MailBag – UPDATED V.2 $LPIH $LIWA $SGZH $CCGY $CHIO $MYST $CHGY $CPQQ $PUDZ $PUDC $PUDA $LTUS $OPAI $CNO $C
- 12 Comment
Here’s the mail it never fails it makes me want to wag my tail … MAIL! (From Blue’s Clues)
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Fernando,
It’s difficult to rank these as they are mostly my top picks as well. For me, it’s a mental matrix of risk which mostly results from “turn up the heat” plays.. like ccgy, or xing, or pudz.. and then there is straight upside potential, where companies like myst, ccgy, lpih, and chme dominate. and then there are the no brainers, sgzh, opai, ltus, cnam, cdbt, (kind of chcg)
-Glen
Hey Glen,
I was wondering if I could get your 1-10 ranking for my list, like you did for that guy in your blog. Thanks! (Some of these are fernandos notes, my notes are marked with a -G
As you mentioned, I did do a quick and dirty “tier” system of the stocks I follow. My opinion on these stocks changes frequently, so it is nothing but a ballpark estimate… I’ll throw out my list, would appreciate your own rankings on them. My tier1 and tier2 are tough to distinguish, I like all of them and stocks move between the tiers frequently for me.
Tier 1:
LPIH (own) – 8 Largest position I have, bought more at $1.05 on latest pullback.
LLFH (own) – 3 Somewhat expensive. I could easily list this as Tier 2 based on price, but I like the management and know they will be uplisting to AMEX very very soon. Once that catalyst is gone, this will likely be tier 2 for me.
CCGY (own) 8
Tier 2:
SKBI (own) 9
CYXN (own) – 8 I love their remote-diagnostic thing. (i think that my article of doubling outstading shares is WRONG. there is no way, i re-read their convertibles… things are looking Significatnly better than my lazy worst case – g)
LTUS (own) 9 – (expanding with working capital, brilliant! -g)
SGZH (own) 9 (cheap + cash + growth + coal over there is consolidating, see pudz/puda/pudc – g)
CNAM (own) 9 – (trading at less than the $ value of loans they’ve been granted recently. For a chinese microcap this is RETARDED – g)
CNOA (own) 8 (hoping that the 3rd and 4th quarters are still big and they didnt spin off that business segment – g)
CDBT (own) 8 (needs to reverse split, pick up shareholders and uplist – g)
JGBO (own) 7 (has a problem with dilution because its cash is locked up – g)
CPQQ (own) – 6 Tier2 at current price of around $1. Used to be Tier 3.
Tier 3:
PUDZ 6 (Own a little, was tier2/tier3 for me at $4. Uplisted and spiked) SGTI (own) MYST – Waiting for R/S and to see what direction restructuring takes.
Could easily become Tier2.
CGDI – (just rallied like 40%.. sucks cause i was trying to fill 100,000 shares at .28 only got 10,000 -G so i’m buying cheap, tell geoinvesting to stop picking up my stocks a month after i find them. when are they going to hire me to “find their stocks?”)
WKBT – 7 (a lot of people are excited about this, i must just be missing something)
CHCG – 8 (Its trading at almost cash-on-hand) OPAI – 7 (own a little) GFRE – 5 CHIO – 7 (own) CBPO – 8 RINO – 4 CHME – 8 XING – 5(own) – Speculative but trading below cash-on-hand.
Speculative Watch list: CHFI and JADA. Not sure where i’d rank them.”
-Fernando
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EROC – should outperform S&P500. should have clicked this instead of UNG for outperform on motley fool caps – from plan maestro see below -glen
Glenn, this is a series with comments to EROC. At current prices the potential I would say is 4x-5x not the 10x you are looking for. However, there are not many of those anymore in the US… China maybe 
I bought in the low 3s.
Hedges and Commodity Risk
http://messages.finance.yahoo.com/Business_%26_Finance/Investments/Stocks_%28A_to_Z%29/Stocks_E/threadview?bn=69301&tid=3281&mid=3334
Recent Proposal
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_E/threadview?m=tm&bn=69301&tid=3726&mid=3733&tof=6&rt=1&frt=2&off=1
Very Conservative Valuation
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_E/threadview?m=tm&bn=69301&tid=3726&mid=3747&tof=6&rt=1&frt=2&off=1
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LS,
It sounds to me like you are stuck in the land of opportunity cost.
