The 2010 China investor conferences are largely over, so NEWN has not had a chance to publicly communicate the details of this acquisition in the way that it was able to with its previous acquisitions of Anytone and New Power in 2009.
The key question to address is whether the future prospects of Kim Fai Solar justify its price and how easily it can be integrated into NEWN as a company. Again, I hope to be able to have a more clear idea of this in January, after the holidays. If the outlook is very positive, there may be a substantial lag until NEWN can get the story out at various China conferences, so I am hopeful that this in one where it makes sense to do the work early.
As of Thursday, December 23, all three of these stocks were well off of their recent lows of 2010. SBAY is off of its low by 53% in just a week, CCME is up by nearly 100% since September and NEWN is up by 58% since September. So clearly, some investors have enjoyed substantial gains, despite the strong headwinds in the China small-cap space.
If I thought that any of these stocks was now overbought at these levels, I wouldn't bother doing much further work. But each of them look like they have a greater potential to trade sideways or potentially up, as opposed to dropping back down, so I intend to get much better clarity on them in the next two to three weeks and will be watching their price action closely.The risk in waiting two to three weeks with stocks that have seen such strong moves is that I may miss a further upward move in the stock. The benefit is that I would rather pay a slightly higher price for the stocks when I have a higher degree of certainty, rather than a slightly lower price for a stock where there still exists too much uncertainty and risk. Weak investor sentiment, an SEC investigation and overwhelmingly negative media coverage all create very strong headwinds for anyone who is investing in the US-listed China space. As a result, I am taking a greater amount of time and doing much more due diligence on individual names before making the decision to invest. My goal is to obtain a comfort level with these investments that is high enough so even if the stock trades down for a period, I will still not be concerned and may add to my position on weakness rather than being spooked out of it.
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