $27.83.

Note that the sell price was lower than every single buy below price in 4 months.

And after Navellier's sell order? What did ACN do? It moved from less than $28 to over $36 in August 2009. So, in addition to the 4% loss (actually peanuts) Mr. Louis Navellier also scored an impressive 28% missed gain.

Thursday, August 27, 2009

Robert Hsu and CSR

Another masterpiece from Mr. Robert Hsu is the CSR trade.
Mr. Hsu decided to buy CSR on August 21st 2008, at $14.60.
Buy China Security & Surveillance Technology
To take advantage of the growing demand for security and surveillance technology in China, I'm recommending a domestic leader in the Chinese security and surveillance industry -- China Security & Surveillance Technology (NYSE:
CSR). I haven't been this excited about a new China Strategy stock recommendation since I recommended Mindray (NYSE: MR) and New Oriental Education (NYSE: EDU) nearly two years ago. That's because CSR fits all of the parameters we like: It was started by private entrepreneurs, it is a leader in a fast-growing industry, it's earnings are growing at over 80% a year, it is trading at an attractive valuation of only 7 times this coming year's earnings, and the company's CEO is regularly buying stock with his own money at up to $30 a share (shares are trading below $15).
Based in Shenzhen, China Security manufactures, distributes, installs and maintains security and surveillance systems in China. And it provides many surveillance products including hardware, software, design, implementation and technical support to its customers, which include government, corporate and commercial clients.
With Chinese demand for security and surveillance products growing, China Security has several manufacturing facilities, a R&D facility in China and an extensive sales and service network throughout the country. And the company is able to compete internationally with a lower labor cost, established distribution channels and a local sales team.
China Security has truly become a leader in this industry over the years and has achieved earnings growth of 80% or higher, as a result. Just look at some of the recent financials:
China Security achieved strong top-line growth from 2002 to 2007 when revenue jumped to $240 million in 2007 from $16 million in 2004. Plus, net income soared to $46.6 million in 2007 from $5.9 million in 2004. And most recently in early August, the company posted strong second-quarter earnings.
Net income soared 81% year-over-year to $7.7 million, or 17 cents per share, from $4.3 million or 11 cents in the prior year's same quarter. Revenue increased 78% to $92.7 million from $52.1 million in the second quarter of 2007. Gross margin -- one of my favorite indicators of a company's operating performance -- improved to 32.8% from 28.6% in the same period last year and 30.5% in the first quarter.
Looking ahead, I'm looking for continued strength as is the company -- its third-quarter revenues are expected to be $110 to $115 million and the full-year 2008 revenue $400 to $410 million. And China Security raised its adjusted 2008 net income forecast to $73 to $80 million, or $1.60 to $1.77 per share.
What makes this company particularly intriguing right now is that China Security is trading at bargain levels. This largely undiscovered stock was unfairly beaten down in the recent Chinese stock sell-off since October, as speculators sold it with other stocks. And now it is trading at a price-to-earnings ratio of only seven times this coming year's earnings. Talk about an attractive combination of strong growth and attractive valuation!
I want you to buy CSR under $19. I'm targeting $27 by the end of this year, which would give us a nice 50% gain.
CSR was able to go down to $2.47 (more than 80% loss) in March 2009, then partially recovered.

Mr. Hsu tried to explain what happened and basically told his readers to hold CSR for one year until on August 20th 2009:

China Security and Surveillance Technology is China's leading security devices company. It recently was finally able to negotiate better terms with its largest creditor, Chicago-based hedge fund giant Citadel. Basically, instead of paying a big lump sum at high interest rate to Citadel in 2012, CSR is getting better terms and the option to pay back the debt in installments. Despite this being a positive development for the company long term, it weakens the company's cash-flow position in the short-term.
I have told you before that, given the company's weak cash position, I am not comfortable with the company's aggressive acquisition strategy. In the past month, the company announced two more corporate acquisitions. So, the long-awaited renegotiation of Citadel notes gives us a good opportunity to sell CSR and put the money into better opportunities. Sell CSR.

Price was $7.27 for a 50% loss.

We should learn at least two things from this lesson:

  1. Robert Hsu is a gambler (with other people's money)
  2. Always use stop loss orders (before going down 80%)

Wednesday, August 26, 2009

Robert Hsu and STV

After STV moved from $4.25 in December 2008 to $8.36 in April 30th 2009, Mr. Robert Hsu decided it was time to jump in.

