GURE was always a high risk stock, just look at its short interest for gods sake. Many people liked it, traded it, but they are certainly not a 'cream of the crop' in terms of safety (Especially after numerous short attacks).

CNTF is not a likely fraud as far as I know -- I don't think many people are betting in that direction either. I don't own it because I dislike the industries it operates in and dislike their non-usage of cash + lack of shareholder friendliness.

You want to reduce your fraud risk? Start by investing in companies with less than 5-10% of the float being short. That by itself will give you better results than 'rolling dice'.

-Fernando

PUDA: I covered all my shorts around 1.7 avg :). Don't care if it goes lower, i'm happy with that price (chuckle). Gotta remember they have 45% ownership of the mines still, even if its levered...I highly doubt the buyout happens but it is a tail risk as well.

-Fernando

Correct. I've kept such a long/short combination for months now, although the exact percentages do vary depending on my read of timing/etc.

I like the setup because it allowed me to slowly shift profits from shorts into long positions as the space has kept going lower the past few months...Keeping my protection in place but at the same time increasing my potential upside from the long portfolio.

As long as my stock-picks add value, this strategy should perform well... It is, of course, possible that my longs do terrible and my shorts surge.

-Fernando

Roughly 25% of my invested-portfolio is in the China Space (I'm currently 20% cash-equivalent (What I call agency-paper-REITs right now, lol), so 25% of 80% invested in the China-Space). I am close to net long 5% exposure, although that varies somewhat from week to week. That is a rough estimate since I'm managing multiple accounts and its not easy to aggregate them ;).

-Fernando

CCCL: Very true, thats why I think it has one of the best risk/rewards in the space personally though!

I have patience, I have no problem holding while they keep growing their capacity...Even without multiple expansion, as long as the multiple does not shrink, the return will be quite good (Thats not to say I don't hope/expect the multiple to go higher at some point).

One reason, as Maj has pointed out, for the under-performance in the name is that the company is still working through the dilution from the capital-raise/warrant-exchange/earn-outs. People don't like seeing YoY EPS shrinking, so many stay away for that reason. Before too long though, this will change and we will see solid EPS growth.

If your a trader, this is NOT the stock for you to play with please. If someone has a 6-12 month timeframe, they could do worse than plunk down a position here though IMO.

I am only long 4 names in the China Space at this point, this is one of them...Heck i'm short more names than I am long ;).

-Fernando

CCCL: All these revenue misses we keep seeing in the space makes me just like this company more (chuckle). I love how they give tile-volume guidance for the following quarter and that guidance has been pretty damn spot-on every quarter -- although I suppose one could also use their 72M capacity number by the end of 2011 to measure their incoming run-rate as well.

Solid and steady wins the race I guess.

-Fernando

GURE: Its certainly still very cheap, just alot less cheap than it was last night... I expect it will go lower than $2.7 personally, at least sometime this week.

-Fernando

GURE: Revised guidance down to 1.43 EPS using the high end of their range at 49.5M?

-Fernando

UTA: Files 10-Q for Q2. IR told me that the company plans to ask the stock to resume once the Q2 10-Q was out...So should not be long now (I hope).

Non-Gaap earnings of $0.254 once you adjust for stock-compensation and non-cash gains for Q2 2011.

They now have 81.8M in cash+short-term-investments (at a bank) -- or $4.1 per share.

-Fernando

LTUS: I was talking about total CURRENT assets and total CURRENT liabilities. Look what their working capital is going to be after they pay off those liabilities! Shareholders better hope they can get more bank loans.

My theory on this company is that earnings were massively exaggerated. They are now getting closer to the truth -- and they 'sunk' much of their fake earnings into overvalued asset prices. Very easy to claim you spent 15M on construction when it might have only been 5M for example.

Thats one way to bring numbers 'inline' if you were lying in the past.

-Fernando

LTUS: Cracked me up, total POS.

So wholesale revenues are down and cost-of-wholesale-revenues is up like over 50% YoY?

Their almost out of cash now and total current assets are way below total-current-liabilities?

Heh, I wonder how they will explain this insane difference in numbers compared to last year.

I've been negative the name since late 2009 after speaking to the previous CFO -- I feel kinda justified now (chuckle).

-Fernando

CCCL: Ahhh, that explains it. Thank you. Stupid translation services ;). So there we go, the full 10M 'capacity' reported to the SEC is supported by a news article talking about production beginning in Sept 2009. Nothing is proof of course, but gotta keep adding those supporting 'data points' which lead to confidence in a viewpoint.

Certainly this was reported/written before the fraud bru-ha-ha started ramping up in the China space.

-Fernando

CCCL: Why would someone who really wants to sell show a HUGE ask? More than the daily volume! Seems insane for someone who doesn't want to scare the market to show that much size.

