Tuesday, January 24, 2006

Gravity(GRVY,$6.66) revisited

After Softbank spent about 400 billion JPY to get about 52% of Gravity, there was a debate whether small shareholders had been screwed by the deal. Based on a bullish report from CSFB, analyst Jeff Kahng believed this deal would create value to small shareholders, since Softbank will bring better management expertise and global reach.

However, I doubted that both previous owner,JUNG-RYOOL KIM, and new owners had the intention to do small shareholders good. Mr. Kim received an offer of about 25$ per ADR, while others were told not to expect anything higher than 7.1$. Right after the deal, the Company reported that Mr. Kim actually 'diverted' about 7 million dollars from the Company in the past few years. Latest news disclosed today said total 'diverted' fund was about 8.1 billion KRW. Mr. KIM did voluntarily paid back 7.8 billion KRW a couple months ago in hope of a peace settlement. But things may not turn out to be as he wished, the Company already filed criminal charge versus this gentlemen. It is a test of how reliable Korean justice system is.

Back to the stock, I am still not convinced the deal had created value for shareholders. I sold all my shares after the deal announcement and never touched it again. So far, I think investors should ask two questions:
* When the revised reports are to be filed? If they are late, NASDAQ may delist the stock.
* How was going with the GAMES? Let's not forget this is a game development shop, its future depends on how well it keeps develop new games, Ragnarok II in particular.

SINA Q4 Earning Guidance

SINA provided Q405 preliminary revenue and earning guidance, which will come in a little bit lower than previously guided. The stock traded up 7.5% to 23.52 at the moment I am writing this.

I have been closely watching it in the past month, found that the market sentiment toward it was quite strong, that may probably explains why the stock shoot up on not so good news.

I do not own any SINA shares, instead I own its rival SOHU, which I believe is better managed and executed. I expect both to do well this year, looking for a price target 27$ for both.

Here is my previous discussion on SINA, and here is my previous take on SOHU.

Tuesday, January 17, 2006

Happy new year

Happy new year, everybody, please excuse my delay in updating my blog these days.

I guess so far this year has been a smooth sailing for most investors and traders, I also enjoyed the breeze of the overall market in the past two weeks, pushing up my own account more than 20%.

I have been closely watching the general equity market, where no clear sign of whether bulls or bears will win the match. Dow has been trading in a tight range, while NASDAQ has been advancing into higher grounds. There are still numerous worries on slowdown of consumer spending, which is said to be the last pillar of U.S. economy, and I also heard talks everyday that the burst of a housing bubble will lead to recession. Meanwhile, the stock markets so far have at least successfully absorbed these negative worries.

Let alone the overall market talks, after all, I am not an economist, nor anybody who can predict the market longer than next second. This year, I will keep focusing on stock ideas based on fundamental study, as well as some basic trading techniques (I learned from past lessons that fundamentals only may not be able to give the best return).

My picks so far include VCLK,DTAS,SOHU,CNTF,IRBT,PALM,and TISA. Most of them could be found in my previous messages, while IRBT, PALM and TISA are my new ideas in the past a few weeks. I have long positions in all of them.