April 30th 2009

New Buy: China Digital TV
Founded in 2004, China Digital TV is a Beijing-based leading technology company in China's rapidly growing digital television market. With a 50% market share, STV is involved in the market in many different ways. The company is the number-one provider of conditional access (CA) systems, which enable TV network operators to manage the delivery of content and services to their subscribers. In addition, the company provides cable, satellite and mobile TV network operators with full-service support systems, value-added services and set-top box solutions.
Plus, China Digital TV's major stream of revenue (90%) comes from the production and sale of smart cards. Smart cards are an important part of the set-top boxes that TV network operators use to provide and control access to their cable networks. And as analog TV users switch to digital TV, they will need one of these smart cards to integrate into the set-top box to access digital cable TV.
Thanks to its dominant position in the industry and the major switch to digital TV, China Digital TV will continue to grow its market share in the coming years. The transition to digital TV will greatly increase the need for STV's services, and this growth is already showing itself. In 2008, the company signed 36 of the total 66 new CA systems contracts. And by the end of last year, STV had 200 carrier customers in 27 Chinese provinces.
Strong Financials
STV's strong market presence and growth has surely shown itself in its financials. The company's net revenues soared from $3.7 million in 2004 to $30.6 million in 2006 and $70.7 million in 2008. That represents an annual growth of 109%! Net income also jumped from $4.5 million in 2005 to $43.1 million in 2008. And STV's gross margin was 80.5% in 2008.

In late September 2008, China Digital TV launched a share repurchase program for up to $40 million of its shares. By December, it had bought back 2.3 million shares at a total cost of approximately $16.1 million. Meanwhile, it declared a special cash dividend of $1 per share. Still, the company has a strong cash position of about $203 million without any liabilities -- that's $3.52 per share!
I look for these strong financials to continue in the months and years to come, considering STV's growing business. And I think we should take advantage of it by buying STV under $9. I'm targeting $14 by the year-end, which would give us a nice 50%+ gain.

Price was around $8.36.

May 7th 2009: China Digital TV (NYSE: STV) shares rallied 30% last Friday on a combination of strong buying and short covering. This action handed us a nice 19% gain already, but it also moves the company's shares significantly above our buy limit price of $9.
After this strong move higher, the stock has gone up too much, too fast. And I know that many of you are wondering if it's still a good buy now, even though it's trading above my $9 buy limit. Well, I don't recommend chasing China Digital stock at this level. I think there is a good chance that the stock will pullback below $10 again before resuming its uptrend, giving us another opportunity to buy China Digital at a reasonable entry point. So I want you to buy STV on pullbacks below our new buy limit of $10.

May 14th 2009: China Digital TV (NYSE: STV), as we discussed in last night's Flash Alert, reported somewhat disappointing first-quarter earnings yesterday, which sent the shares tumbling 20% in trading. And shares continued to fall today, losing another 5%. As I said in the Flash Alert, I remain confident that the Chinese government'-backed TV digitalization project will continue to benefit the company in the months and years ahead. Still, I want to gain more of a firsthand perspective of what's happening behind the scenes at the company, so I'm traveling to New York next week to meet with China Digital's management. I'll be sure to share my findings with you in next week's China Strategy weekly update. Until then, I recommend that you don't sell or buy any more shares. Continue to hold STV.

May 21st 2009: China Digital TV Update
The whole world is moving towards digital, and this is creating incredible investment opportunities in the technology sector. That's why I added China Digital TV (NYSE:
STV) to the China Strategy portfolio a few weeks ago. As you know, the company is China's leading supplier of conditional access systems (CAS), better known as smartcards, for cable boxes. It sells smartcards to over 200 regional cable operators throughout China. To date, China Digital has sold over 25 million smartcards, or to 50% of all cable TV households in China.
Currently, there are 50 million households with cable TV in China, an incredible leap from the 15 million in the country just three years ago. There's no denying that demand for digital cable is growing rapidly in the country. This is creating a tremendous opportunity for China Digital, especially when you consider that there are 380 million households with television sets in China, and the Chinese government has set a timeline to convert all TV broadcast to digital format by 2015, starting with the larger cities.
So in five years, most of the 380 million TV households in China will have digital cable. That means the number of digital cable TVs and smart cards sold in China is estimated to reach 110 million by the end of 2011, which is more than 100% growth. And China Digital will grab the lion's share of this expanding market -- it already grew by about 30% in both revenue and earnings in 2008, and it has no debt.
Despite all this, though, China Digital reported first-quarter earnings last week, and the stock dropped 20% on news that its revenue decreased 15% from the fourth quarter in 2008. Net income slipped even more, 38%, indicating a drop in profit margin as well. I know these results raised red flags for a number of you. And although I believe that this is a temporary drop due to tight credit with cable operators last year and the Chinese economy bottoming out in the first quarter, I was concerned as well.
So I traveled to New York on Monday to meet with China Digital's Investor Relations Director, Eric Yuan, to discuss these issues and gain a better understanding on what he thought was happening at the company. During our conversation, I learned three positive pieces of news about the company that indicate the slowdown is temporary and business will pick up in the second half of the year:
1) Improving Financing: Due to the global financial crisis, Chinese regional cable operators, all of them municipal state-owned enterprises, had a tough time obtaining bank credit last year, which slowed their purchase of smart cards. This trend continued until the end of the first quarter in 2009 when China's stimulus policy encouraged banks to lend to cable operators. As they receive funding in the months ahead, cable operators will resume purchases of smart cards in the second half of the year. So revenue is expected to pick up in the second half.
2) Economic Recovery: The Chinese economy likely bottomed in the first quarter, and we're already seeing improvement in general economic conditions there. This will drive continued digital cable growth, as consumers feel more comfortable spending on digital cable. Also, Chinese cable operators tend to purchase smart cards near year-end, making this a seasonal business.
3) Favorable Government Policy: Last week, in an effort to push cable digitization forward, nine Chinese provinces announced a three-year tax waiver for cable operators. This will add 5% to the cable operators' bottom-line and will boost smart card sales. More provinces may follow suit, which would accelerate China's cable digitization process.
So much of the decrease in China Digital's earnings in the first quarter was a direct result of seasonality and the global financial crisis pinching banks lending practices. Eric also explained that some of the decline in margin was attributable to increasing R&D spending, as the company is working on movie-on-demand, interactive TV games and other new businesses.
After my conversation with Eric, I was feeling much more optimistic about China Digital. The causes for the decrease in earnings during the first quarter are short-term issues. And given China's enormous television audience, the three factors mentioned above are all potential long-term bullish catalysts for the company. So, I recommend that you to start buying STV again below our original limit price of $9.

