Bought some shares of BIDU. Think it's quite undervalued. Was tempted by both JD and BABA for a while but struggled to see exactly how they grow. With Baidu, it's slightly simpler. They're basically the Google of China and have been heavily investing in AI for a while. The Baidu thread is very good for getting up to speed - Baidu (BIDU) | Stock Discussion Forums (siliconinvestor.com) - but my initial interest came from the sheer cheapness of the stock. Lots of cash, strong margins and a relatively constant future... of course, in the last decade their history has been unremarkable, but AI can change that. Risks are easy to come up with - their growth is limited because no-one trusts China and an escalation in political tensions can hurt the potential of the company.
Also bought some ELA - really, the luxury resale business is what interests me. Have been tempted by REAL in the past, but the lack of profitability has always turned me away. ELA is much smaller - especially when you consider they have other arms to their business including electronics recycling... valuation is slightly pricier compared to other micro-caps I look at. EV/EBITDA about 10x, PSR under 1x, 17x earnings... most of the price discovery has already happened in the last five years (stock up about 1000%). Still think there's a decent amount of organic growth left to occur and the CEO also owns about 70% of the stock.
Sold out of CUTR a few weeks ago. Mistakes include assuming management w/ previous successes resulted in a more likely future success, buying into a good product (and not a good business!) and failing to realise the scale of the turnaround. Will continue to watch the situation, though. The forecasted cash burn for this year destroyed my thesis. They still can pull through and if they've lowballed their forecasts it could be a decent buy. Just too risky for me at this point. I'm willing to pay a higher price for more certainty! Lessons learned for next time, I suppose.
If you're struggling to find value in this market, a useful screen for me has been searching for micro-caps (less than $200m) with high insider ownership (>10%) and positive EBITDA. Low P/B on top of the above yields a few interesting companies that have operated for many years with virtually no analyst coverage likely trading at less than liquidation value. Would have dabbled in a few but my UK broker doesn't let me buy them with such a small portfolio. The other risk to this is that because there's no-one watching, management can do whatever they want.
From the top of my head, I liked ICCH (P&C insurance), BDL, SCX (but it's merging with another company), SND (sale of proppants) and ARTW (though, shareholder dilution is a killer!). Think they're all (except SCX) worth looking at. Willing to explain the thought process behind these in more detail if anyone wants. |