Who knows the truth though. The stock has been very weird today with it starting up 20% on a 5k trade at $4.8 for god's sake...then this big ask comes out? Very manipulated it seems.

-Fernando

CCCL: Here is a Chinese article from the China Business Herald (translated) talking about how in Sept 2009 Hengdali had just brought online 2 production lines with roughly 6M tile capacity (Gotta multiply the daily rate by 365). It also talks about how the construction started way before the company went public, some delays due to rain during 2009, etc.

If I remember correctly, the company had 10M capacity reported to the SEC on that facility when the phase-1 construction was finished at the beginning of 2010. That 6M goes a long way towards that total, not hard to believe another 1-2 production lines were brought online in the following 3+ months.

Lots of positive datapoints out there like this if one looks for them. Shrug.

http://translate.google.com/translate?js=n&prev=_t&hl=en&ie=UTF-8&layout=2&eotf=1&sl=zh-CN&tl=en&u=http%3A%2F%2Fwww.cngsw.com.cn%2Fganqi%2F2010%2F0402%2F1063.html

-Fernando

Evidence of production capacity isn't just counting tile production for an hour, theres quite a bit more. Can't say specifics because the stupid report isn't out yet though, lol.

The CEO's "Blood Brother" (not actual family) owns Tengda, which is right next to the Hengda Facility. They started those factories 15 years ago (Very old facility, i've seen pics).

The SAIC mismatch could indicate tax fraud in 2009, when the company was private. You don't think private chinese companies conduct tax fraud en masse? Shrug, thats easily accounted for by the evaluation.

-Fernando

CCCL: Geo has not found anything new thats negative -- They delayed the report because they are trying to clarify the fact that the SAIC did not match when they first pulled it, but then matched when they pulled it again later. The OTG findings were positive, as we all know. No new information as of yet, positive or negative AFAIK.

I really should urge Maj to just release the actual FINDINGS, with no interpretation by Geo. Right now the negative information is out there (The SAIC not matching initially, etc) but none of the specific positive OTG findings have been released. Thats a very skewed information flow.

No idea who the seller is, could simply be someone trying to raise money to buy other cheap stuff after this market down-turn...Or someone unhappy with the earnings report for some reason.

I grabbed some more shares personally below $4 today.

-Fernando

Thanks for the info :).

-Fernando

Put strike prices are only adjusted for stock dividends, not for cash dividends -- At least as far as I understand it.

What makes you think it will be adjusted?

-Fernando

You can buy GA at $8 and buy Sept $7.5 puts for like 40 cents.

Get $3 dividend after August 31st (even if its like $2.5 after withholding/dividend taxes/etc)....And you are protected by the put so you cannot sell for less than $7.1.

8-7.1 = .9 cost.

3 - .9 = $2.1 surefire gain at dividend tax rates.

As long as they really pay the dividend to shareholders on record at August 31st as they claim ;).

-Fernando

Very true. I'm all for them paying a dividend but at least CCCL has a reasonable reason for not doing so right now compared to many other China Microcaps -- They are actually using their cash for very high ROI returns for shareholders, in fact they already used 20M of bank-lines for that purpose!

The companies that have huge huge cash balances sitting idle, quarter after quarter, and still do not do large buybacks/dividends are the ones I shake my head at the most.

The worst are those with huge cash balances that for some reason also use bank lines. Why pay 6-8% interest on millions when you have tens of millions in the bank and enough working-capital? Makes no sense.

-Fernando

Researcher, could you post your usual index comparison between your China index and the S&P? I'm curious to see if the China-Index has gone down by less than the S&P the past two weeks...

-Fernando

CCCL: I'm gonna laugh if CCCL goes green today after that initial 6k volume sell-off from trading-money on the earning report this morning. Looks like more long-term minded money is entering the name now.

-Fernando

CCCL: I think a -300 point DOW might have something to do with it too (chuckle).

Look at how far NM, NMM, RSO have come down the past 2 weeks. Obviously paying high dividends is not great protection from overall downside market sentiment.

Btw, LOVING my $4.5 buys on RSO ;). 22%+ yields and already have 15%+ capital gains, lol.

-Fernando

CCCL: Earnings pretty much as expected (Kind of hard for them to surprise up or down by much when they give you the quarterly expected tile-meters sold, lol).

Non-gaap 3 month of $0.63,
Non-Gaap 6 month of $1.14,

Their Q3 tile-volume is around 7% higher than Q2, so we can expect non-gaap earnings of around $0.70. Assuming Q4 is the same (Fair given their constant capacity increase), thats 1.4 EPS in the 2nd half.

$1.14 + $1.4 = $2.54 Non-Gaap EPS projected for 2011?

