Archive for the ‘Financial Speculation’ Category

Portfolio update

June 30, 2009

current holdings:

SRS – large position
HQS – large position
XSC-UN.TO – tiny position
50% cash


Ten Reasons Why I Like Chinese Pharma Stocks

May 25, 2009

1) The Chinese Government will be making huge investments in health care and give huge support to companies in this field in the coming decade.

2) A number of US-listed Chinese pharma stocks trade OTC but are in the process of getting listed on major US exchanges.

3) Chinese hospitals are solid customers but they are very late payers. Therefore, many Chinese pharma companies trade at very low PE ratios due to their very high working capital requirements. At some point they may find a way to lower their working capital through factoring or negotiated faster payments from the hospital. If this happens, PE multiples could expand significantly.

4) Institutional investors like “Aging” as an investment theme, but they are concerned about future profitability of Western pharma companies, as Western governments face pressure to reign in health care costs. Emerging market pharma such as Chinese pharma allows them to continue to have pharma/aging exposure without the gross margin risk of Western pharma companies.

5) For historical reasons, the biggest pharma companies in the world are in the US, France, Switzerland, Denmark, Germany and other European countries with good health care systems and good education. Considering the huge population in China, the government’s new focus on health care and a very large number of world class scientists and low cost production, it is not hard to imagine that China in ten or twenty years will have a number of pharma companies joining the ranks of the largest pharma companies in the world.

6) At some point Western pharma companies will want to buy Chinese pharma companies as a way to more effectively penetrate the Chinese market.

7) China is rapidly becoming a medical tourism destination especially for cancer treatments.

8) Potential for existing players to buy state owned enterprises at compelling valuation (without truly competitive bidding processes) and run them much better than today.

9) Generally speaking, there are a lot of compelling valuations combined with the potential for Chinese pharma to develop into a bull story in the coming years.

10) Most Chinese pharma stocks have little or no debt

Of course one has to be very careful with Chinese stocks – lots of poor management, fraud, dilution, poor disclosure and pursuit of growth for its own sake.

I currently have no positions in Chinese pharma stocks but I’m doing research on Jiangbo Pharmaceuticals (JGBO.OB) and China Pharma Holdings (CPHI.OB).

A new reason to short GOOG

May 20, 2009

Mark Cuban was never really a big fan of Google. Or maybe it was always a love-hate-admire relationsship. Anyway, in one of his latest posts he writes about how people increasing find his blog and everything else they need not via Google, but via Twitter and Facebook. The shift he sees is huge. And it’s happening right here, right now. I think Mark Cuban just gave us a good, new, original reason to consider GOOG as a short candidate.

Bicycles as an investment theme

May 20, 2009

We live at a time where there are very few original investment ideas being put out there.  For a long time every asset class went up, followed by months where everything went down. It was, as they say, not a stockpicker’s market – it was all about direction.

And now we live in the great confusion. Should we buy buy buy because the government will do whatever it takes, or should we sell sell sell because, as Todd Harrisson likes to say “the cancer is bigger than the patient”? It’s a tough call. But where are the good ideas? Don’t tell me about solar or palladium or gold or biotech or another retail story. Tell me something new. Tell me about something like ehh… BICYCLES. Bicycles make sense to me. More and more cities are promoting bicycle riding, building bicycle lanes and so on. People want exercise and green solutions. They want cheap and they want solid. I was in Shanghai tree weeks ago – they have very nice cars but I did not see one nice bicycle. All their millions of bicycles are total rubbish. If you want another China bull story start watching out once people in China start buying nice bicycles, perhaps encouraged by their government.

Off course selling or building bicycles are horrible businesses. But companies like Shimano could be worth looking into as a long term investment idea as well as other bicycle gear companies (most of these companies like Giro, ABUS, Bell and Brooks are not listed though).


May 20, 2009

As of today my portfolio looks something like this:

HQ Sustainable Marime Industries (HQS) – large position

Air Transport Services Group (ATSG)

White Electronic Design Corporation (WEDC)

Northgate Minerals (NXG)

Andean American Mining (AAG.V)

XS Cargo (XSC-UN.TO) – extremely small position

FAZ (3X short Financials) – very short term

SRS (Ultrashort Commercial Real Estate) – very short term