GlobalSpeculation.com
Because it does not make sense not to

M,

You’re correct. But, to be honest, that doesn’t matter much. It’s cool, but look at the liabilities. The liabilities are 4x their cash. Sales figures for properties in china are really bleak right now. SELLL SELL SELL! Is what they’re saying. Mean’s a great buying opportunity for those who think that there will continue to be some level of construction in china over the next 5 years. The downside to XIN is that it does high turnover. The upside is that it operates in Tier II.

The way I figure, if you write off all their property under development down by 50% (worst case scenario) about 300, and add cash about 160,

You’ve got assets backing liabilities still. Doesn’t seem nearly as risky as it’s priced. I’m not selling my shares, but I’m not buying more. It’s in my top 4 positions, which is good enough for me. (I probably should be buying more and would be if I wasn’t playing with college money.)

Glen

From: sagges
Sent: Thursday, October 09, 2008 10:53 AM
To: gbradfo
Subject: XIN

Glenn,

Still hanging in with XIN?

Unless I am reading the balance sheet incorrectly their cash position is twice their market value.

I understand the total instability of the world markets but this looks like a ridiculous opportunity.

M

Jaime,

I am not concerned. The markets are falling and those perceived as the riskiest are sold off the fastest. XIN is perceived as risky because it’s real estate, it’s in china, and it’s small (compared to other companies that most people trade). I’m not really concerned. The concern that usually comes up as prices go down is a private takeover. There are a lot of companies trading unreasonably cheap. This is one of them. Selling a brick of gold at $1 just cause everyone else is never made sense to me.

I don’t think a private takeover is likely, because I imagine that most of the owners and management of XIN realize that it’s actually a flourishing company. In this kind of market, I try to allocate into the cheapest companies, which keep getting cheaper. But, I came in with a lot of “stalwart” companies. I have a few left to push into the small caps at huge discounts, and will do so over time.

I’m not sure about delisting. I just don’t really care where it’s traded. I expect it will be traded somewhere.

Glen

From: salc
Sent: Thursday, October 09, 2008 8:29 AM
To: gbradfo
Subject: XIN

Hi Glen,

I have been watching XIN get hammered in the last month. I firmly believe the stock is worth much more that the current price and will probably quadruple over the next year.

My concern is that if it trades lower, is it in danger of being “delisted” by the exchange?

What are your thoughts?

Jaime

GHII: Gold Horse International, Inc.

Talked to their CFO Adam Wasserman,

He just got back from Mongolia and was there to help them file their annual reports. The issue with GHII to him is the publicity: there is none. They’re going to get some though. But, they work really well with the community, built a jail, police station, building schools to lease back to the community, a few roads and other buildings and otherwise operate a hotel in the 2nd fastest growing city in China. Great balance sheet, PE of around 2 now. Should have a PE of at least 10 in normal market conditions.

I’m buying a lot of shares.

Glen

From: Hall, Douglas (MCOE)
Sent: Wednesday, October 08, 2008 2:33 PM
To: Bradford, Glen Richard
Subject: Got text

What’s the scoop?

Doug Hall

(Mr. Jonathan Blum, Director)

Hey Jon,

Just was curious if I could get some balance sheets/income statements for GHII as well as your opinion. It looks like a company that is fiscally responsible and really helps its rapidly growing community.

I don’t think GHII is in trouble, but it’s priced like it’s going bankrupt. Also, the PE is about 1 and it’s priced lower than book value; not bad for a growing company.

Thanks in advance.

Glen

Dan,

Making the decision to pay off debt or purchase investments is a common decision that companies make all the time. Honestly, it depends on your risk tolerance. The market’s at a relative low. Historically at times like this, it’s been a good time to invest. But, I thought it was a good time to get in 3 months ago, and I was wrong. In my opinion, any time you can get a great company with predictable future cash flows with the present value of future incomes at less than 20%… It’s hard to resist. Right now’s a fire-sale.

Two points:
1. Remember to factor in taxes, you probably need 10% before taxes to beat debt payoffs.
2. Don’t invest if a lot of your capital is getting eaten up by trading expenses.

There’s a lot of potential for a rebound. People sell everything when they are fearful. I see a lot of opportunities surrounded by varying levels of risk. There are highly profitable companies selling at less than book value. If I was you I’d do 50:50. Pay off debt but at the same time, buy undervalued securities. That said, if the Dow Jones and S&P continue to fall, I’d accelerate purchases.

If you look around, global governments are fighting this credit crunch head on. I think they’ll fix it.

If your short on time, look for mid-large companies with a low PEG ratio and high motley fool caps ratings.

Besides, I’m calling market bottom. The negative consensus is too high and the central governments around the world are pushing positive messages through the pipeline.

http://finance.yahoo.com/rss/headline?s=kci,ktii,kci,ebix,ande,tex,wab,sigm,vsec,aob,hurc,midd,ctsh,team,lxu,zumz,ezpw,sohu,mtw,apa,adm,beav,nvda,pcp,cedc,bucy,nihd

That’s one I read for updates frequently.

Glen

From: Dan
Sent: Monday, October 06, 2008 1:52 PM
To: gbrad
Subject: Starting Strategy ?