I'm happy with that personally.

-Fernando

TSTC/GURE: Another company whose short interest seems to be dropping nicely. Down to 1.7M from a high of 2.2M in May.

http://www.nasdaq.com/aspxcontent/shortinterests.aspx?symbol=YONG&selected=TSTC

GURE is down to 3.6M from a high of 4.8M in the beginning of may as well.

http://www.nasdaq.com/aspxcontent/shortinterests.aspx?symbol=YONG&selected=GURE

-Fernando

CCCL: Yeah, no real conviction shorts here -- Its a solid company after all. I guess those shorts were simply traders hoping to benefit from the overall negative China sentiment but covered when that sentiment changed.

Glad to see such a big drop in shorts personally though.

Looking forward to earnings tomorrow.

-Fernando

CNTF: Fair enough, for some reason when I posted that I thought all those PR's had come from the company. I guess its just been a flood of CNTF articles on this board, hehe.

-Fernando

CNTF: Too many PR's, none of which will necessarily move the needle become pretty worthless.

I'd much rather they do 1/10th as many PR's and combine their releases with some estimate of impact and potential.

In fact, the amount of PR's they do makes me like the company LESS. Shrug.

-Fernando

I like NM alot more personally. If you subtract the market cap ownership of NNA and NMM, you barely pay anything for NM or NSALI-subsidiary -- At least that was true yesterday when I bought tons below $3 ;).

Lower yield, only about 8.2% yesterday, but more growth prospects and NM benefits from being able to 'pass down' ships to NMM/NNA.

GSL has gotten crushed on fears from CMA-CGA bondholders...Getting very very attractive here at $2.7ish as well in my opinion (I expect other shippers will bounce harder first though, so may sell some NM to buy more GSL if we spike there first as I hope). I expect they will be able to pay a 0.40 dividend by the end of the year once they get the ZIM ships.

-Fernando

Non-Food inflation was 2.9%, compared to 3% last month. Interest rates, bank reserve requirements/etc do not really impact food prices so it is a good sign to see that important metric is coming down.

The real reason the CPI was above expectations (6.3%) is because of the silly pork prices, lol.

-Fernando

I'm shopping today too :). Loving these TSTC around $5 (They just announced the CC for the 15th), TRIT is down big today so nibbling some there, GURE, YONG, CCCL, etc.

Great non-China buys as well! OGXPY, PetroBank, NM, GSL, RSO, etc, etc!

-Fernando

Heh, why so surprised? Look at NM, SFI, GSL, SSW, OGXPY, PBR, etc etc etc. Many are down 20%+ in the past 2 weeks, some 30%+.

People get scared, so people sell. Simple as that. Thats what gives other people the opportunity to buy cheap.

-Fernando

CCCL: The S&P is also in deep oversold territory now, so we should get a bounce there too. Combine such a market bounce with the CCCL earnings approach and we might see a decent earnings run from current price levels. I grabbed another 5k shares today personally :D.

Frankly though, I don't care that much if we get a earnings run -- since I plan to hold most of my shares for at least the next few quarters as their capacity-expansion hits the bottom line. Currently I have a 80% core, 20% trading position on CCCL to take some advantage of the volatility.

-Fernando

CCCL: Just spoke to IR. Tomorrow morning they will put out a PR announcing the Q2 conference call which will be held on Wednesday August 10th.

-Fernando

CCCL: Geo is not really any more spooked than before (The issue with the SAIC being amended and the original SAIC conflicting with their positive on-the-ground findings), the only difference is that they are now negative on EDS -- Which is in the same Province (ie: State). CCCL's reason for being in this Province is quite strong, over 80% of ceramic tile production in China is in this Province -- Something about easy access to the right kinds of Clay.

They are talking to CCCL management, holding a Q&A and management is cooperating. Shrug.

Thanks for the scare today though Joe, let me grab another 5K cheap shares :D. Nibble Nibble, I feel like PacMan.

-Fernando

CCCL: Joe, the Paul Kelly you referred to in the article does NOT look to be the Paul Kelly involved with CCCL.

Our CCCL Paul is "Paul K Kelly" and the one from the article is "S. Paul Kelley". Aside from the name issue, nothing in the biography seems to match.

