Am seriously thinking about thinning my CYD position, or at least selling some January $30 calls. IMHO, the recent run has quickly gone beyond what the fundamentals justify, and the pendulum may soon swing the other way. But selling a winner while it's running does not make a lot of sense either. Thoughts anyone?
Thanks for the several replies, though most of you didn't address my question! Thoughts:
(1) Little retreat in the past few days is quite reasonable IMHO; stocks that rise quickly often retreat a bit to consolidate. No worries.
(2) In response to the question concerning why I'm concerned re CYD fundamentals, I'll note only that more than half of the Chinese growth company stocks I follow are currently available for a lower trailing P/E and a lower projected PEG -- though that's dependent on the growth rate you assume, and I'm just using Yahoo (analyst consensus) figures here.
As usual, I had a passing thought that the PPS would correct, but didn't act, and then I turned out to be right but not to make a nickel on it.
I have been selling into this rally for over a month now. CYD has made me some money and I felt it was time to take some profits. I built this position in the first half of the year, my average cost is 15.56, I sold half at 23.50 (+50%), some more at 28.50 (+80%), and 100 shares today in the premarket at 33( more than a double). I have to say I have no idea why some one bought them from me this morning, but I love Interactive Brokers, they let you have limit GTC orders on the books that can be filled outside of normal trading hours. Leaving me with only 100 shares left. These all hold for awhile, just in case this takes off for the moon, mostly for potential bragging purposes.
CYD have been good to me, but the Chinese ADR sector has not been an easy trade all in all. Made good money with CYD, VIT (made over 70%) and HOGS (almost a double), yet lost gobs in FUQI and TXIC. Still have a pretty big position in HRBN and WX which on first glance should be simple arbitrage plays, but nothing is ever simple with China. A somewhat sizable position in FMCN and lesser stakes in CELM, YUII, CMFO. and SORL. While I am still bullish on China via etfs (FXI, EWH and EWS) I am not sure I will ever again be as exposed to China by buying the individual ADRs, the volatility is just to great. Each and every ADR position I have I have sell limit orders in, no stop losses. If filled the orders would generate handsome returns, just don't want to be holding anymore FUQIs or TXICs in the future. GLTA
I don't completely trust the financials of many chinese stocks. Several have had to restate. FUQI, RINO, DGW. When this happens their value drastically declines. I'm not saying there is anything wrong with CYD's reported numbers. I would say there is a lack of transparency. You cannot get as much info as you can on say Ford or Visa.
These numbers often sound to good to be true. As for CYD specifically, I am surprised their revenue is not growing as much as I would expect. Their EPS is growing.
"gone beyond what the fundamentals justify"
why you think this way? how do you calculate the "fundamentals" of cyd? can you detail your thoughts a little?
i personally think cyd's share price is moving toward its fundeamentals, although there is still a long way to go. being the 1st chinese company listed in the NYSE, yuchai has grown more that 5000% since its ipo. and do not forget cyd's ipo price is around $10 in 1994.
It has been a rapid, steady ride from the little earnings hiccup.
A while ago somebody compared the metrics from CYD to Watchei (sp?).
If the "1/3 of the PE" statement is even remotely applicable apples-to-apples,
then we have a long way to go to really even get started.