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China Economic Data; Scoop on Monitise: Best of Kass

NEW YORK (TheStreet) -- Doug Kass of Seabreeze Partners is known for his accurate stock market calls and keen insights into the economy, which he shares with RealMoney Pro readers in his daily trading diary.

Among the posts this past week were items about Apple and risks ahead.

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China Economic Data

Posted at 7:18 a.m. EST on Wednesday, April 16, 2014

Last night, China's 1Q 2014 real GDP came in at +7.4%, down from the fourth quarter's rate of growth of +7.7%, but slightly ahead of consensus of +7.3%.

Industrial production was +8.8% for March vs. consensus of+ 9%, retail sales were +12.2% compared with the consensus of +12.1% and fixed-asset investment was +17.6% vs consensus of +18%.

Everything was broadly in line and China's local market's were not impacted by the release. (I put an iShares China Large Cap  (FXI) short on yesterday.)

The economic numbers are, to a large extent, fudged, as we know. And, as always, there are no subcomponents given for GDP and no deflator. The relevance here is simply to have this out of the way, as data out of China of late has been to the weak side, especially recent import data. 

The general view is that China is irrelevant to the S&P index and to most capital markets in general (certain commodity markets are a different story). 

GDP growth has slowed to the 7-7.5% level, down from 9.8% in 2010, 8.9% in 2011, 7.9% in 2012 and 7.7% in 2013. And the Chinese economy may slow to the 6.5-7% range by year end. But the market has likely discounted this. The slowdown would have to be much more dramatic to matter and there is no reason to expect this. Most believe markets are safe with anything aobve +6.5%.

At the time of publication, Kass was short FXI.


Buy the Dips, Sell the Rips

Posted at 2:17 p.m. EST on Tuesday, April 15, 2014

The volatile swings and moves in the last five trading days underscore my belief that this is one of the best trading backdrops for opportunistic traders in many years.

But quick trades are not for everyone.

Many have risk profiles that are more conservative, and many just don't want to play the quick trading game.

As such, I have selected my long ideas (a few more coming up!) as stocks for all seasons and attractive over the intermediate time frame based on their individual risk/reward ratios.

That said I continue to look for a year in which the S&P 500 drops by 5% to 15%.

 

The Scoop on Monitise

Posted at 7:13 a.m. EST on Monday, April 14, 2014

Monitise's MONI.L/ (MONIF) shares continues to weaken in London trading this morning.

I have spoken to a large and knowledgeable holder who had a constructive conversation with Monitise's CEO on Saturday.

I have learned that a meaningful shareholder of Monitise (owned through a private equity fund), who had previously sold his business to Monitise (for stock), might have been the seller over the past week.

It is important to recognize that the company now has approximately $250 million in cash assets and zero debt.

The cash hoard is $125 million more than Monitise needs to execute its new strategy of moving from about 30 million subscribers to 200 million subscribers in the next three to four years.

Whether or not Monitise can successfully execute the strategy will determine the success of Monitise as an investment. The successful implementation of that strategy will be a huge business and stock market winner.

My belief is that the company will succeed, and our job as an analyst is to monitor its progress in the time ahead.

Hopefully, the recent weakness is a gift to new investors -- at least that is the way I am playing the drop in Monitise's shares.

Bottom line: When I review the company's earnings prospects, business strategy and addressable market opportunities, I continue to view Monitise as a potential 3x-5x play over the next two to four years (with limited downside exposure).

At the time of publication, Kass was long MONI.L and MONIF.

 

Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.

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