The only service I provide is private asset management. Everything else I do is for fun (at least for now).
Remember to not forget that when a company goes up in price, it becomes more risky to buy and less attractive to acquire.
Conseco should be $10+. I haven’t stayed up to date on the Citigroup dilution story. http://www.globalspeculation.com/archives/223
In Seinfeld and in life, just because the other lanes of traffic appear to be moving faster does not mean that you will get ahead by changing lanes at any given point in time. The trick is doing your best to anticipate which lanes are going to be going the fastest in the long haul.
If your objective is to buy back into CNO, do it immediately. Above $5, the mutual funds will carry it to $10. That’s what dumb money does. Dumb money loves to pay what things are worth. If Citigroup ever breaks $5, expect to see it run. That’s my sentiment. I don’t own enough Citigroup to look deeper. There is so much easy money out there that I’m already invested in.
Good Luck
Best regards,
Glen Bradford
CEO ARM Holdings LLC
TheStreet.com/Stockpickr.com/Seekingalpha.com
Disclaimer: Anything above is not advertising or advice to buy or sell securities or do anything. Any stocks or companies or legal entities mentioned Glen may own at any time and sell for any reason without warning. Glen maintains that following his advice will likely lead you to bankruptcy. Glen believes that he has no idea what he is doing and you shouldn’t follow him. Anything that he says is his best guess for what may be happening and is likely to be wrong. He strongly advises that you question why you even bother listening to him. The websites that he may list or manage also are a source of unreliable information and should not be taken seriously. This is not investment advice.
Frm:
Sent: Thursday, September 17, 2009 4:26 PM
To: Bradford, Glen Richard
Subject: (no subject)
Hi Glenn
I sold CNO around 3.21 and bought C at around 4.14.
CNO has almost doubles since then, and C just about the same.
I really liked CNO, and I want to get back in however I will be buying back only half the shares.
I need your guidance if there is any other good stocks that I can get into in the meantime: my objective is to buy back into CNO at least the same amount of shares of CNO.
I would gladly pay for your service. You are a professional and I need your help.
Thanks
LS
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Hey Dustin,
This is one of the better lists.
Great Stuff, I’ll just do my best to ballpark rank them 1-10 quick. 10 is the best. Do note that my sentiment changes all the time and I own most of these. Fernando put out a list recently somewhere with his 3 tiers of companies and ranks. I believe some post on finance.yahoo.com — if he’s reading this, feel free to comment at the bottom with a link of that list.
In the past, I’ve given mine out. The issue with that is that when collaborating, it’s best to collaborate with people that aren’t biased to what you already told them — because you get two independent opinions. I was having a lot of people just give me my own information back, wasn’t helping me at all. And then I don’t mind when people make a ton of money off my ideas, that’s what they are there for.
Best regards,
Glen Bradford
CEO ARM Holdings LLC
TheStreet.com/Stockpickr.com/Seekingalpha.com
www.armholdingsllc.com
Disclaimer: Anything above (or below in this case) is not advertising or advice to buy or sell securities or do anything. Any stocks or companies or legal entities mentioned Glen may own at any time and sell for any reason without warning. Glen maintains that following his advice will likely lead you to bankruptcy. Glen believes that he has no idea what he is doing and you shouldn’t follow him. Anything that he says is his best guess for what may be happening and is likely to be wrong. He strongly advises that you question why you even bother listening to him. The websites that he may list or manage also are a source of unreliable information and should not be taken seriously. This is not investment advice.