Glen,

This might be too basic a question for you, but I’d appreciate any feedback if you have time to provide it. My question concerns a starting investment strategy in the current market, given preexisting debt obligations.

Currently, I owe about 10k in credit card debt that I incurred after my wife took a year off work after the birth of our daughter. During the same time, we burnt through our small savings and currently are trying to figure out the best blend of investments/debt payoff. The good news is the debt is cheap at 5.9% APR & with my wife just starting working again, we have about $1000/month surplus that we can allocate to debt paydown and/or investments.

So, my question: Is it better to strictly target debt paydown, or to take a blended approach to take advantage of opportunities to buy into cheap stock. My phyche tells me to pay down the debt in a year, then start agressively putting money into stocks – ostensibly, it would “feel” better. Yet logic tells me that if I can beat 6% on my returns, then allocating at least some of the cash to securities is the way to go, given I’m providing myself a “head start” over the former strategy on generating profits.

So, given the instability of the market right now, how do I determine the best approach to this delima?

Aside:
I’m certain this is obvious, but just for the sake of disclosure,I am indeed a beginning investor, but am looking to make investing a major part of the rest of my life. Currently my only holding is a small stake in CTSH (I am an employee and participate in the ESPP). I also have Schwab online checking which will pay me 3% to sit on my cash in that account – less than I project the CPI to increase over the coming year, but better than nothing, I suppose.

Dan

Dean,

I like VSEC, but lets take a look at VSE

VeraSun said it plans to use the net proceeds of the offering for general corporate purposes… what’s that? It’s very indescriptive.

You’re right, from a historical perspective, the revenues kick butt. But, the net incomes don’t follow and this company hasn’t been around that long.

Looks like they produce the E85 alternative gasoline. The short term news is bad. They just sold shares to raise capital for… who knows…?

They are taking a huge net loss this next quarter. Anyway, this thing has been down ever since it IPOed. (This doesn’t matter, just an observation)

I dunno, the net incomes don’t follow the revenues. This isn’t my kind of company. This is a “Turn-Around” They aren’t occurring “one-time” losses. Their loss is because of their operating business.

Thanks for the heads up, but I don’t plan on buying VSE. I could be wrong. I just don’t have any reason to buy besides it’s cheaper today than it was yesterday.

Glen

From: Dean Davis
Sent: Wednesday, September 17, 2008 11:07 AM
To: gbrad
Subject: Verasun

Glen,

I have taken an interest in Verasun based on one of your articles. After reviewing the company’s financials and future prospects, I too think they are poised for tremendous growth in the coming years.

With the recent downgrade and third quarter projected losses, these seems like a very good entry point. What are your thoughts on the company given the new data?

Thanks!
Dean

Chuck,

I have AOB priced at $28 with a 30% growth rate, which is way below what it is likely to achieve. The issue with AOB is the EPS dilution which several writers have covered. I just don’t see why share dilution is a problem when the EPS is still growing at 20%. That’s still far better than you can get from most other companies.

Remember that there is a lot of uncertainty when investing abroad. Watching the TV makes me think the sky is falling. But, when I go outside, it’s clear that it’s not. That’s the nature of the market.

Glen

From: Kosel, Chuck
Sent: Wednesday, September 17, 2008 11:53 AM
To: gbra
Subject: AOB

Glen,

I enjoy reading your insight into AOB. I first bought this company back in 2005 when it was about $2. I’ve rode the roller coaster buying and selling it between but have now decided to continue to buy on dips and accumulate. There is just too much potential in this stock not to ride it for the next 5 years.

Continued good fortunes in AOB.

Regards,

Chuck Kosel

David,

Price doesn’t always reflect value. I doubled my holdings yesterday. Good catch on the interest rates. I was excited too. I wrote a new article that mentions XIN over the weekend. Hasn’t been published yet. XIN seems pretty far from going bankrupt, which is where it’s priced. As far as I can tell there’s no reason it should be priced at such a discount.

It’s at $3 cause more people are selling than buying. The question I ask is: Is there a reason?

Lower interest rates are good for XIN and pre-sales seem good for next quarter too. That’s my take.

Glen

From: David
Sent: Tuesday, September 16, 2008 10:47 AM
To: gbra
Subject: What’s up with XIN ?

Glen,
Enjoy your contributions to Seeking Alpha. I, too, purchased XIN — bought it $6.80. Why is it now in the $ 3 range ? To my knowledge, there has not been any press releases regarding major “bad” changes in Chinese housing. XIN announced they will be taking pre-sales of some of their projects in late September. Also, China just lowered their lending interest rate. I would think this would help the housing market.
Just curious as to your thoughts.
Thanks,
David

Thanks,

I do my best. It’s always a learning experience and I’m getting better at making decisions all the time. My current favorites:

AOB, ARD, MTW

Glen

From: Scott
Sent: Thursday, September 11, 2008 10:56 PM
To:
Subject: Your Stock Picks

Hi Glen:

I read your article on Stockpickr.com and decided to visit your site to read more about your investment strategy. I think you have a really great handle on investing…keep up the great work man.

Scott
Reebles, LLC
Don’t Ask…Just Register!
www.reebles.com