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No. of Recommendations: 12
deja vu is my feeling after reading the latest conf call. As you may remember, I pounded the table on BIDU around two years ago, as the stock had a meaningful correction as the market was concerned about elevated investment.

Well, here we are again. The core search biz is doing great (38% rev growth last Q, which may slow down a bit to low 30's in coming Q's). Number of advertiser up 21% YoY and 13% sequentially. Mobile is half of revenue. Monetization is increasing at both desktop and mobile and the gap is closing (now over 60% of desktop cost per click). Mgmt also disclosed search is generating 50%+ op margin, which I had always expected. btw, i wish GOOGL would give similar level of disclosure. Not even sure what they are afraid of.

Now comes the downer. They are investing heavily in O2O (online travel, takeout delivery and Groupon like service), and mgmt is so encouraged by early traction that they will double down on investment, which is hurting op margin by 30% (along with 500bps hit from the online video service).

I don't know where consensus EPS will settle at, but I think looking at headline P/E completely misses the point. Core search is doing $10+ EPS ($9B search rev * 50% op margin * 80% after-tax) in '15 and should do easily $12+ in '16. A 20-25x multiple does not feel stretched for this kind of business, which gives you $240-300.

Then you get cash and a bunch of loss-making assets at various stages. QUNR, the #2 OTA, is publicly listed and could be worth a lot more if it ever decides to play nice with CTRP or even merge. iQiYi, one of the leading online video sites, has plenty of comps to get a positive valuation. Then the other stuff have VC stage comps with semi-crazy valuation. Let's just say they are 0 to be conservative. the flip side is i am overlooking the interim losses.

I am about as negative as you will find on China macro, but the positives here are just so hard to ignore. The stock has doubled the last two years, but revenue more than doubled. Stock will be volatile as it always has been, but it should be a compounder for years to come. Founder/CEO has a meaningful stake and his track record speaks for itself.
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No. of Recommendations: 3
I don't disagree but what happens do you think if China growth implodes along with the stock market?

A sinking tide drowns all boats or something...
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A sinking tide drowns all boats or something...

current quote $159.5 down $8.5 (5%) today.
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I am about as negative as you will find on China macro, but the positives here are just so hard to ignore.

Today, Chanos had this to say about China,

"It's worse than you think. Whatever you might think, it's worse," he said.


He can be dramatic and everyone has their own interests in mind.

I'm hoping to see Oaktree, LonePine, Third Point and Appaloosa get into this one again this quarter but there is a loooong three month wait for that clarity. I hope it stays down for a while. Everyone on Dataroma was out or getting out of this by June 30. It was $200 June 30. $155 now, so it is a different stream today...

If some of my stocks were jumping up today I might rotate but when everything goes up or everything goes down I tend to freeze.

I wonder what others here are doing...
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If some of my stocks were jumping up today I might rotate but when everything goes up or everything goes down I tend to freeze. I wonder what others here are doing...

If it matters, I don't think it as much as freezing as just doing the same things each day and a 2% drop in the SP500 doesn't translate necessarily into doing something with anything. I mean, if you wanted to buy TUES then today is a good day indeed but I count only 17 of the 120 or so stocks I follow actually down more than 3% right now. And some of those are barely off the 52 week high.

I mean, TSCO case in point - at 90 it is 31x, at 85 it is 29x. And down a bit more than normal perhaps in Deere's farm warning, but 29x or 30x it is the same story.

I sold three today cause I'd been thinking of selling or was already selling before today, so...but there is nothing on my screen I want to buy.

Like MCO - big deal - down slightly under $105. 52 week low was 85.
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but I count only 17 of the 120 or so stocks I follow actually down more than 3% right now. And some of those are barely off the 52 week high.

Hell, I own 7 stocks down more than that today and PCLN is down 2.99%. Of course, I have big gains in all of them but PYPL down and ULTA now up small, but man it still hurts.

At least my TLT and VIA are up today. I guess I'm happy Pandora only down 1%.
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I mean, TSCO case in point - at 90 it is 31x, at 85 it is 29x. And down a bit more than normal perhaps in Deere's farm warning, but 29x or 30x it is the same story.


But if last week you put 2% in both at 31x and over the last two days one went from 31x to 29x (down 6.5%) and the other went from 31x to 33x (up 6.5%) you might rotate out of the 33x to the 29x (13% relative difference). Or at least, I might, with most of my names.

