Mr. Obvious Snags Chinese Uplisters $MYST $LPIH $OPAI
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What you don’t know has more of an impact on your future than what you know. Under this mental framework, you can effectively make uncertainty work for you or against you. You make it work against you when you buy companies where the growth expectations are priced in and not meeting expectations will potentially crash the stock price. You can make it work for by buying companies that are priced to shrink and are set to grow.
If you’ve been reading me regularly, besides likely being up over 100% this year, you know I’ve been preparing for the wave of the unloved Chinese uplistings for quite some time. Well, it’s time to ring the bell. We have arrived. We are in the middle of the madness. While most of the attention is diverted to M&A’s and huge IPOs, I’m gladly taking advantage of some opportunities that are so good it doesn’t make sense not to take advantage of them. Oriental Paper (OPAI) is reverse splitting 1:4. Great news, they’re still priced for shrinking and they’re set to grow. I pointed them out at $0.22. After the reverse split we’ll likely see $10+. In my personal opinion, $20+ isn’t out of the question. Target: AMEX.
Take a look at MystarU.com (MYST). A month from now you’ll be calling this Subaye. You may even get a new ticker. This one is undergoing a ton of structural change. A reverse split 1:100, a spin-off of non-core assets, an acquisition and name change to Subaye, Inc. and an increase in authorized shares just to name a few. That is one way to turn a penny stock into a 10 dollar or more stock. I suspect that this one will be looking to uplist by the end of the year. My target: NASDAQ. The fear here is dilution of common equity, and this fear is justified. To me, this is offset by explosive growth potential on the cheap. Pay a little, get a lot. Monday was the highest volume in 2 years. This won’t be undiscovered for much longer.
MYST came out with news today
http://www.earthtimes.org/articles/show/subaye-acquires-new-members-and-invests-in-guangzhou-joint-venture,990178.shtml
Longwei Petroleum (LPIH) is a company trading at $1.40 and forecasted $0.80 per share in 2011 and has a ttm EPS of $0.30. I would argue that this is a no-brainer. I’ve told you about it before. James Altucher reportedly likes this one too. I had the pleasure to watch them present at RedChip’s New York Equities Conference on October 1st along with 34 other companies. In my opinion, they saved the best for last. Speaking of that, I want to point out the perspective of what I would call an ignorant investor. A question was raised: “Why are you guys growing at 30%+ and carrying a forward P/E of around 2?” I wanted to interrupt, but let the presenter field the question. My response would have suggested that the abundance of uninformed investors like the one that asked the question has offered up the opportunity of a lifetime. It will be interesting to see if Longwei is able to uplist in the next year without having to reverse split. Hey — It could happen. Target: AMEX. I’ve informed my Financial Statement Analysis class that I believe we’ll see $3 by Halloween; 100% in a month.
I keep getting asked: “How do you find these stocks?”
Prim’s Algorithm
My stock picking strategy is not unlike Prim’s Algorithm for MST that I traversed across in my PhD Combinatorial Optimization class. In a sentence, I quickly branch out from what I know to expose myself to more of what I know that I don’t know, spending as little time on each non-value add activity as possible. So, I specialize in quickly eliminating opportunities that don’t appear to be the best using basic valuation metrics. I’m one of the few people that actually believes in my ideas as opposed to just writing about ideas — as I own them all myself. After sorting through thousands of companies I stick by one guiding principle: When you can be certain that others are uncertain and that the price that you pay is less than the underlying value — buy. Thus, I own when it doesn’t make sense not to.
Disclosure: Bradford was long Oriental Paper, MystarU, and Longwei at the time of publication.
14 Comments on this post
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PSP Go said:
Good advice. When is the best time?
October 7th, 2009 at 1:05 pm -
wen57 said:
Glen, this is so you! When you were at Trinity and kids put math problems on the board that were wrong you could not stand it, and the teacher had to let you go fix them to get you to settle down. I can see that a bad question would make it hard for you to be patient and contain yourself. The kids at Trinity teased you about this, but it looks like you will have the last laugh. BTW, Chris T. thinks you are a genius.
October 8th, 2009 at 11:25 am -
House Hold Testing said:
It is possible. After all, they are still ladies, regardless of their backgrounds. With respect and love, you can snag anyone you fancy.
October 8th, 2009 at 11:51 am -
House Hold Testing said:
China’s state-run news agency suggested yesterday that two days of talks in Beijing ended in failure because the United States has been “too demanding.” And although the talks are expected to continue, some disagreements have erupted over what China proposed in the first place…
October 8th, 2009 at 11:53 am -
Bill Ingram said:
I am interested in joining you hedge fund…could you please send me the details…I didn’t seem to be able to find them on the website.
Thank you,
Bill Ingram
October 9th, 2009 at 5:13 pm -
Glen Bradford said:
Hey Bill,
my email is gbradfor at purdue.edu. I just shot you an email.
Glen
October 14th, 2009 at 10:04 am -
James said:
ok I’m in on LPIH. Glen Bradford likes it …. check. Gorilla Gorilla likes it in the Motley Fool Global Gains group … check. 5 stars in Motley Fool Caps…. check. I wish fidelity would serve up their financials and ratios for easy spoon feeding …. but oh well.
Gorilla Gorilla thinks this one is going to 8 before too long.
October 16th, 2009 at 9:29 pm -
James said:
Glen I’m hoping you comment on this:
Ok so I’m looking at the 10 K for LPIH and I see revenue shot up but I see that eps between 2008 and 2009 is flat.
http://biz.yahoo.com/e/091013/lpih.ob10-k.html
so what good is an increase in revenue without an increase of eps? Am I missing something? What’s the story?
And I love how on the company’s website they give a target price for their own stock (of $4).
October 16th, 2009 at 9:53 pm -
J.P.O said:
I’m hearing rumblings about CFO, Mr. Crane (32 yrs old) being at center of negative situation with BONU as he is the CFO and Principal Accouting Officer of BONU, based in NJ. How can he be at the same time the CFO of MYSTARU, a Chinese company based in China? Will his being involved with the BONU debacle be an issue when they apply to NASDAQ?
October 17th, 2009 at 2:19 am -
Fernando Moraes said:
James, supposedly the 2010 EPS numbers are an “abnormal” because they plan to do a equity-raise and the new facility will only work for half the year (FY 2010 is Q3 09 through Q2 2010). The dilution and financing costs will negate the revenue-growth in FY 2010, but then it will shine through in FY 2011.
-Fernando
October 20th, 2009 at 12:36 am -
ihtblr said:
James T Crane is a greedy crook and he is very harmful to the common share holders of the companies he represent.
I didnt know he is there at BONU as well, as if screw ups at SBAY (MYST) and LPIH are not enough yet.
He has a much bigger role (than just CFO) at SBAY and he might have received kickbacks to undercut and dilute the share holders to the extent that share counts (OS) went up by 4 times in 4 months.
Ofcourse he is getting millions of shares for himself.November 10th, 2009 at 12:28 am -
Ogden Lafaye said:
Having taken a huge profit in SBAY (MYST) at $27.00, I am a little reluctant to buy back in at $13 as this represents a 60% drop in 3 weeks. Any comments and ideas out there?
November 11th, 2009 at 11:14 am -
PSP Go said:
Always be prepared just like a boy scout.
November 30th, 2009 at 3:09 pm -
Enacrasse said:
Love to make beats then you should take a look at sonicpro. It works so well, i love all the beats i make.
December 11th, 2009 at 6:43 am