Saturday, August 16, 2008

James Altucher's Chinese Stock Picks

On his Stockpickr website, James Altucher writes about "Five Chinese Stocks Poised to Double". Altucher is a serial entrepreneur who writes an entertaining column in the Financial Times in addition to his work on StockPickr, and, like his friend Jim Cramer, has no shortage of stock ideas. I tend to put weight in someone's stock recommendations in an inverse proportion to the number of recommendations that person makes. That said, with the Chinese stock market down so much, there may be some bargains there, so Altucher's picks may be worth a look. Perhaps reader and China hand J.K. will offer his opinion on these. J.K. has had some successful investments in Chinese stocks and is also knowledgeable about some their unique risks. Here are the five companies Altucher recommends (Altucher's column includes descriptions of each of their businesses):

Giant Interactive (GA)

China Precision Steel (CPSL)

Cogo Group (COGO)

China BAK Battery (CBAK)

Shengdatech (SDTH)


Dennis Mangan said...

Hong Kong seems to me a good way to play China, and a few RE companies there are bargains right now. Henderson Land at just below NAV, and Cheung Kong and Sun Hung Kai Properties both appeared on a recent "Graham screen" at AAII. I would also bet on any of them being a lot safer than the stocks on Altucher's list.

DaveinHackensack said...

You may be right that those stocks are safer; often when someone claims a stock is "poised to double", as Altucher has, those stocks are higher risk. Henderson Land is a holding of Daniel Wahl's, if memory serves (or if he hasn't sold it recently).

J K said...

Giant Interactive is my favorite in the list. Great valuation of a growth debt...But what I really like is that this is a Chinese company with a share repurchase plan already.

Chinese company's get a (deservedly) bad rap for being dilution machines, with insider purchases and share buybacks almost unheard of, and equity financing very common. I chalk it up mostly to an inexperience with capital markets, but there might be a more devious side to some companies, especially the ones that list directly on US exchanges through offshore holding companies.

Giant Interactive seems to be ahead of the curve...I'll do some more reading to see if I want to open a position sometime. It looks great to me though. Note that it is the only ADR of the pack too.

The other ones on the list I think are decent are CBAK and SDTH.

DaveinHackensack said...

Thanks for that info, J.K.