a ok , so i supose i leave the chinese microcaps alone? It seems that if there are certain red flags, and you manage to avoid those, that you can make some huge gains (and maybe get caught with a fraud every once in a while). If everyone is too scared to invest.

Im still too newb, so im afraid i miss some tiny detail in the 10k that might be a huge red flag tho.

I supose you could make a list, and then travel to china?

I supose the red flag here is that its trading under cash, and they arent buying back.

http://www.foodwinenet.com/skypeople...ice-beverages/

The red flag is "Chinese microcap." You can make loads of money if you found one. I highly suggest that you do if you can. Otherwise, move on.

alright last one then, this one is a 1.8b market cap company. It capitalizes on the fact that chinese people love to gamble, and that asians in general seem to love those mmo games. they have insane profit margins, and buy back shares. and it seems cheap. also over 10% dividend lol. Its not super cheap tho, but it seems at least a stock to watch ?
http://www.develop-online.net/blog/4...nt-Interactive

http://www.marketwatch.com/investing/stock/cyou
this one does the same thing, except its cheaper, pays out 12% dividend, and has more solid growth. But 1 red flag, and that is they borrowed alot of money in 2012. Which seems weird with the abundance of cash, and the relative low expenses they have. Its hard to be a scam, as apparantly these games are very popular in china (which is very easy to believe and check online). And they have pretty good business models. Plus they have large market caps and give tons of cash back to the shareholders.

Hey all:

There have been several academic studies over the years that shows "value" strategies solidly outperform the market as a whole.

I personally know several investors who have above average returns for long periods of time. ALL OF THEM have achieved this using a largely "value" strategy.

I would suggest that there is a LOT of potential purchasing stocks in small-micro-nano cap companies. These companies frequently have 1 or NO analysts following them. It is an extremely inefficient area of the market.

As an example, I have seen nano cap stocks selling for P/E's of 1 or 2, a fraction of cash flow, AND a huge discount to book value.

Another "value" area that is rewarding is buying stocks in out of favor industries. For example, many small community bank stocks were left for dead after the financial crisis. They had problems and took losses. A couple of years later (2010, 2011) they had largely worked their problems out. There were many stocks trading for 40% of TANGIBLE book value, and were earning money.

I bought a small Ohio based bank for 40% of tangible book value in the Fall of 2011. Price? about $2.60 a share. Fast forward to today...The stock is STILL tremendously undervalued, trading at only $8.25/share. Why do i say that? The bank is earning $1.06/share. They initiated a dividend and raised it once already. I strongly suspect they will raise it again in the upcoming year.

This bank's book value is now approaching $11/share. They are earning 10% ROE. What should it trade for? I am unsure, but $11 or $12/share would still be a very reasonable valuation...

There were DOZENS of banks like this out there.

If you can do the research, crunch the numbers, and be patient, there are incredible bargains out there.

Muddy Waters report on borderline fraud in AMT:

For some reason it's blocked. It's a couple results down.

I bit on the muddy waters short. Very short AMT now. It's a badly overvalued growth stock if everything the represent is correct. This is the kind of catalyst that makes things implode.

what does this mean u bought a bunch of puts/ if you're actually naked short the company -- how large aposition are you actually willin gto make this position? the BIggest short I've ever had was a 2% position.

Congrats on LACO.

I thought I had until November to buy in, but I see that is no longer the case (´･ω･`)

Just sold about 20% of my LACO position always nice to have some liquidity in these small cap stocks.. to actually be able to sell when it goes up. They had some nice news today. basically they got paid back in full for a note (they will lose the management business with the Shingles Tribe and finally be out of the business of managing indian casinos.) -- but a note that was carried on the books at $37 million (and which there was some question about getting paid back) will now be (most likely) paid in full by the end of the year at $57 million (and it's not a taxable event).

I have about ~2% in puts right now. As of right now I'm stuck a lot, but my puts don't expire till January so I'm pretty much fine with where I am. I've also done what I can to verify what Muddy Waters put forward... and it seems to check out. Particularly damning was the fact that the company did not immediately deny the meat of the report (the part where they paid more than market value on acquisitions in exchange for higher lease rates so that they could claim higher earnings)

You're looking for opportunities in all the wrong places. So far since I started reading your posts (admittedly not long ago) you've talked about a GPS manufacturer and Chinese microcaps. These are spots where random investment fish would expect to find 'ten baggers'. Because of their interest they are rarely all that much of a bargain from a risk adjusted point of view.