June 4th 2009: China Digital TV (NYSE: STV) has won two new contracts to provide conditional access systems to Jiangxi TV Network Co., Ltd and Zhongguang Movie and TV Satellite Co. Ltd,. Jiangxi TV Network is the provincial level TV operator in the area and covers nearly 5 million cable TV users across 11 municipalities. The new contract will allow the network to transmit up to 200 digital channels to its users.
Meanwhile, STV's contract with Zhongguang Satellite will allow the company to provide its new Miracle 3.0 SMS solution to the satellite company. The Miracle 3.0 SMS solution will allow Zhongguang to optimize its customer account management and fee collection process. Zhongguang Satellite is a China Central Television (CCTV) subsidiary that distributes content from four CCTV channels to more than 300 million users via more than 7,000 head-end receivers in China. These deals will add nicely to the company's bottom line. Continue to buy STV under $9.

July 16th 2009: China Digital TV (NYSE: STV) shipped approximately 2.13 million smart cards in the second quarter, slightly lower than its forecast of 2.35 million to 2.55 million. Management noted that the miss was due to some cable operators delaying digitization projects. However, the company won 12 new contracts to install CA systems in China in the past three months. As China moves to government-mandated full broadcast digitization by 2015, China Digital TV is well positioned to play a leading role in China's ongoing digital mass migration and beyond. Continue to buy STV under $9.

July 30th 2009: China Digital TV (NYSE: STV) will report second-quarter financial results on Thursday, August 6, after the market closes. I expect a slow second quarter but better forward guidance for the second half. Continue to buy STV under $9.

August 6th 2009: China Digital TV (NYSE: STV) will report financial results for the second quarter today, after the market closes. I expect the earnings to be stable, but look for stronger guidance in the second half. Buy STV under $9.

August 13th 2009: China Digital shares also fell dramatically -- 17% -- following the company's second-quarter earnings report last Thursday. The company announced that revenues dropped 25% to $14.6 million year-over-year, and 2% from the first quarter. The drop in revenues was mainly due to a decrease in smart card sales as only 2.13 million smart cards were shipped during the second quarter compared with 2.69 million in the same quarter of 2008.
While I was expecting flat results, the forward guidance was weaker than anticipated and that's what whacked the stock last week. China Digital management looks for smart card shipments of 1.85 million to 2.25 million in the third quarter and revenues of 411.8 million to $14 million.
The company is currently struggling because a number of cable operators decided to postpone their digitalization projects, cutting demand for China Digital's smart cards. Because of the recent miss in earnings, disappointing outlook for the third quarter and decreasing demand for China Digital's smart cards, I will talk to company management tonight to gain a better idea on what's currently happening in the company's business and industry. Until I have more details, I recommend that you to hold STV.

August 20th 2009: China Digital TV is China's leading provider of smart cards that are used to upgrade from analog to digital TV. I recommended the stock to take advantage of the Chinese government's policy to have all Chinese households upgrade to digital service by 2015. But despite this demand for its products, the company announced a disappointing second-quarter results last week, leading me to speak with Eric Yuan, the company's director of investor relations.
Eric told me that despite China's economic recovery and improving finances for cable operators (STV's primary customers), they have been slow to purchase more smart cards for digital upgrade. The main reason for this is a lack of quality content for TV audiences, who have limited incentives to upgrade to digital right now. Although there are more than 60 TV stations only available to digital customers, most of these stations offer low-quality programming that is unappealing to consumers. This hampering is caused by Chinese government control and restriction of television programming, something that did not exist in the U.S., Hong Kong or Taiwan.
Although I am long-term bullish on the digital entertainment market in China, I am disappointed by China Digital's near-term prospects and I see no quick turnaround in sight. I want you to sell STV and cut our losses.

Price: $7.43

Did anybody buy at $10 for a quick 25% loss?