From: Dustin [mailto:dustin
Sent: Wednesday, September 16, 2009 8:20 PM
To: Bradford, Glen Richard
Subject: Another question – quick one
Hey man,
Sorry for bugging you again – quick question:
I’ve always been an advocate of “less is more” in a portfolio. Basically, own fewer, better companies rather than diversifying over several (which I know is your philosophy as well). However, I find myself in a difficult situation due to all the great bargains out there. I have about 14-17 stocks that I really like, but I’d like to narrow it down to 8-10, maybe less. My question is, how to do that? Now, I definitely do my DD on all my stocks, but I really do like them all and their growth potential. After I research my stocks, I usually look at what you have to say about them since I consider you a great investor. So Glen, when you have to narrow down a list of stocks, how do you do it? I lean towards the stocks that are in industries set to grow rapidly, but I can’t ignore some of the valuations on the others.
Here are my following stocks. Some I already own.
CHFI – 5
CNOA – 8 (however, I feel like I could get exposure to this by investing in CHFI)
LTUS – 8
PUDZ – 8
OPAI – 8
CEU – 3
SKBI – 7
CNAM – 9
LLFH – 4
CPQQ – 6
CPHI – 3
RINO – 3
CMFO – 3
CHGY – I like this one and am way optimistic – 7
SGZH – 9
CCGY – 7
LIWA – 5
NEP - 4(own)
CHIO – 5 (own)
MYST - 6(own)
LPIH – 8(own)
Whenever you get a chance, shoot me an e-mail. I definitely appreciate all that you do on your blog and other websites.
Dustin
12 Comments on this post
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Fernando Moraes said:
Hey Glen. As you mentioned, I did do a quick and dirty “tier” system of the stocks I follow. My opinion on these stocks changes frequently, so it is nothing but a ballpark estimate… I’ll throw out my list, would appreciate your own rankings on them. My tier1 and tier2 are tough to distinguish, I like all of them and stocks move between the tiers frequently for me.
Tier 1:
LPIH (own) – Largest position I have, bought more at $1.05 on latest pullback.
LLFH (own) – Somewhat expensive. I could easily list this as Tier 2 based on price, but I like the management and know they will be uplisting to AMEX very very soon. Once that catalyst is gone, this will likely be tier 2 for me.
CCGY (own)Tier 2:
SKBI (own)
CYXN (own) – I love their remote-diagnostic thing.
LTUS (own)
SGZH (own)
CNAM (own)
CNOA (own)
CDBT (own)
JGBO (own)
CPQQ (own) – Tier2 at current price of around $1. Used to be Tier 3.Tier 3:
PUDZ (Own a little, was tier2/tier3 for me at $4. Uplisted and spiked)
SGTI (own)
MYST – Waiting for R/S and to see what direction restructuring takes. Could easily become Tier2.
CGDI
WKBT
CHCG (Its trading at almost cash-on-hand)
OPAI (own a little)
GFRE
CHIO (own)
CBPO
RINO
CHME
XING – (own) – Speculative but trading below cash-on-hand.Speculative Watch list: CHFI and JADA. Not sure where i’d rank them.
September 19th, 2009 at 3:59 pm -
PlanMaestro said:
Fernando, why do we end up in the same sites?
That is a great list. What happened to WEMU one of your former favorites?
September 19th, 2009 at 7:38 pm -
Fernando Moraes said:
Hey PlanMaestro! Small world, huh! As for why we are both here, there just aren’t that many helpful information sources on China stocks… Our buddy Glen here is great =). Anyhow, good to see you follow these type of stocks…They have been very good to me so far.
Regarding Wemu, I still own a small piece of them… But I probably shouldn’t…Opportunity cost, as Glen puts it… I will likely hold till the next quarter report and then get out. The whole solar industry has been going through a rough patch and WEMU has made it abundantly clear that their guidance is more of a ‘wish list’. When you have a backlog that constantly changes, price isn’t fixed, customers don’t have financing in place at all, orders have ’slippage’, etc… Just not realiable enough for me in an industry with immense competition.
Besides, their orders are not the renewal type, so every year their sales team needs to match and exceed the previous year’s order flow. Too much volatility and risk there for me. Don’t even get me started on them having made a factory, using it at like 25-30% capacity only while still outsourcing most of their production…and now they want to make a new factory 3x as large? Bleh. When I asked the CFO on why the planned expansion, he tells me that they are getting a great deal on the land and in China the land-values appreciate by 20% YoY. I paused at that statement for a little while…Thought about it…Shook my head…and then made the little ‘Is this a land-speculation company’ comment next to WEMU. Somewhat of a joke but land-values really should not be why they are expanding as a solar company.