Your link: http://sharesleuth.com/investigations/2011/01/you-wont-find-s-paul/?utm_source=internal&utm_medium=link&utm_campaign=featured

Our Paul: http://www.sec.gov/Archives/edgar/data/1470683/000114420411019979/v215922_20f.htm

Paul K. Kelly has been our director since August 18, 2009 and our Non-Executive Chairman since April 4, 2010. He was also Chairman of the Board and Chief Executive Officer of our predecessor, CHAC, from its inception. Since February 1992, Mr. Kelly has been the President and Chief Executive Officer of Knox & Co., an investment banking firm specializing in mergers and acquisitions, corporate restructuring and international financial advisory services for clients in the U.S., Asia, and throughout the world. In 2004, Mr. Kelly formed the Westgate Group, Inc., a strategic advisory firm focusing upon identifying and implementing cross-border business opportunities for clients with an emphasis on Asia and the Pacific Basin, for which he acts as Chairman, CEO, and is the majority shareholder. Mr. Kelly is also the President, Chief Executive Officer and sole shareholder of PH II, Inc., a privately held investment company which has investments in the United States and New Zealand. He has held these positions with PH II since 1988. Mr. Kelly also serves as Chairman and Chief Executive Officer of Knox Enterprises, Inc., successor to THT Inc., a privately held diversified manufacturing company. In 1996, Mr. Kelly founded the Carrington Club, a golf resort and karikari estate and winery in New Zealand for which he is the owner and Edgewater Developers, a real estate development company in New Zealand. From 1985 to 1990 Mr. Kelly served as President and Chief Executive Officer of Peers & Co., an international investment banking firm. From 1984 to 1985 Mr. Kelly was the President and a director of Quadrex Securities Corp. From 1982 to 1984 he was an Executive Vice President and Director of Dean Witter Reynolds, Inc., responsible for all investment banking activities for financial institutions. Mr. Kelly also served as Managing Director and a member of the Management Committee of Merrill Lynch White Weld Capital Markets Group from 1980 to 1982 where he was responsible for all investment banking activities for financial institutions on a worldwide basis, and was also senior banker to Merrill Lynch & Co., the holding company for all Merrill Lynch interests. From 1978 to 1980 Mr. Kelly was Executive Vice President, Director and member of the Executive Committee of Blyth Eastman Dillon, where he was co-head of the Corporate Finance Department. He was responsible for all new business activities for the firm and headed the Financial Institutions Group. Among the other positions held by Mr. Kelly prior to 1978 include his positions from 1968 to 1975 as Vice President of The First Boston Corporation where he established the commercial paper department and was responsible for all corporate finance new business activities, and as a partner, member of the management committee and head of investment banking for Prescott, Ball & Turbin from 1975 to 1978. Mr. Kelly is a member of the Board of Trustees of the University of Pennsylvania, a member of the Business School Advisory Board of the University of Auckland (NZ), and a member of the New Zealand Business Roundtable. In addition, he is a member of the Director’s Advisory Board of the Yale Cancer Center. He is a past director of American Life and Health Insurance Company of New York, The Chicago Sun-Times Corporation, Hydrox Corporation, Ltd. (New Zealand), MCR Corporation, and Porta Systems Corporation (ASE). He graduated from the University of Pennsylvania in 1962 and received an MBA in Finance from the Wharton School in 1964. We have chosen Mr. Kelly to serve as a director because of his experience in the US financial industry and he was also the founder of CHAC.

-Fernando

While we hold many similar views (I consider myself a humane libertarian meaning I am more sympathetic to social-safety-net systems than most libertarians), I think many of these topics are hot buttons and best avoided in any public medium (chuckle).

Specially on religion: I don't tell people my views and they can keep their brain-washing cultish spiel to themselves. If I see a bible-holding missionary come to my door though, my response would be a bit more forthcoming ;). I can certainly understand the attractiveness of belief, the certainty of illusion can be quite comforting to those afraid of the certainty of the unknown. Given the choice between happiness and ignorance or knowledge and torment, I bet most would choose the first option -- Which is why most people give at least a token nod towards some faith.

Just for the record: I think atheists are just as silly as believers. How can one make up ones mind, either way, in the absence of proven facts? There goes my damn mathematician's leaning again ;). QED!

-Fernando

OGXPY: I bought big today below $8.3 to add to my nibbles from before. Long term position.

-Fernando

CCCL: Looks like it might close above the 100day MA for the first time in over 6 months today :D. Come on baby, you can do it!

Been interesting watching the trading there, had a nice upsurge in volume with no movement in price the last week -- Now volume has been dropping and the stock slowly melting higher (Did we exhaust the sellers at this price point?)

Note: Now that I mentioned this here, i'm sure someone will get a kick selling 1k shares in the last 10 minutes to keep it below the 100day MA :P. Hehe, I curse thee!

-Fernando

UTA: Good catch. Although to be perfectly accurate, I guess we need to add back in 161.6k from the amortization of intangible assets (As you can see here, Oracle adds back amortization of intangibles when doing non-gaap calculations: http://www.oracle.com/us/corporate/investor-relations/financials/q1fy12-guidance-421320.pdf).

With that 161.6k added back in, the non GAAP EPS goes up to around $0.253.

-Fernando