Tuesday, May 13, 2014

New Buy: Leju

Leju was a recent IPO that had a tough time shortly after beginning trading.  I believe there was a "wash out" this past week and bought today at  $10.65 as it has regained strength.  The catalyst today was an analyst outperform rating.  I believe a break above 11 will trigger the next run up and we are within striking distance. I want to be in before the break as I find it best for risk management.  Stop is at $9.45 which is the lowest close for this stock.



Exclusive deal with Zillow.
Exclusive right to sell to Bidu
Exclusive advertising agent for SINA
15% ownership  (180 million stake) by Chinese internet giant Tenecent.
over 60 million users.
335 Million in revenues (2013) 96% growth from 2012.
Tiny 14 Million float.
Profitable -- 10 Million (2013) up from a loss of 63 Million in 2012.
Leju just picked up its first analyst, who initiated coverage at "outperform" and a price target of 15.

It's a Chinese company
Possible Chinese housing slow down.
180 Million shares outstanding (huge in comparison to float)
presently has low volume
Insider lock-up period expires in October 2014. (could be a positive depending on time frame).

Sfun -- A Competitors provided Disappointing guidance.

While SFUN beat earnings it provided lower guidance.  This is probably the biggest negative. As it may suggest that the entire sector is slowing down.  On one hand, this is a negative for obvious reasons.  On the other hand, it may be a positive as it reduced expectations for Leju, which reports on May 20.

Given the trading volume as of late and volatility this trade makes sense only with a wide stop and small shares.  1 R at most.

No comments:

Post a Comment