-Fernando
September 19th, 2009 at 7:53 pm -
PlanMaestro said:
That is a great anecdote. Most CFOs are frustrated of being overpaid accountants and want to do deals. Can I publish it in my blog?
I am new in this site. Crossed paths with Glenn on Twitter when he asked about EROC, realized it was the same guy behind some excellent street.com articles about small cap Chinese that I am reading, and here I am. Just realized that there is a world out there besides CHCG.
Thinking about doing a “Buffett in Korea” with your list. Give me 5,000 of each one.
September 19th, 2009 at 10:08 pm -
Fernando Moraes said:
Go ahead, Blog away mate.
Alot of news on the EROC front since Friday, huh? I’ve seen some of your posts and am not quite that upbeat about the deal… But hey, it does not look like a total disaster either…Although I *hate* buying the subordinate units now when they probably wouldn’t get a penny till 2014+… No big deal either way for us, I guess, given that we bought around the $3 level…Ah well. I think I was the one who pointed out EROC to Glen via email a while ago, he was looking for natural gas exposure.
Regarding the china stocks, we welcome you to the fold…beware, once you go china you don’t go back! Its amazing how many great deals still exist out there, getting companies with huge growth at super-cheap prices, with totally clean balance sheets. I find that american listed China stocks tend to trade at much lower P/E’s than China-Listed China stocks. I believe there is still a *huge* hesitation on the part of american investors in owning China companies, and feel that this bias will lessen in the coming years. That means, even aside from the uplisting+insane growth catalysts, we should experience stable multiple-expansion on many of these stocks…Specially as they grow and get out of the ‘tiny microcap’ category.
One thing you need to be good at, to invest in this sector, is reading SEC filings… Alot of ’shady’ deals like preferred that convert to 10 common, CEO’s that buy assets from themselves to get more shares, etc etc… If you don’t pay attention, its very easy to be mislead. Given the language problem, the often horrible investor relations, the lack of conference calls on many of them, the lack of transparency in their filings… You need to be able to dedicate the time to call some companies, see their presentations, check the conferences they go to and watch what you can…
So I would call these stocks “High Maintenance”, but definitely worthwhile. For the people who cannot dedicate the time to follow the stocks themselves, I would suggest going with a money-manager like Glen here. At least you get the exposure to the great upside that way. Its too bad Glen isn’t running an ETF which we could all throw money at
.-Fernando
September 19th, 2009 at 10:40 pm -
PlanMaestro said:
Yea, maybe I got a little over excited with the EROC proposal and I already found a couple of things not so good about it. However, months were passing, no news from these guys on either the deal or the hedges front, and was getting nervous that they were going to bet the farm to solve the subs issue. When we got a reasonable proposal, where we were going to buy them below par and with several protections, puts, and backstops for unitholders I was very happy.
Regarding the DD on these Chinese thanks for the advice. I was watching the R&R presentations and was blown away by JGBO , cash on hand, no debt, low P/E, moat, high double digit growth. Wow, until I got into their 10K and found the convertibles bomb.
And what about the CFOs of these companies. Sometimes it looks like that the only prerequisite is to know English and Chinese. What is the story behind the presenter of LPIH at R&R? I also loved SKBI but the presenter sounded like snake oil salesman. Makes me nervous.
September 19th, 2009 at 10:59 pm -
PlanMaestro said:
BTW, what were the things you did not like about the EROC deal?
PD: Glenn, here is a beautiful Mexican woman, that saw me watching your YouTube video and wants to meet you. Hey, and she does not know that you are going to be rich some day.
