Wednesday, September 23, 2009
Remember these pictures taken in December and in March? That were plastered around the world to show we were heading for Armageddon?
How did that short on Ford work out?
Now remember last week, when we saw those pictures of idle ships?
And how Maria Bartiroma was breathlessly intoning about the fall in prices in the Baltic Dry Index yesterday? How she was concerned that world trade was slowing?
China is now projected to have growth of 8.9%. Now that wasn't supposed to happen! Did anyone think that maybe trade is doing fine, thank you, but prices are down because we have some idle ships? So short the shippers at your own peril. Just like these brainiacs got courage to short Ford at the lows because they saw the cars stacked up at the ports. But no-one wants to make that analogy now. Especially since the stocks of the shippers are down. Just like the stocks of the auto companies were, when you had the above pictures!
But if you missed those auto plays, and you missed Buffett's 8 bagger in Hong Kong with his first $230 million bet for 10% of Chinese electric car and battery maker company BYD, you now have another shot at redemption. That company is trading at over 60X earnings.
Now you have the next play. Goldman Sachs just put $250 million into Chinese car company Geely, (HKSE: 0175.HK) via convertible bonds and warrants.
It's currently selling at about 10X earnings. You will get a PE expansion on this name, with Goldman's bet.
And it should turn out, just like Buffett's!
Posted by Palmoni at 1:22 AM