When one drops 7.5% in two days and the other drops 5.5% in two days there isn't much sense in making a change from one to the other.

And, I agree, 3-7% drops probably isn't enough to make large changes in cash positions. I just like to rotate what I have invested as things move away from each other.
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So, everyone's in options-land is trying to pin the stocks/S+P at the lowest possible prices today it seems.

Can't really argue with that the way the market actions been going...

Down 495 on the Dow wooo-hoooo1
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and they're trying to pin ILMN right at 200, or conversely bulls are buying here as the stock has barely budged on the day.

200.00 now.

Sure, big figures are irrelevant...lol.
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but I count only 17 of the 120 or so stocks I follow actually down more than 3% right now. And some of those are barely off the 52 week high.

Hell, I own 7 stocks down more than that today and PCLN is down 2.99%.



Oops, make that 7 down 4.5% on the day.....wheeeeeee!
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No. of Recommendations: 2
GOOGL 650
AGN 300
PCLN 1200
AIG 60
VIA 40

Lots of premium being collected today!
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No. of Recommendations: 2
BIDU hit $100 today according to Yahoo!. $143 now. Might be a glitch.

Maybe having a few absurd buy orders in at all times does pay off once in few years. Someone just pointed that out and I didn't bother.
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I see E*Trade also showing $100 as low but the trade details show only $111 as low. I am wondering how much of today's price action are due to program trading.

I just kick myself that I was not bold in putting more buys at steep discount. I had few REIT's at 15% below market close on Friday and 1 got filled.
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I think a lot of those down 30% drops didn't really happen/won't be transacted at those prices.

CVS was down 20% when I checked Fidelity this morning. I foolishly didn't try to buy. Grrr.
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did you pick any during last week?
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Deutsche bank analyst slashes estimates after Baidu world conference

http://blogs.barrons.com/asiastocks/2015/09/08/baidu-cant-ha...
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No. of Recommendations: 1
Baidu CEO Li talks about listing in China and speculates desisting from US. Hmmm...

Li has the patience to make investments now and wait for the payoff. He’s not sure his investors do. He has said publicly he would like to list Baidu shares in China, in addition to those traded on Nasdaq. Now, he says it’s possible he would delist from the U.S. entirely in favor of his home market.

“If one day I find that the U.S. market has no hope of recognizing our value, and the domestic market truly understands our business, I may do that,” he said. “First of all, we need to be patient and give our U.S. investors some time. I hope they will be able to appreciate us more.”


Moe details on Bloomberg article...


http://www.bloomberg.com/news/articles/2015-09-13/baidu-s-li...
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I sold at 206 and will probably buy some back down here.

Wonder whose buy order got hit at $100...must have been nice.
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No. of Recommendations: 1
GOOGL 650
AGN 300
PCLN 1200
AIG 60
VIA 40


Lots of premium being collected today!



VIAB was such a layup trade at $40 and I didn't add. Which was a terrible mistake because I have a small position in it. Gah.
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Today, Chanos had this to say about China,

"It's worse than you think. Whatever you might think, it's worse," he said.


GM had a nice report today on several fronts:

In China, GM reported pretax income of $463 million, down 4 percent from a year ago, but profit margins rose from 9.6 percent to 9.8 percent because the company sold more expensive Cadillacs and SUVs. "China has not fallen off the cliff as everyone had expected," Stevens said.
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No. of Recommendations: 1
QUNR, the #2 OTA, is publicly listed and could be worth a lot more if it ever decides to play nice with CTRP or even merge.


Baidu receives 0.725 shares of Ctrip ADS in exchange for every 1 share of Qunar ADS it owns and post this transaction, Ctrip will own approximately 190.2 million shares of Qunar while Baidu ends up with a 25% stake (voting) in Ctrip.

My understanding is this stake is worth about $700M. Is that correct?

http://www.forbes.com/sites/jaysomaney/2015/10/26/baidu-sell...
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1) PCLN is growing like gangbusters in China.

Great, I own it! My 2nd biggest position.

2) PCLN owns a nice chunk of CTrip.com.

Great, even better exposure to the white-hot online booking market in China!

3) Maybe I should look at buying Ctrip?

[crickets chirping]


Nah, only went up 102% YTD, why bother....
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VIAB was such a layup trade at $40 and I didn't add. Which was a terrible mistake because I have a small position in it. Gah.


Under $40 again if you still want it.
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Yeah, I wonder if it's mostly tax-loss selling or just people freaking out over Redstone or what.
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