September 19th, 2009 at 11:06 pm -
Fernando Moraes said:
The CFO of LPIH is horrible, he made a bad bad bad presentation full of mistakes and no enthusiasm…He wasn’t wearing a suit+tie, didn’t shave, looked like he just came from a bar. He just started working for the company in June/July, and both the company and RedChip (the IR firm) are very mad at him… I would not be surprised if he wasn’t the CFO anymore in a few months… Luckily this doesn’t really change the investment thesis of LPIH, which is why I was grabbing shares left and right when it dropped down to $1.05… But yeah, he needs to go or shape up REAL fast. Supposedly he presented data from a deal they were trying to do months ago which has been dead for awhile.
SKBI had two presenters, the first one I found great and the second was decent. He did have a ’snake oil salesman’ super-polished tone of voice, but I was about 5ft away from him and he came across perfectly fine. It was the best presentation that day at the R&R by far.
JGBO does have that convertible bomb, I wish it did not… I own shares there for the rest of the story, but it is not a huge position.
The way I approach my DD on these China companies is I find the fully-diluted (Warrants, convertibles, common, etc etc) number first thing…Then I look at the rest of the information. Too many times I’ve thought the company was great then found out a hidden little clause in the preferred which threw the investment out the window. Just the other day I had Maj (CEO of GeoInvesting) ask me to take a look at yyin.ob to verify something. Company looked fine until I saw the 10-common-per-PRF information (It was somewhat hidden, you just had the total-face-value of the PRF and the conversion-price…Did not state the conversion ratio anywhere) and suddenly the fully-diluted count jumped from 30M to around 44M. Makes a big difference, huh?
Anyway, if you want to email me sometime I can be reached at fmoraes@nyc.rr.com.
-Fernando
September 19th, 2009 at 11:18 pm -
Steve said:
Glen, thanks for including the input of others plus your comments. BTW your ratings for several of the companies changed going from one list to the other – confusing.
Glen, Fernando, Maestro-
For CYXN, Glen mentions that convertibles didn’t double the shares OS as he originally thought. I’ve looked at the 10Q but I’m not perfectly clear on the actual impact. They needed to do net income of $3M in 07, $4M in 08 and $5M in 09 to be able to convert into 10M shares per year. They made the required net income in 07 & 08 so up to 20M shares could have been converted – I see an increase from 07 to 08 of about 9M shares to 31,186,366 so I assume only another 10M shares may be converted at the end of 09 (though at the 6-mth point, they’ve only made $1.5M net income for 09 and need to make $5M for the year). So we may end up with max 41M shares OS. Is that how you guys see it?BTW, I ‘ve been in Chinese small-caps for a couple of years now and own many of the same stocks you have on the list. As you stated Fernando, they are a challenge to evaluate but very rewarding. Glen is about the only guy online who specializes in these stocks so your blogs are much appreciated. And the message board comments from the other serious investors are appreciated too – nothing like finding a new lead to do DD on!!
September 20th, 2009 at 1:12 pm -
Fernando Moraes said:
Steve:
You hit the share count right on, I have 41M O/S as the max possible from the conversions as well. Of course, maybe we won’t hit the net income targets… The fact is, if we hit 5M in net income, even with 41M O/S, CYXN would at current prices be at a P/E of 4. So either way, i’m fine with my position. I must admit it does feel weird hoping the company I own makes less net income this year.I also love finding new stock gems in this space…I’ve had to branch out and make new friends just to expand my networking… Its great when someone else finds something good, does all the DD on it, then recommends it to you. So many bad companies out there, its helpful when you can use other people as filters. Doing it this way, when I do my own DD, i’ve been able to find 1 company I like for every 3 or so i’ve researched. I’m lazy, so that ratio is good for me.
-Fernando
September 20th, 2009 at 2:19 pm -
Ogden Lafaye said:
Since I ran across Glen at Motley Fool just before March 9th, I have closely read his various material on the net and have become more and more invested in his suggestions. At present I am up 246% (plus cash withdrawals) and my potfolio has held that level through September. Considering this and my below poverty level income at my age (70), I am now free of future anxiety.
September 27th, 2009 at 12:06 pm -
PSP Go said:
My portfolio is up thanks to much of your tips and advice thanks.
October 7th, 2009 at 1:09 pm