Tuesday, November 16, 2010

I am a Buyer

With today's sell-off, especially in some Chinese names, I am a buyer.


  1. I sold the remainder of my MAIL. Post their earnings a couple weeks ago, I was as enamored with their move to growth and removal of the dividend.
  2. I bought JGBO, which absolutely has to be the cheapest company in the entire stock market. I have been watching them drift from $9 to $7, but could not pull the trigger as I was worried about their growth prospects. They answered that today.
  3. I bought more SCEI (but not in my MFI account), as they had dropped 14% post most excellent earnings a week ago.
  4. I bought some LNC, again not an MFI stock. They are a former TARP company selling at about 55% of book value. They just had their rating affirmed by AM Best (A+), they are increasing their dividend to 20 cents a share (still down from about $1.60 pre credit crisis) and most importantly will begin to repurchase share (Lincoln National Corporation Raises Dividend, Resumes Share Repurchase Program, and Announces Redemption of Series F Trust Preferred Securities). The repurchase should place a floor on their stock price (at about $23.70 right now) and will be very very accretive as there are few better investments for a company than to buy their shares at a 40% discount.
RAI Splits

I am always (ahem) split on whether I am in favor of stocks splitting. For some weird reason, I feel like I have "more" when I have more shares. But RAI split 2:1 today, so if you're playing at home trying to follow my portfolio, double the shares (Splits Calendar: Reynolds American splits before market open today (2:1 ratio)).


I did have two companies report their earnings today.
  1. NEWN had a stellar quarter (New Energy Systems Group Reports 236% Increase in Revenue for the Third Quarter of 2010) and managed to rise 5.7% on this god-awful day. Their key is that they have now earned $1.13 for the 1st 3 quarters and will clearly blow-out their guidance of $1.23 for the year. Recall this is a stock still under $8, with an $85m market cap and $9m of cash.
  2. JGBO really impressed me (Jiangbo Pharmaceuticals Announces First Quarter Fiscal Year 2011 Results) which is why I bought in even though they were up. Think about some of these key facts:
  • Their market cap is about 100m (for the life of me, I do not know what Yahoo finance has so much trouble with market caps and historical prices, both missing for JBGO).
  • They made $14.6m in income in operating income for the quarter.
  • Non Gaap income was $10.1m.
  • They have $124m of cash. You read that right, $124m in cash for a company with a $80m!
  • They grew revenues this quarter by 13%
  • Management believes current sales level can be maintained.
Well, thankfully today is over. On to tomorrow!



re JGBO:
Due to restrictions on the Company's ability to transfer cash out of the PRC, the Company has been delinquent in the payment of interest on its November 2007 Debentures and May 2008 Notes. Management has been in close discussions with holders of the November 2007 Debentures and May 2008 Notes in order to reach a resolution to this issue in the near-term.

Did you listen to their earnings conference call? Any discussion of this topic?

Marsh_Gerda said...

Jeff - I did not listen to the conference call. I read the 10-Q and it appears that no progress has been made on the issue. What do you think it means? It seems very unusual that a company so flush with cash per their balance sheet would have to accrue interest penalties.