Tuesday, August 25, 2009

Robert Hsu and CHL

Last week (August 20th) Robert Hsu closed his position with CHL. He realized a gain of almost 109%
Those who bought CHL back in December 2005 may be happy. If I followed this guru's advice I would be very disappointed for a simple reason: the missed profit is twice the realized one.
Those who bought it on October 2007 (when the genius was writing "Buy CHL under its increased limit of $100") should be quite angry... I would actually go at Mr. Hsu's place to kick his ass.

I am not going to show all the things Mr. Hsu wrote about CHL, but only a short summary, just to give you an idea of how this guy operates (or at leasts how he wants you to operate - I doubt he is putting his own money at stake, or he would be sleeping under a bridge by now).

December 2005: China Mobile (NYSE: CHL): There are only two state-owned enterprises worth investing in, and we’re going to talk about both of them now. SOEs are only worthy of our money when they are respectably run and have a monopoly (or close to it) in a growing sector. That describes China Mobile a nutshell. China currently has 400 million wireless handset users, and over 70% of them pay monthly fees to China Mobile. In addition, the market is growing more than 15% a year, and as bandwidth and those valueadded services improve, China Mobile stands to increase its fees and revenues. Buy CHL under $25 for at least 20% gains by the end of 2006.

January 11th 2006: China Mobile (NYSE: CHL) users sent a combined total of over 700 million short messages a day in 2005. That's right, a day! China Mobile's subscriber base grew by over three million each month in 2005, reaching 243 million by the end of November. China has the world's largest mobile phone market, with more than 377 million mobile phone subscribers, an average of 29 mobile phones per 100 people. CHL is far and away the dominant player and will be for the foreseeable future. Buy CHL under $25.

May 4th 2006: China Mobile (NYSE: CHL) plans to work directly with music companies to provide online service, which will cut most existing service providers (SPs) out of the deal. However, the company will leave some development space to other service providers and mainly concentrate on cooperation with large record companies. This news will help CHL's earnings and hurt smaller SPs. I believe that leading SPs such as Tom Online and KongZhong will still thrive given the explosive growth and size of the wireless services market. Buy CHL under $32.

November 16th 2006: China Mobile (NYSE: CHL): Is China Mobile trying to turn its mobile phones into the next Swiss Army knife? With the addition of some new all-purpose devices, it certainly seems that way. On Monday the company announced a new music-sharing service that will provide music, sports, and other content to mobile users. One interesting feature is that users will be able to upload their own self-produced songs to the Web for others to download. If that weren't enough, China Mobile has reached agreements with 19 domestic banks, including the Big Four banks, to jointly provide a mobile phone-based banking service called "Yin Xin Tong." Subscribers can use mobile phones to receive real-time financial information through text messages and other mobile data services. Paid service is expected to begin next year in Beijing. China Mobile led the Hong Kong market to new highs on November 15, closing with a market cap of $174 billion, making it the largest telecom company in the world. Buy CHL on pullbacks under $40.

January 11th 2007: China Mobile (NYSE: CHL): Just like China Aluminum, there's been talk of China Mobile going public on the red-hot Shanghai Stock Exchange. Last week we talked about the China Mobile IPO rumors that were floating around. The company finally came out and said that it won't be issuing A-shares on the Mainland—at least not in the next six months.
However, with the lure of potentially higher valuations and a greater domestic profile, I think it's only a matter of time before the company finally does go public in China. I don't think this will happen anytime soon, though. China Mobile won't list A-Shares until the government approves 3G licenses and the restructuring of the wireless industry is complete. I'll keep you posted on the situation as it develops. In the meantime, I think all of the speculation will give the stock a boost. Buy CHL when it's under $43.

May 10th 2007: China Mobile (NYSE: CHL) will put its EDGE (2.75G) network in Shanghai into commercial operation on May 17. This new technology will increase its current network transmission speed by roughly three times, which is great news for China Mobile customers. The company started EDGE services in Guangdong province exactly one year ago, while the networks in other cities remained in the testing stage until now.
Compared with China's homegrown 3G technology (called TD-SCDMA), EDGE is based on China Mobile's existing GSM network and can be upgraded to WCDMA 3G network technology in the future. EDGE can also supplement TD-SCDMA networks.
China Mobile plans to spend more than 10 billion yuan (or $1.3 billion) in upgrading EDGE networks in major cities throughout China. A nationwide network is expected to be completed by the end of this year.
China Mobile's cutting-edge technology proves that the company dominates China's communication sector. Continue to buy CHL under $50.

July 5th 2007: China Mobile (NYSE: CHL): After finally completing its 3G network construction in October, China Mobile is getting ready to provide 3G services to 2 million–3 million customers beginning at year-end into the start of 2008, and another 12 million customers should get 3G service in the first half of 2008. With that event on the horizon, it's looking like China's homegrown 3G technology will rapidly dominate the 3G market—whether or not the Chinese government decides to issue 3G licenses to mobile operators. Keep an eye on CHL and grab it when it's trading below $55.

