Monday, October 11, 2010

M(en)FI in Black

The last day I was above break-even was May 12th. Guess what? I actually broke back above break-even today! It was quite a "spurt" fueled by my Chinese stocks, which were up 4.4% today and are up 19% since September 24th.

Not quite sure what caused them to rise, as it was an otherwise lackluster day. But I suspect it had something to do with this headline:
Harbin is an undervalued Chinese firm where apparantly the CEO (to quote famed philosopher Popeye, "I can't take it no mores".

So with the stock priced depressed as US investors shied away from Chinese hybrids, they offered to do a leveraged buy-out! Cool.

I think that sent shockwaves through the community of shorts on these stocks. It is easy to bash a stock and create fear 5,000 miles away on companies in a different culture and using a different language. But it is quite different if the management of those companies steps to the plate with real cash to take the firm private! I suspect this is just the beginning of a rally in these stocks (even though up 19% since 9/24, they have a long way to run).

Finally, the M&A activity was not just with Chinese stocks. GYMB also got an offer from BAIN to also go private (Bain pays $1.8 billion for kids clothing firm Gymboree). This type of activity is almost always bullish for the value stocks in MFI.

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