BlastInvest
Blast Investor Real-time Plus           by Henry Lu

GKIS Big Gain, Sell Strategy, Sogou

06/15/2005


The past 1 month was great month for BIRTP model portfolio's performance. BIRTP model portfolio is up 22.11% year to date, beating S&P500 by 22.55%.

Over past 2 weeks, BIRTP model portfolio exited all the positions of GKIS, invested into a new pick JRCC, announced intention to sell current NRG position next week.

GKIS annualized return of 330%

GKIS investment was up around 44% for only 3 months of holding time with annualized return of around 330%.

This pick was a typical value investing fast track profit opportunity opened by stupidity of Wall Street analysts.  GKIS earned adjusted earning of close to $3.00 earning per share in 2004. When BIRTP issued trade alert on GKIS 3 months ago,  GKIS was trading at PE around 5. Further more, Wall Street analysts then were giving out 2005 earning estimate around $1.5 per share earning so that GKIS was trading at a reasonable forward PE of close to 10. At that point, my own estimate for GKIS 2005 was significantly higher than $1.5. This artificially low Wall Street earning estimate was clearly wrong so that GKIS easily beat earning estimate by 90% in the last quarterly earning release. This artificial low earning estimate also can be identified by extremely low enterprise value to revenue ratio then. That earning surprise triggered big rally and I and BIRTP members who invested in GKIS booked big gain in this investment recently.

Now, the fundamental of GKIS has changed. The commodity market of chicken and corn/soybean feed meat is moving against GKIS in recent weeks. Chicken commodity price has weakened much worse than I expected and feed meat price has not dropped as deep as I estimated originally. My latest 2005 adjusted earning per share estimate is around $2.88 per share. That is still higher than current Wall Street estimate number $2.41 per share earning, but not large enough to be in safe ground.

The latest Wall Street conference call further confirms my concern of deterioration of GKIS profit margin this year. Chicken business is cyclical business. Its business cycle averages around 5 year per cycle. The last business cycle bottom was 2003 and this year or next year may be close to its business top.

Although BIRTP is long term oriented value investing newsletter, I would still want to sell if fundamental changes even after only couple of months of holding. GKIS is just such selling case.

Tip on the Past 3 Months of Big Gain out of GKIS

Invest into a dirt cheap low PE value stock when its earning power is significantly larger than Wall Street earning estimate.


BIRTP Sell Strategy

There are 2 cases of selling for BIRTP picks:

  1. When a stock reaches or moves above intrinsic value/fair value, BIRTP will issue an email trade alert to sell part or all of a stock in the model portfolio.
  2. When there is a better value stock, BIRTP may issue an exchange trade alert to sell the existing stock and buy the new pick even if the existing stock is still below target.


SOHU's Sogou Traffic Jump

Sogou.com is web search portal for SOHU. Over past couple of months, Sogou had dramatic traffic jump. Just several months ago, Sogou was ranked below 100th globally most visited web site. Now it ranked at 44 most visited web site. It surpassed Yahoo's Yisou and it is now the third most popular search engine in China after Baidu, Google. Sogou's daily reach is about 1/3 of Baidu's right now.

Sogou, the 1 year old new search engine of Sohu has exceeded many investors' expectation. This new search portal will fuel Sohu's earning growth in the year ahead.


Blast Investor Model Portfolio Update

(as of 06/15/2005)

Model Portfolio - Performance


Portfolio inception date
 12/31/2003
Portfolio inception value
 $89,000
Portfolio 12/31/04 value
 $141,981.00
2004 SP&500 Performance 8.78%
2004 Portfolio Performance 59.53%
2005 SP&500 YTD Performance -0.44%
2005 Portfolio YTD Performance
 22.11%


Model Portfolio - Open Positions
Symbol Last Shrs Value Paid Gain
CEI 18.87 1,500 $28,305.00 16.63 $3,340.00 +13.38%
CHK 22.53 1,100 $24,783.00 13.90 $9,483.00 +61.98%
EXX-A 1.60 6,500 $10,400.00 1.638462 -$270.00 -2.53%
JRCC 34.56 900 $31,104.00 34.406667 $118.00 +0.38%
LIBHA.PK 4.70 1,200 $5,640.00 5.10 -$490.00 -7.99%
NRG 36.24 335 $12,140.40 23.05 $4,408.65 +57.02%
SOHU 21.34 700 $14,938.00 24.882857 -$2,500.00 -14.34%
USG 47.15 950 $44,792.50 18.425789 $27,268.00 +155.60%
WLL 37.97 600 $22,782.00 22.683333 $9,152.00 +67.15%
$$CASH -21,512.3 -$21,512.30 - - -
10 symbols Total(USD):
$173,372.61




