Ebay Wannabe's?

Here are two stocks that have models similar to Ebay - GMKT (G-Market) and MELI (MercadoLibre).

GMKT is based in South Korea. This company's model is more similar to Amazon than Ebay but they don't store the inventory itself. They sell varied products ranging from clothes, electronics, accessories and recently started selling persihables like meat, vegetables and fruits. They have been planning to luanch a Japanese site, which might happen some time during the 2nd half of this year.

MELI currently operates in Brazil and Argentina the largest countries in South America. It's model is very similar to Ebay. MELI is growing at an explosive rate, and it is probably easier for them to expand to the rest of South America.

Because of that MELI trades at a much higher multiple than GMKT. I am invested in both the stocks and will continue to do that unless something dramatic happens.

What are your thoughts? Please post your comments.

BRIC Weightage

Is this a good time to change the weightage of BRIC (Brazil, Russia, India and China) stocks? Not sure if this is the right thing to do, but between China and India - I feel more and more comfortable with increasing the exposure to India at the expense of China. The reasons for this are:

• China's stock market seems to be murkier and there is a possibility of stock market coming down after Olympics.
• India's market has come down 25% from its highs, and the average P/E of the broad market is very reasonable at around 18 with still lot of growth.

I have slightly lightened my exposure to China and added more to India. If you have equally weigted portfolio to BRIC, I would suggest to consider weightage change to something like:

• Brazil - 25%
• Russia - 25%
• India - 30%
• China - 20%

I could be really wrong here, but taking my chances with slight changes.

My Recent Purchases

Brazil and Latin America: This market seems to be doing extremely well. I have recently added a closed end fund - LDF to add to my existing positions in FLATX and SBS.

Option Calls: Sold Jan 2009 Puts on RIMM, MA, IBN and NOK. (Selling puts in a very simple explanation translates to betting that the stock price goes up or doesn't go down from its strike price).

Technology stocks: Added to my positions on VDSI and GMKT. Hoping that GMKT will take off during this year. Addded ITWO as a sepculative play hoping that it will get bought over in the next few months.

Alternate Energy (Solar and Wind): With the oil price going up, the solar and wind energy stocks seems to be taking off. Not sure how this sector will turn out in the long run, but got into STP, SOL and TRN as short term trades. If you want to play it safer, here are two safe stocks that are indirect plays in alternate energy: GE and CY (which is a majority holder in SPWR).

Economic Parity?

Interesting thoughts by Bill Gates, talking about China's prosperity and how it is not a threat to world.

Here are is one key excerpt

The fact that China is getting rich is overall a very good thing. The fact that more minds are getting educated is huge. If you care about the human condition, really then a richer China is better.

You can really generalize this and apply it to any country. Who can disagree, whether it is China, Africa, India or even US getting richer. Any country that gets richer is better for the humanity, but it probably is even more applicable for countries such as China and India due to the population density as more number of people benefit from prosperity.

Here is another one

The fact is the United States is 5 percent of the world's people. At some point we are going to have 5 percent of the world's influence and that's OK

Does this mean, Bill Gates is predicting an economic parity based on the population? I don't know what his thoughts are, but it certainly is not going to be the case atleast in my life time. But that doesn't mean US will not lose it's current share of world's influence. Similarly, emerging countries will gain more influence due to their raising prosperity.

What does this mean from an investing perspective? If your horizon is long term, investment returns are probably going to be better in emerging markets compared to US.

Here is the link to the original news article: http://www.reuters.com/article/marketsNews/idCNTN0438772720080404?rpc=44

Investing in China & Taiwan

Here are some of the Mutual Funds/ETFs for China & Taiwan.

Oberweis China Opportunities - This is one of my favorite funds for China. This fund has taken a beating this year along with the broad China market. It is relatively a new fund, but the manager has an excellent track record and this fund has outperformed the Category for 2006 and 2007 but down ytd for 2008.

MORGAN STANLEY CHINA - This is an etf (closed end) fund that invests primarily in China A-shares. This fund is currently trading at 19.4% discount to its NAV value. This will be a good way to bet if you think China market will turn around due to its huge discount.

TAIWAN FUND INC THE - This is an etf (closed end fund) which invests in Taiwan. This fund is currently trading at 7% discount to its NAV value.

There are numerous Chinese and Taiwense stocks that trade as ADRs, but for the most part I have limited myself to investing in the above mentioned funds.

S&P India 10

It looks like Standard & Poor's launched a new index for India to make investing in the Indian equities even more accessible to international investors.

I was not able to find all the 10 stocks listed in that index, but here are some of them included in that index.