October 25th 2007: China Mobile (NYSE: CHL) reported third-quarter earnings this week and the numbers were very impressive. Net income surged 38% to 22 billion yuan ($2.9 billion) from 15.9 billion yuan a year earlier. Sales jumped 21% to 91.9 billion yuan ($12.3 billion).
Driven by gains in rural areas, China Mobile added a record 48.4 million users in the first nine months of 2007 and a record 6.1 million in September. Controlling about two-thirds of China's wireless market, it had a total of 349.7 million subscribers by the end of September. The company is also boosting value-added services, such as ring tones, to keep urban customers.
With a market value of $367 billion, China Mobile is the world's fourth-biggest company. I believe China Mobile will continue to grow rapidly in the Chinese wireless market. Its biggest rival, China Unicom, isn't likely to catch up any time soon. Like many of our other stocks, I'm raising our buy limit for China Mobile. Buy CHL under its increased limit of $100.

March 13th 2008: China Mobile (NYSE: CHL) added a record 7 million new users in January, increasing its total number of subscribers to 376.4 million. CHL's major competitor, China Unicom, gained a mere 1.4 million additional subscribers, rounding off at 164 million. China Mobile continues to expand its network by venturing into smaller towns and villages, where fewer people are accustomed to mobile phones. CHL is a good buy under $80.

March 20th 2008: China Mobile (NYSE: CHL) reported strong fourth-quarter earnings on Wednesday. Net income rose 37% to 27.2 billion yuan ($3.8 billion) from 19.9 billion yuan during the same period a year ago, beating the 26-billion yuan estimate by analysts. Sales also increased 19% during the quarter to reach 98.5 billion yuan, up 82.7 billion yuan from last quarter.
For the full year of 2007, China Mobile's profit grew 32% to 87.1 billion yuan ($12.3 billion) from 66 billion yuan a year ago, while sales also increased 21% to 357 billion yuan. Its gross profit margin—one of my favorite indicators of a company's operating performance—improved to 54.3% from 54% in 2006.
These strong results are mostly due to a growing subscriber base. In 2007, China Mobile's total subscribers increased 23% to reach 369.3 million, as four out of five mobile users are now China Mobile customers. It is expected that the company will gain 80 million new users this year for a total of about 450 million subscribers by yearend.
Going forward, I expect China Mobile to gain more market share in lower-income rural areas. And I also believe that the company will maintain its profit growth by selling more value-added services in the urban areas. Continue to buy China Mobile under $80.

April 24th 2008: China Mobile (NYSE: CHL) reported strong first-quarter earnings early this week. Net income rose 37% to 24.1 billion yuan ($3.4 billion) from 17.6 billion yuan in the same period a year ago, beating analysts' estimate of 23.6 billion yuan. Revenues increased 20% to 93 billion yuan. The company's strong numbers were boosted by a record 6% subscriber growth in the quarter.
China Mobile continues to win subscribers from fixed-line companies such as China Telecom and China Netcom by removing charges for receiving calls and offering a variety of services. The company added 7.8 million users last month to a total of 392 million. It dominated the nation's mobile-phone market with 68% share.
I believe China's rapid economic growth and strong demand for mobile services will continue to drive China Mobile's business. Buy China Mobile under $90.

May 1st 2008: China Mobile (NYSE: CHL) announced this week that it will offer its 3G mobile services during the Summer Olympic Games in Beijing. As I have discussed before, I think that CHL has potential to become a leading provider of 3G mobile technology with its homegrown technology. And the exposure that the company will receive during the Olympic Games will surely give a boost to this goal. Buy China Mobile below $90.

October 23rd 2008: China Mobile (NYSE: CHL) reported that its third-quarter net income rose 26% to 27.8 billion yuan, or $4 billion, from 22 billion yuan a year earlier. This was slightly below Wall Street's estimate of 29 billion yuan. In addition, sales were 14% to 104.9 billion yuan, missing estimates of a 14.9% increase. CHL said that the lower profits were due to the addition of lower-spending users in rural areas, as well as slowing call volumes during the Olympics.
Even though CHL is growing a bit slower than in the past, I think it is too early to make a meaningful analysis of these results because of the distortion caused by the Olympics. So for now, buy CHL below $55.

August 20th 2009: This Week's Sells
China Mobile is the world's largest wireless telecommunication operator with 493 million customers, and it has been a core holding of our China Strategy portfolio ever since we first started the service in late 2005. But as the Chinese wireless market became increasingly saturated and policy makers became wary of the company's domination of China's telecom space, CHL's growth has gradually slowed. In the latest quarter, the company had its first decline in profit since 1999 after growth stalled and competition intensified.
Second-quarter net income fell to 30.1 billion yuan ($4.4 billion) from 30.6 billion yuan a year earlier -- that was short of the 31.1 billion yuan that analysts were expecting. And since the recent telecom industry shake-up, China Mobile's struggled to adapt to the technologically inferior homegrown 3G wireless standard, and it's received intense competition from fixed-line giant China Telecom when it entered the mobile-phone market as part of the industry revamp. This caused CHL's average monthly phone bill to plunge 11%. In addition, the company only added 15.96 million users in the second quarter, compared with 22.5 million a year earlier.
So, the combination of slower growth and lower revenue per customer has made the company's stock an underperformer this year. While China Mobile will offer 3G services in 238 cities by October, few customers are upgrading because of the company's less reliable homegrown TDS-CDMA technology. Considering this, I want you to sell CHL for a 109% gain.

