Monthly Archives: October 2011

BUY PANIC! – The Coveted Inside Reversal Day Just Happened

October 4, 2011

DOW up 152
S&P up 25 (2.2%)
Russell up 6.5%
XRT up 5.4%
Berkshire up 4.3%

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Macau Gambling Revenues Grow 39%

October 4, 2011

china modelThe Macau gaming sector has been demolished as fears of credit tightening and distress amongst the junket operators mounts. Macau’s Gaming Inspection and Coordination Bureau just released that revenues for the month of September grew at a 39% rate. This is another data point which demonstrates that China Hard Landing fears are just that, fears. Contrast the strong growth to the Macau geared gaming stocks which have seen rapid declines as investors lost confidence in the space. Here are number of leaders and what the stock prices have sold off since September 1st. This may be an opportunity for investors willing to make a wager.

Wynn Resorts (WYNN) down 24%
Wynn Macau (1128.HK) down 35%
Las Vegas Sands (LVS) down 18%
Melco (200.HK) down 49%
Shun Tak Holdings (242.HK) down 40%
Galaxy Entertainment (27.HK) down 53%

*note that Shun Tak is the Macau ferry operator and also involved in Macau real estate

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China Xiniya Fashions ADR – Trading Sub Cash

October 3, 2011

The route in all things related China has created a number of anomalous investment situations. Hong Kong listed stocks have been pulverized over China hard landing fears but any China stock that has been US listed and subject to less corporate governance scrutiny has been annihilated. There are many stocks in this space where to go down from here; the stocks must be a fraud. That isn’t to say that there are not many other Chinese ADR frauds. I would speculate that there are for companies that have not gone through the IPO process. For stocks that have IPO’d and are not reverse mergers it may be far-fetched to believe that all the stocks are frauds.
Here is just one example among many. China Xinya Fashion is a small cap Chinese ADR. The stock has a USD market capitalization of $85M. The cash on the balance sheet is $121M. The company is free cash flow positive the past five years and generating cash. There is no debt on the balance sheet. My conclusion is that there must be fraud going on for this stock to trader lower from here. Interesting situations that the market crisis has created.

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