WT, surely you're aware of that old Buffett aphorism, which has come to us as "the stockmarket is a means of transferring money from the impatient to the patient."
We're seeing again with U.S.-listed China smallcaps/microcaps, after a brief positive hiatus from Oct-Nov, a massive "sector abandonment," such as we were experiencing much of 2010, especially from the time of the May 6 "flash crash," when the "risk trade" was abruptly, violently turned OFF.
When big money leaves a sector, that sector can stay abandoned "dead money" for quite some time. LTUS is caught in this morass.... If we believe in the co. and its prospects, we're going to have to be patient.
The shortsellers have been all over this China RTO/r.m. space since at least the time of that June basher article by Herb Greenberg and then the Bill Alpert/Leslie Norton piece for Barron's.
They were aided by 1) a very uncertain, volatile market climate for most of 2010, wherein, to reiterate, the risk trade was OFF, and the shorts were also helped by 2) China's anti-inflationary tightening steps and the consequent extremely poor performance by the SSE, and 3) Europe's ongoing sovereign debt crises.
The well-orchestrated campaigns of hit-pieces followed by class-action lawsuits by ambulance-chasing legal firms, then the big news of the SEC investigation of this space, have all combined to create the impression that investing in U.S.-listed China stocks is one of the worst mistakes anyone can ever make and that this is, truly, the most hated stock-sector in the universe.
Obviously that is a carefully crafted, well-orchestrated campaign of PERCEPTION-MANAGEMENT by short-sellers likely tied together in the kind of corrupt shortseller rings described over the years by the DeepCapture.com investigators. E.g., Herb Greenberg and Bill Alpert are old friends; Greenberg and Jim Cramer are ol' buddies who co-founded TheStreet.com; Jim Chanos (who launched the battle-cry against China in Jan. 2010) and David Rocker and other shorts are also old friends/close colleagues of Cramer, and Cramer has openly admitted on CNBC's Mad Money that "certain hedge funds are shorting U.S. listed China stocks," no doubt referring to some of these old buddies, and when he warns all of his viewers to stay away from EVERY China stock except the overvalued BIDU, he assists his old short/hedgie buddies in scaring lots of retail money away from this sector.
All of this "manufactured fear" will blow over, as it always does. The shorts have made a LOT of money trashing this sector and pounding already undervalued strong-growth cos. with low P/Es of 5 and 6 down to P/Es of 2 and 3. At our expense.... those of us who are very careful not to invest in OVER-valued companies trading at ridiculous P/Es of 50, 80, 100+.
One wouldn't think it impossible that these stocks could go lower or stay so low, but "sh1t happens."
It's heartening to note that many big institutional investors like CALPERS, Morgan Stanley, et al., and noted individual investors like Mike Koza, featured in Forbes' "Buffetts Next Door" as #1 stockpicker for past 5-year period and past 10-year period, are still quite quite positive on U.S. listed China smallcaps.
I'm patient. Yes, i'm frustrated and disappointed that the possible substantial gains in many of these names came to a screeching halt in 2010 and only quick-fingered, micro-term traders and/or shorts were making any money in this sector. But eventually value investors will triumph over the "Greed, Inc." fear-mongers.
JMO...
Best wishes to you and to all...
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