Tuesday, May 31, 2011

China Re-revisited?

How's that for timing?
The day after I blogged about bailing on Chinese fertilizer company Yongye International (Ticker: YONG) over nagging concerns about cooked books, the stock is up a whopping 42 percent.
That's no error. A 42-percent move.
I'd have egg on my face if it weren't for the reason behind the stock's sudden surge.
Simply put, Yongye has taken a number of steps to help restore investor confidence.
You can read about them in more detail in a nicely written Motley Fool piece here.

In short, Yongye made three key moves:
  • It's CEO announced plans to invest $3 million of his own money in company stock.
  • It put Morgan Stanley on its board of directors, giving a Western firm some oversight of its operations.
  • It convinced Morgan Stanley to buy a big share in the company.
All three are smart moves that should help ease the fears of those holding Yongye stock.

You probably figure this has me wishing I'd held on to those YONG shares I owned as well.
Not so much. At least not yet.
There's still a dark cloud of suspicion hanging over these Chinese firms listed on American exchanges, and Yongye is going to have to prove itself worthy of my hard-earned dollars again.
Tuesday's news is a good sign. But's it may be a while before I'm ready to dip my toes back into Chinese waters.

What do you think? Is this enough for you to consider buying YONG? If you own it, how much better does this make you feel?

Monday, May 30, 2011

Why I bailed on China

Can you trust that Chinese company whose stock you own?
Are you sure?
Read this story from The New York Times and ask yourself that question again.
I'd trusted China, too. But not any more. Or at least, not anytime soon.
When the short-sellers beat down Chinese fertilizer supplier Yongye International a few months back, my initial instinct was to hunker down. I'd done my research. The company's financials looked good. It had great growth in an industry that seemed poised for a lot more to come. It was selling at a bargain.
The company was one of the few with a major Western auditing firm minding its books.
It had the blessing of the Motley Fool's Global Gains investing team. They'd visited the company, met with its principals.
Weeks passed. The stock went nowhere but down.
That would have indicated a great buying opportunity with most stocks I held. Load up the truck.
But with Yongye, I wasn't able to pull the trigger. There were simply too many stories about fraudulent Chinese companies whose stock was now worthless. And as it was with Longtop, from the NYT article, having a big, Western auditor didn't seem to ensure anything.
So, I asked myself again, "Can you trust this company?"
The answer was no.
I wanted to. But wanting to isn't good enough.
With Yongye, I wasn't investing. I was gambling.  Just rolling the dice, and hoping they land on "books not cooked."
If I'm going to do that, I'd rather put some cash on the Phillies to win the World Series this fall.
I want to believe that's going to happen, too.

Read my follow on this China story here.

Saturday, May 28, 2011

Beating the S&P

After two straight years of beating the S&P 500 as a novice stockpicker, I'm seeing the tide turn for the first time.
Through the first five months of 2011, I'm trailing.
The S&P has been no juggernaut in 2011. Had I invested my money in SPY, I'd have been up about 4.2 percent on the year.
But my holdings have delivered me a measly 2.7 percent through May.
While I know I may be just one piece of company news away from evening things up, there's something about being behind that's spurring a sudden rally in interest and research.
I'll be sharing some of my ideas, my victories and my slips and falls through this blog.
Feel free to chime in with any thoughts or ideas.
If nothing else, I hope these experiences can give some confidence to those considering managing some of their own money. Not only can you do it smartly, but you can have a lot of fun with it, too.