If you want to find undervalued companies you want to find boring companies. Example: FRS is a small midwestern restaurant chain. It is mind bogglingly boring. It also is sitting on a massive amount of seriously valuable real estate that it is not using very well. It's underlying business is also selling very cheaply. All in all it's the kind of smallish company that value investors should be digging for. It also has virtually 0 downside risk.

You should be looking at companies that manufacture boring but important products (chemicals, fertilizers, raw plastics, textiles if in asia, etc). You should be looking at the manufacturers of commodities that are currently cheap (oil companies as of a few weeks ago). You should be looking for old companies (like FRS) that have real estate that is massively massively underpriced on their balance sheets.

Ideally you want to be buying something that you can be reasonably sure is a) real b) profitable and c) cheap. Usually that means boring.

lol. the volume is pretty boring too.

The CEO responded briefly yesterday, and also declared that a detailed rebuttal will be presented in the next 8K.

Maybe a option straddle will be good to do before that is presented.

yeah i just went over a ton of stocks with a low pe ratio, went over all theboring stocks etc. Just cannot find alot of opportunities. It seems there is little upside in alot of non small and microcap stocks. Almost every stock just seems expensive now :/ . I got a bunch of my watch list in case they get cheaper tho.

Usually post on first impulse here, and yeah those chinese RTO microcaps were pretty bad, but that one you quoted is not a microcap. It is 50% owned by Sohu (not a spinoff), a chinese company that sponsored bejing 08 olympics. The games it produces seem real, they have massive margins, they pay out big dividends and seem really cheap. Im pretty sure i still wont buy it, but it looked good. probably a bit too good.

one huge red flag, and that is they had over 300 mill in cash, and borrowed 250 mill to give dividends. last year. That seems really strange.

why would this lead to a breakout to the upside? all he can say is "no we did not fraudulently report on $200 million+ dollars. Don't know why this would be a catalyst to drive the stock way up.

Yeah, I don't think it will now that I think about it. Pretty much the only possible outcome is downside.

Posted this in the monthly thread but it should have gone here:

I have been a long term ETF holder (VTI, VCE, VEU, VNQ, BND) but have decided to start new positions in solid dividend companies with plans to hold long term.

I know some of you guys here are seeing MSFT falling lower but I had been looking to pick it up and hold at a cheaper entry point so bought today.

Also bought
CVX (Chevron)
RDS.B (Royal Dutch Shell)

Over last few weeks bought:
BCE.TO (Bell)
BNS.TO (Bank Nova Scotia)
IPL.UN (Inter Pipeline Fund)
NWH.UN (NW Healthcare REIT)
TA.TO (Transalta)

Watching for entry points:
KO (Coke)
WMT (WalMart)
MCD (McDonalds)
S***** (Suncor)
REI.UN (Rio Can REIT)

Any comments welcomed.

What's your reasoning behind IPL.UN ? It's just a pipeline? It seems to return just about everything it makes in a dividend which is now 5%. It appears this would be pretty susceptible to interest rate risk. So it's like a bond with a little better yield. Is that the kind of risk/return profile you're looking for?

That was my only issue with everything he is looking at. Very concentrated play on dividends. Saving grace is that he already holds ETFs that have him massively diversified.

You are absolutely correct that this stock does not conform to my overall plan. This stock is in my TFSA account with the idea to hold a bank, a pipeline, a telco, a utility & REIT for diversification purposes.

Added INTC to my watch list. May add a position as early as tomorrow.

I like BCE, TA and NWH for yield. You wont make a fortune off these guys but the dividend should be safe. id go with ppl over ipl for a canadian pipeline.

didnt read the entire MW report but their reasoning on towers being displaced by wifi is really off.

Anyone buying McDonalds today?

I haven't looked into PPL much and certainly my inexperience selecting stocks will probably come to light here but there dividend payout ratio at 169% seems alarmingly high?

My plan was to buy on a miss. In at 97.6