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A Cautious Opportunity From China

Why Real Money's Tim Collins thinks Weibo may finally be playable to the upside.
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Real Money's Tim Collins is looking at a potential opportunity in Weibo WB. 

To be sure,  he’s looking very carefully. 

Weibo is a Chinese social media and light-blogging platform. It has a user base larger than the entire population of the United States, which certainly is more than enough to keep it on investors’ radars. However U.S. investors also remember the way that government intervention shook up the Chinese marketplace.

“The Chinese government has definitely put a damper on securities from the Far East trading on domestic exchanges., " Collins wrote recently on Real Money.  "The names that exist and trade with heavy volume are difficult to see vanishing from trading, but newer listings may be harder to come by. It also seems that the government may force the hand of some players involved.

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 In particular, "Alibaba BABA is exploring a sale of the shares it holds in Weibo as encouraged by the Chinese government," Collins wrote. "There may be an opportunity here as the possible buyout of WB puts a floor under the stock. While shares have been trading sharply lower over the year, they have found a bottom over the past month. The $28 level looks like a hard stop here for longs."

The result is a sort of cautious exploration. Collins doesn’t want to ignore a stock with real potential, but it wasn’t that long ago that Real Money was keeping as far away from Beijing as possible. Add in a market that remains in flux as we get to mid-January and Collins has interest, but isn’t yet ready to commit.

“Weibo is a trade I would often make but not today," he wrote.