I bought some DSWWF for 4 1/4 yesterday.
I think the high volume on Nam Tai is that some brokers (like Schwab) finally credited their customers with the Nam Tai units in their base allocation this week. Schwab still has not credited their customers with their share of the overallocation. Some of the new shares are findig their way out onto the market. BTW, I think NTAIF has bottomed; with the stock at 14 and warrants at 3, the units are finally trading at the 17 unit issue price. At prices less than this, the arbitrage profit is gone.
I think Deswell is close to bottoming here as well. I don't see this stock breaking 16, and the upside is mid-20s in the next 60 days, as soon as tax selling and the Asian crisis dies down a bit.
I read an article on the Asian crisis in Barrons today. I guess I'm alone in seeing the Asian problem as first a real estate bubble, second a overbuild in commodity industries like steel, autos, DRAMs, and HDDs, and then third because of these problems, a banking problem. I really think the Asian problem is falling on the backs of the big real estate tycoons, the banks, and some of the big cabols and keiretsus (big Korean and Japanese holding companies and families of companies), and these guys had the money ot lose. The continued buildout of new infrastructure, productive capacity in domestic industries (like appliances and motorcycles), the continuing investment inflow into China, and the continuing need by Western firms to move into such large expansion markets, augurs good for the future. I think the average Chinese will continue to see their standard of living increase, and will be consuming more next year. Also India, Eastern Europe, Russia, and Latin American markets are expanding. In terms of Gross $ expenditures, these markets may not seem big yet, but in terms of population, they are huge. China, India, Brazil, Russia, and Mexico I believe are in the top 10 populous countries in the world and probably comprise at least 60% of the world population. I expect good GNP growth in all of these countries next year.
I really think the Asian crisis is serious in Korea, but on a world-wide basis, this too will pass, and by mid-year at the latest I expect we will be past most of it. In the meantime, companies like Deswell and Nam Tai who have lots of dollars and are doing business in the lowest cost country around, will emerge stronger.
My strategy to deal with a downturn in the market last summer, was to seek out stocks of companies that should rise or fall more in line with individual company performance, not the overall market trend. I can't say my strategy was all that successful. In hindsight, I should have taken short positions in a few stocks that I felt were overpriced (mostly semi-equipment stocks and semiconductors). This would have protected me better, and allowed me to now close those positions and take positions in stocks I liked at a much better price. Oh well, now I see why hedge fund managers always have some short positions.
Deswell looks at cheap now, based on fundamental, as when I first bought it at 10.
Paul |