Model Portfolio Transactions
Date [Descending] Type Symbol Shares Price Comm Amount Notes
Jun 14, 2005 Sell GKIS 500 22.56 10.00 11,270.00 + 43.88%
Jun 13, 2005 Buy JRCC 200 34.50 10.00 6,910.00
-
Jun 13, 2005 Sell GKIS 1,000 22.84 10.00 22,830.00 + 45.60%
Jun 8, 2005 Buy JRCC 700 34.38 10.00 24,076.00
-
Jun 8, 2005 Sell ADGO.OB 9,000 1.16 10.00 10,430.00 + 48.51%
Feb 28, 2005 Buy GKIS 1,500 15.68 10.00 23,530.00
-
Feb 28, 2005 Sell NTES 150 41.88 10.00 6,272.00 +14.22%
Feb 25, 2005 Buy CEI 500 16.39 10.00 8,205.00
-
Feb 25, 2005 Sell NRG 335 38.42 10.00 12,860.70 +66.57%
Jan 31, 2005 Buy CEI 1,000 16.75 10.00 16,760.00
-
Nov 24, 2004 Sell HRB 350 47.35 10.00 16,562.50 - 12.31%
Nov 4, 2004 Sell NTES 100 46.50 10.00 4,640.00 + 27.05%
Oct 19, 2004 Buy EXX-A 1,500 1.60 10.00 2,410.00
-
Oct 6, 2004 Buy EXX-A 5,000 1.65 10.00 8,260.00
-
Oct 6, 2004 Sell NEN 100 80.00 10.00 7,990.00 + 48.15%
Oct 5, 2004 Buy USG 250 18.75 10.00 4,697.50
-
Oct 5, 2004 Sell NTES 100 39.12 10.00 3,902.00 + 6.9%
Sep 30, 2004 Buy USG 700 18.31 10.00 12,827.00
-
Sep 29, 2004 Sell NEN 100 79.65 10.00 7,955.00 + 47.5%
Aug 5, 2004 Buy WLL 250 23.50 10.00 5,885.00
-


Date [Descending] Type Symbol Shares Price Comm Amount Notes
Aug 2, 2004 Sell NEN 100 69.95 10.00 6,985.00 + 29.5%
Jun 17, 2004 Sell HCA 250 40.30 10.00 10,065.00 - 4%
Jun 17, 2004 Buy NRG 670 23.05 10.00 15,453.50
-
May 24, 2004 Sell ADGO.OB 13,000 1.55 10.00 20,140.00 + 98.7%
May 10, 2004 Sell HCA 250 39.97 10.00 9,982.50 - 4.8%
May 10, 2004 Buy SOHU 200 15.59 10.00 3,128.00
-
Mar 5, 2004 Buy WLL 350 22.10 10.00 7,745.00
-
Jan 26, 2004 Sell WRP 700 17.40 10.00 12,170.00 - 5%
Dec 31, 2003 Buy CHK 1,100 13.90 10.00 15,300.00
-
Dec 31, 2003 Buy NEN 300 54.00 10.00 16,210.00
-
Dec 31, 2003 Buy HRB 350 54.00 10.00 18,910.00
-
Dec 31, 2003 Buy NTES 350 36.60 10.00 12,820.00
-
Dec 31, 2003 Buy SOHU 500 28.60 10.00 14,310.00
-
Dec 31, 2003 Buy LIBHA.PK 1,200 5.10 10.00 6,130.00
-
Dec 31, 2003 Buy ADGO.OB 22,000 0.78 10.00 17,170.00
-
Dec 31, 2003 Buy HCA 500 42.00 10.00 21,010.00
-
Dec 31, 2003 Buy WRP 700 18.30 10.00 12,820.00
-
Dec 31, 2003 Cash In -
-
-
-
 89,000.00 Inception