No Random Walking!

According to Sohu.com, UTStarcom holds 13.8466 mil shares of Gemdale (????, 600383.ss), or 2.08% of the home builder as of 06/30/07. At today's price of RMB56 per share and using an exchange rate of RMB7.55/USD, the investment is worth about USD$100 mil alone! Strangely this investment is not listed in UTSI's SEC filing.

In addition to the investment in Gemdale,  UTStar also has holdings in other companies that is worth anywhere from 30 to 100 million dollars. On top of that, it currently has net cash of  over $100m. The sum of these is close to today's market cap ($335M).

Either the information at Sohu is wrong, or UTSI is worth a whole lot more! If that's the case, I expect an explosive rise any time in next few weeks/months. Downside risks are: (1) stock being delisted from Nsadaq; (2) Lack of financials triggering bond default. and (3) possible criminal verdict against the company which could be fined heavily!

Link to ????(600383) : ???? - ????

Having sold Sigma Design (SIGM) too early, I am glad that I've got this one right: OmniVision (OVTI), which reported quarterly earning  today that blew away analysts' estimates ($0.08 vs. 0.23 actual) and gave a very strong view for next quarter, quoting margin increase and strong market reception to its latest optical sensors for mobile phones and laptop PCs. The short position of OVTI is over 30%. Should be a fun day tommorrow.

What does OVTI and SIGM in common? Both of them showed incredible strength during the market bloodshed during last month. The strength drew my attention and led to my purchase of their shares. Both reported very strong earning during last two days. Both are small-cap tech company that has the potential to have its share price doubled in a year!

Link to OmniVision Offers Strong 2Q View: Financial News - Yahoo! Finance

One day after I sold Sigma Design (SIGM), it went up $7! 

When will I learn to keep the winners and sell the losers?

The free Java applet can generate a graphical view ("graph") of the hirachieal tag structure of a HTML web page. For example, the graph for this blog site (a WordPress blog) can be found at:

http://www.aharef.info/static/htmlgraph/?url=http%...

Link to Websites as graphs - an HTML DOM Visualizer Applet

????: ??????????????? ??7.04%

????: ???????????????

They are competitors, but are competing in the wrong way. Sina won the credibility contest this time as it was indeed the leader for the day, up over 12% yesterday.

On the other hand, Sohu is catching up Sina in Alexa's web traffic ranking. As a matter of fact, its page view (PV) per user surpassed Sina's several days ago, probably for the first time ever. 

... for UTStarcom (UTSI): bad news - a law firm "investigating" the company - caused the price to drop below $3, but the price started to recover right before 11 AM! A classical example of stock movement caused by different behavours of retail and professional investors. It's still too early in the session, but surely it looks exactly like what we saw a couple of days ago (see previous blog: When A Stock Refuses to Go Lower …)! The interpretation? With a very high probability, some investors are ignoring the bad news and accumulating (or short-covering) the company's stock!

Keywords, also known as "data" in my previous profession, in the whole story (a.k.a. "model") are: investigation, 11 AM, repeat patterns, relative strength and valuation .... Those are what I look for in what I call "data analysis" and "model building"! Can I be wrong? Sure (e.g., the market can defy logic and the institutions can be wrong also). But at least my model is data-driven. For now, my model is assumed valid until invalidated with new data. 

McDermott International (MDR): I bought it in 5s in 2003. Sold around 32. Now: $75.

MDR is one of the "Google beaters" featured in the current issue of BusinessWeek Online.  MDR has returned 3100% in five years! Incidentally I "discovered" MDR with an online screening program that is now part of BusinessWeek Online.

When a stock refuses to drop on bad news in a bad market session, that is a very strong signal to buy. That's exactly what happened to UTStarcom (UTSI) today.

Yesterday after the market closed, UTSI released news which said Nasdaq had again warned the company of the possibility of delisting its stock for having not filed financials on time. Bad news indeed. However for most of the trading session today, UTSI went down only about 10 cents while the market was in a crashing mode. Finally in the late afternoon when the market started to settle down, UTSI went up as high as 50%+ in a matter of minutes! It closed the day up over 20%.

The market is irrational or unpredictable most of the time. But in certain situations, its actions actually make sense.  In UTSI's case today and in many other cases I've seen, the price actions provides enough data points with which high-probability events can actually be predicted.  

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The market is terrible lately and I've been losing a lot of money (not today though), but I am not worried yet. In fact the market is feeding me new data everyday that can be very valuable:

• They can be used to validate or invalidate existing models.
• They provide new candidates for me to build models on.

Based on these data, I am adding shares to some stocks that I've owned and in the meantime building positions in some new promising candidates.

Market goes up. Market goes down. But It's never dull!

A war is raging among Chinese Web sites over who will reap  millions of dollars in online advertising revenue inside China during the 2008 Olympics. Behind the battle is a debate over the role for a new kind of corporate player in the Games: the sponsor of Internet content services.

Link to An Olympian Web War in China - WSJ.com

Everything is set up nicely for the headline story for the rest of August:

 Gold Shines!