Play It Safe With Chinese Dot-Coms
With all the volatility hitting U.S. shares, now may be the perfect time to switch to something safe like Chinese Internet stocks.
"Most tech companies have no oil exposure, are cash rich, and have very little debt so they are not exposed to the U.S. market's credit problems," says Ryan Jacob, portfolio manager for the $100 million (JAMFX)Jacob Internet fund. "The Chinese Internet companies we own are profitable and most trade at reasonable valuations considering the Chinese economy is growing at a double-digit rate, has a growing middle class and is adding a phenomenal amount of Internet users each day."
Jacob's fund, which skyrocketed during the tech bubble only to come crashing back to earth, is up 2.2% this year and has returned an average of 37.5% annually over the past five years as the tech market has rebounded. About 2% of the fund is invested in TheStreet.com (TSCM), the publisher of this Web site.Jacob says almost 20% of the fund is allocated to Chinese Internet companies, his top picks being Internet portals Sohu.com (SOHU) and Sina Corp. (SINA), which combine to make up more than 9% of the fund. "Sohu and Sina are traditional portal models like Yahoo! (YHOO) and their ad-based revenue is picking up because of the 2008 Beijing Olympics," says Jacob. "And while the Olympics may not be a huge deal for American sports fans, it's the Superbowl 10 times over for them."
|Want more? Check out TheStreet.com TV video. Gregg Greenberg gets a read on Chinese Internet stocks from Ryan Jacob.|
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