For some people it was a 109% gaining trade. For others it was a 50% loss trade.

If you want additional details just put a comment to this post.

Monday, August 24, 2009

Louis Navellier and IDCC

Another impressing trade was executed by the icon of growth investing in just one week.

Louis Navellier on August 10th 2009 decided it was time to buy this overvalued stock: IDCC. It had a P/E ratio of over 45 that day.

Here is what Mr. navellier was writing on August 10th 2009:

For over three decades, InterDigital (IDCC) has invented and developed advanced digital wireless technology. Its circuitry designs and software can be found in every digital cell phone today and licensed all over the world by leading brands like LG Electronics, NEC, Siemens and Sony Ericsson. Approximately 80% of the company’s sales are from its Asian customers. InterDigital holds over 3,000 U.S. and foreign issued patents combined, with an additional 9,000 patent application in process—a great sign of future revenue streams.
In the second quarter, IDCC’s earnings rose 353.8% to $26.4 million, or 59 cents per share, compared with $5.9 million or 13 cents per share in the same quarter a year ago. During the same period, the company’s sales rose 27.6% to $74.9 million compared with $58.7 million. The technology sector has been gaining momentum in recent weeks thanks to solid earnings reports from some of its key players. IDCC is no exception—the stock is a good buy.

Buy below: $32.82

Close Price: $30.92

One week later (August 17th 2009):

InterDigital Inc. (IDCC) was stopped out today after a U.S. International Trade Commission judge ruled in favor of cell-phone maker Nokia in a patent infringement case brought by IDCC. Two years ago, InterDigital alleged that Nokia had engaged in unfair trade practices by selling certain 3G technology handsets for importation into the U.S. that violated four of IDCC’s patents. While I expect the company to appeal the ruling, the risk of owning this stock outweighs the reward. IDCC is also an excellent example of why stop losses are such an important part of our strategy here at Quantum Growth. Stop-loss prices do exactly what the name implies—protect us against severe losses. One of my top priorities at Quantum is to keep our risk level low. If a stock falls sharply for whatever reason—say, an unfavorable court ruling—a stop-loss strategy helps us leave the stock quickly without taking big losses.

Close Price: $22.52

A remarkable 27% loss in one week.

Thursday, August 20, 2009

A quick update on John Lansing

I am not going to publish all the details (unless you really ask for them) but here is how Mr. John Lansing is performing:

Parabolic Options:

  • Average closed position in 2009: 11.58% loss (with S&P500 gaining 10% in the same time)
  • Current open position: down 33.71%


  • Average closed position in 2009: 6.69% gain (with S&P500 gaining 10% in the same time)
  • Current open position Stocks: up 6.98%
  • Current open positions ETF: down 70.60%

NOTE: I am afraid Mr. Lansing is hiding some of his trades. As an example, in his Trending123 log he is not referring to his trade with CROX, where he lost more than 73%. The CROX details are here.

A quick update on Chris Johnson

Chris Johnson is not one of my preferred experts. You may know him for sending you regular spam about his services with 100% money back guarantee.

Well, let's have a look at how Chris performed in 2009:

OptionTickerPositionDate BoughtEntry PriceDate SoldSold pricereturn%
FLRHKFLR Aug 55 Calls 08/06/09$3.3008/18/09$0.20-93.94%
MSQHDMSFT Aug 24 Calls07/24/09$0.3908/18/09$0.09-76.92%
FLKHGFFIV Aug 35 Calls 07/22/09$2.9008/18/09$0.50-82.76%
MSQHDMSFT Aug 24 Calls 07/17/09$0.9708/18/09$0.09-90.72%
CQNHMCERN Aug 65 Calls 07/24/09$3.6508/14/09$0.40-89.04%
SXHHRSU Aug 33 Calls 07/21/09$1.3008/14/09$0.50-61.54%
AVTHEAVT Aug 25 Calls 08/04/09$1.4508/14/09$0.10-93.10%
MYLIVMYL Sept 12.50 Calls07/30/09$1.3508/13/09$1.8537.04%
MOTRMO Aug 17 Puts 07/22/09$0.3008/10/09$0.05-83.33%
NQTQINTC Aug 16 Puts 07/17/09$0.0908/10/09$0.01-88.89%
XXJTNXHB Aug 14 Put 07/28/09$0.7508/10/09$0.10-86.67%
FTQTUFTIB Aug 7.50 Puts07/23/09$0.3708/10/09$0.00-100.00%
NQTQINTC Aug 16 Puts 07/14/09$0.5108/10/09$0.01-98.04%
TRVTGTRV Aug 35 Puts 07/17/09$0.3507/27/09$0.00-100.00%
MSQTNMSFT Aug 22 Puts (07/17/09$0.2707/24/09$0.3011.11%
HOTHXHOT Aug 22.50 Calls 07/21/09$1.0007/23/09$1.5050.00%
UWVTFWYNN Aug 30 Puts 07/10/09$2.7007/22/09$0.20-92.59%
CFQTCCAKE Aug 15 Puts07/07/09$0.8507/22/09$0.10-88.24%
CXJHKCAT Aug 37 Calls 07/20/09$1.7207/21/09$4.50161.63%
GOPSTGOOG July 400 Puts07/09/09$8.5007/17/09$0.00-100.00%
CGVC July 3 Call07/16/09$0.1307/17/09$0.07-46.15%
CSVC July 3 Put07/16/09$0.0807/17/09$0.02-75.00%
KMXSVKMX July 12.50 Puts06/16/09$0.9507/17/09$0.00-100.00%
GDQTIGILD Aug 45 Puts07/07/09$2.0007/17/09$0.60-70.00%
EXPTXEXP Aug 22.50 Puts 07/10/09$1.5007/17/09$0.40-73.33%
IWMSAIWM July 53 Puts06/16/09$3.2007/17/09$1.16-63.75%
NQGSINTC July 17 Calls07/14/09$0.3007/15/09$0.95216.67%
NKEGJNKE July 50 Calls06/25/09$2.0507/13/09$1.70-17.07%
KRGDKR July 20 Calls06/22/09$2.2507/13/09$1.60-28.89%
MZRGAMRK July 26 Calls06/29/09$1.9507/10/09$0.85-56.41%
UNESOUNG July 15 Puts06/18/09$1.0007/02/09$2.05105.00%
UNESOUNG July 15 Puts06/18/09$1.0006/30/09$1.5050.00%
MONGQMON July 85 Calls 06/04/09$3.4006/17/09$2.55-25.00%
LLLGOLLL July 75 Calls06/04/09$2.2006/16/09$1.15-47.73%
MONGQMON July 85 Calls 06/04/09$3.4006/11/09$5.4058.82%
IHBRHIYT June 60 Puts 06/08/09$2.1506/11/09$0.90-58.14%
FDOFFFDO June 30 Calls 06/05/09$1.4506/11/09$0.55-62.07%
DLYRODELL June 13 Puts 06/05/09$1.0306/10/09$0.49-52.43%
TEPFDTOL June 20 Calls 06/02/09$0.7506/03/09$0.50-33.33%
PRQFWCOST June 47.50 Calls05/27/09$2.6005/28/09$1.45-44.23%
TDFITD June 45 Calls05/22/09$1.4005/27/09$2.4575.00%
TDFITD June 45 Calls05/22/09$1.4005/26/09$2.3064.29%
ABTRWABT June 47.50 Puts05/11/09$3.3005/22/09$3.506.06%
AROFKARO June 32 Calls 05/21/09$2.1005/22/09$3.0042.86%
TGTFOTGT June 41 Calls05/19/09$2.7205/20/09$4.2054.41%
QAVRHQQQQ June 34 Puts05/12/09$1.6505/19/09$0.99-40.00%
FROREFRO June 25 Puts 05/08/09$3.5005/14/09$4.7034.29%
KSSFPKSS June 42 Calls05/05/09$4.3005/14/09$2.55-40.70%
DFQXDF May 22.50 Puts04/24/09$3.1005/11/09$4.4041.94%
KHQEBHCBK May 10 Calls 04/21/09$2.2505/11/09$2.7522.22%
DFQXDF May 22.50 Puts04/24/09$3.1005/07/09$4.8054.84%
PCSEWPCS May 17.50 Calls04/30/09$0.8005/07/09$0.45-43.75%
CCLEECCL May 25 Calls04/28/09$1.9505/07/09$3.5079.49%
NQDFTNDAQ June 17.50 Calls 05/01/09$3.1005/07/09$3.100.00%
CCLEECCL May 25 Calls04/28/09$1.9505/05/09$4.40125.64%
MYLEVMYL May 12.50 Calls04/30/09$1.2505/01/09$0.85-32.00%
ZMHEIZMH May 45 Calls 04/17/09$1.7005/01/09$0.35-79.41%
DQIEGDRIV May 35 Calls04/29/09$2.4004/30/09$3.5045.83%
YHQQQYHOO May 16 Puts 04/16/09$2.2704/30/09$1.78-21.59%
RRCEURRC May 37.50 Calls04/23/09$3.6004/29/09$5.8061.11%
WMTEJWMT May 50 Calls04/09/09$2.4004/24/09$0.65-72.92%
XJZQIXLF May 9 Puts 04/06/09$0.7904/24/09$0.20-74.68%
MKTESVMW May 28 Calls04/21/09$3.6004/23/09$1.15-68.06%
@SHWQJSHW May 50 Put04/14/09$2.4004/22/09$0.45-81.25%
BIGEXBIG May 22.50 Calls 04/09/09$2.4504/17/09$3.7051.02%
BBTQBBBT May 22.50 Puts 04/16/09$2.6004/17/09$2.00-23.08%
OAQDPAPOL April 80 Calls 03/24/09$4.6004/17/09$0.00-100.00%
FDODFFDO April 30 Calls04/02/09$3.3004/08/09$4.2027.27%
KMXDVKMX April 12.50 Calls03/25/09$1.2004/06/09$0.25-79.17%
NLQPWNVLS April 17.50 Puts03/30/09$1.7504/02/09$0.85-51.43%
GLDDLGLD April 90 Calls03/05/09$4.9004/02/09$1.70-65.31%
GLDDLGLD April 90 Calls03/10/09$3.2004/02/09$1.70-46.88%
CSXPECSX April 25 Puts 03/31/09$1.3504/02/09$0.65-51.85%
TIFPXTIF April 22.50 Puts03/20/09$3.0003/25/09$1.15-61.67%
SZCRBSPY June 80 Puts02/17/09$7.8503/25/09$5.25-33.12%
SKFDYSKF April 150 Calls 03/19/09$10.8003/25/09$4.40-59.26%
GGDRTGOOG June 300 Puts03/19/09$16.8003/25/09$12.80-23.81%
CCQPCCMCSA April 15 Puts12/04/08$2.6503/25/09$1.30-50.94%
GGDRTGOOG June 300 Puts02/17/09$20.7003/25/09$12.80-38.16%
SZCRBSPY June 80 Puts03/19/09$5.9003/25/09$5.25-11.02%
NKEPINKE April 45 Puts03/16/09$3.3003/20/09$2.05-37.88%
RUPOERIMM March 25 Puts 12/04/08$2.7003/20/09$0.01-99.63%
XRYRRXRT June 18 Puts02/17/09$1.8003/13/09$1.00-44.44%
AMTOYAMT March 27.50 Puts02/25/09$1.8503/13/09$0.40-78.38%
KSSOGKSS March 35 Puts02/25/09$2.4503/13/09$0.25-89.80%
NSMCBNSM March 10 Calls 03/09/09$1.3003/13/09$0.45-65.38%
QAVOCQQQQ March 29 Puts01/02/09$1.7003/11/09$0.88-48.24%
QAVODQQQQ March 30 Puts 02/18/09$1.6803/05/09$3.60114.29%
DQOCGDLTR March 35 Calls 02/06/09$3.1003/05/09$5.0061.29%
CUYCDCECO March 20 Calls 02/12/09$2.9502/24/09$5.2377.29%
AVPODAVP March 20 Puts 02/05/09$0.9502/24/09$2.15126.32%
APDNLAPD Feb 60 Puts01/20/09$7.3002/20/09$8.4015.07%
CABCCA Feb 15 Calls01/27/09$3.0002/20/09$2.20-26.67%
DWGNM DO Feb 65 Puts 02/04/09$4.3502/20/09$1.25-71.26%
XRTNUXRT Feb 21 Puts12/29/08$3.3002/06/09$0.75-77.27%
BAXOYBAX March 57.50 Puts01/27/09$2.4502/06/09$1.40-42.86%
MCDBLMCD Feb 60 Calls01/23/09$1.4502/05/09$0.50-65.52%
METOFMET March 30 Puts 01/30/09$4.3002/05/09$3.20-25.58%
AVPNDAVP Feb 20 Puts02/02/09$1.9002/03/09$0.60-68.42%
SYQBCSYMC Feb 15 Calls 01/28/09$1.0002/02/09$0.50-50.00%
BMYBDBMY Feb 20 Calls01/26/09$2.4501/30/09$1.80-26.53%
ZQNBJAMZN Feb 50 Calls01/22/09$4.1501/30/09$9.75134.94%
COFNECOF Feb 25 Puts01/21/09$5.0001/29/09$7.8056.00%
CXJNICAT Feb 35 Puts 01/23/09$2.3501/27/09$3.3040.43%
AMTMFAMT Jan 30 Puts12/11/08$4.3001/15/09$1.31-69.53%
FCNMJFCN Jan 50 Puts 12/11/08$6.7001/15/09$5.00-25.37%
XLQNWXLNX Feb 17.50 Puts01/13/09$1.9001/15/09$1.70-10.53%
SKFAOSKF Jan 145 Calls12/18/08$7.6001/15/09$16.30114.47%
TTJMPTLT Jan 115 Puts01/05/09$6.1001/14/09$4.40-27.87%
OAQAOAPOL Jan 75 Calls01/07/09$6.1001/09/09$12.0096.72%
SZCAISPY Jan 87 Calls01/02/09$6.5501/08/09$3.65-44.27%
FDOAXFDO Jan 22.50 Calls 01/06/09$2.5501/07/09$5.50115.69%
HUOMWPFCB Jan 17.50 Puts12/05/08$1.9501/02/09$0.15-92.31%

Average loss for Mr. Johnson in 2009 is 20.25%. In the same time the S&P500 gained 10%.

A final note: on his current open portfolio Mr. Johnson is down 27.44%.