1. Infosys Technologies
2. ICICI Bank
3. HDFC Bank
4. Tata Motors
   
5. Reliance Industries
6. Sterlite Indistries (India) Ltd

For more on these companies and stocks except Reliance Industries (it doesn't trade as ADR yet), refer to my posting titled 'Indian Markets'.

Investing in Eastern Europe & Russia

Here are some of the Mutual Funds/ETFs for Eastern Europe & Russia.

1. U.S. Global Accolade Eastern Europe - This fund focuses as the name says on Eastern Europe - Russia, Poland, the Czech Republic, Hungary and Turkey.
2. ING RUSSIA FUND - This fund invests exclusively in Russia. Please note that this fund has a front end load fee of about 5.75% which is quite expensive, unless you are investing for the long haul.
3. CENTRAL EUROPE & RUS - This is an etf (closed end fund) which invests in Eastern Europe and Russia. This fund is currently trading at 12% discount to its NAV value.
4. Templeton Russia and East European Fund - This is an etf (closed end fund) which primarily invests in Russia. The premium on this fund has come down from high of 40% two years ago to almost no premium now.

Technology Picks

Here are the stocks that are part of core holdings in my technology portfolio

Google - Their earnings growth seems to be slowing because of concerns of slowing ad revenues, but this company has one of the most compelling growth stories. They are planning to release their android based phones this fall which probably will be accretive to their 2nd half 2009 earnings.

Oracle - This has become 'The Software Company' in my opinion. Starting from their core product - Oracle RDMS, thye have expanded their portfolio with several acquisitions - Siebel CRM, PeopleSoft, JD Edwards along with products in Linux and Virtualization software.

Microsoft - Does this need a justification to be in the core portfolio? Great company with solid growth and great cash balance. Their acquisition of Yahoo will be good for them in the long run.

Research In Motion (This falls under the Niche market of enterprise/pro-consumers that I explained in my investment thesis) This is by no means is cheap, but it has been growing for several years and doesn't show any signs of slowing down.

Apple (This again falls under the Trendy devices market that I explained in my investment thesis) This company has excelled in coming out with such cool products starting with iPod, iPhone and the most recent addition MacBook Air.

VM Ware (This falls under the Virtualization trend that I explained in my investment thesis)Wallstreet is worried about competition, but this company is an undisputed leader and this trend is just getting started and is going to become even more prevalent in the next few years.

EMC (This falls under the Storage trend that I explained in my investment thesis) This is a great company along with solid growth. On top of it, they own approximately 86% of VM Ware which probably they will start distributing to thereholders starting next year.

Indian Markets

Why India? The Indian market has been on a wild ride since the last 2 years. It has gone down by 25% since the beginning of the year, but even including that it has gone up by more than 500% since the last 5 years. The GDP growth has been hovering around 8-10% and the market has room for growth even though it might not be the same returns of the last few years.

Mutual Funds/Closed End ETFs

1. MINDX - Matthews India Fund (Mutual Fund)
   
2. IIF - Morgan Stanley India Investment Fund (Closed End Fund)
3. IFN - India Fund (Closed End Fund)
4. EPI - WisdomTree India Earnings (Closed End Fund)

Stocks Traded as ADRs

1. SLT - Sterlite India (a very good play on mining)
   
2. IBN - ICICI Bank (one of the biggest banks in India growing at an enormous rate)
   
3. HDB - HDFC Bank (smaller in size compared to ICICI, but growing at the same rate)
   
4. INFY - Infosys (One of the largest IT sourcing companies)
   
5. TTM - Tata Motors (One of the largest commericial and passenger vehicles)
   
6. SAY - Satyam Computer Services (IT Sourcing company that is relatively smaller in size compared to Infosys, but growing rapidly)

Some of the other ADR's are: RDY, WIT, CTSH, MTE

My Investment Thesis

Invest where growth is. Buy low, sell high - pretty simple huh... If it were that simple, I would have surely retired several years ago and sipping my martinis on a beach in Hawaii :-).

How do you know where growth is and if it is sustainable or not? What is cheap? What is value? It probably depends on lot of factors - macro, micro, sector, country and lot of other things. Setting aside all these things, for me it is all about identifying trends and investing in them. Here are some of the trends that I believe in:

1. Emerging Markets: I have believed in this trend for the last 2 years, and I still think that it is valid. I have invested in emerging markets with particular emphasis on BRIC (Brazil, Russia, India and China) . Other markets that I have invested include - Eastern Europe, Taiwan and Korea.

2. Alternate Energy: Demand for Oil is not going to come down. I guess we realize this everyday at the gas pump paying around $3.50/gallon. With the kind of growth that the emerging markets are seeing, and with China and India's insatiable need for Oil - what are the alternate sources of energy that seem viable? Nuclear, Solar , Wind, Bio-fuels

3. Storage Market: Does this need to be explained with the amount of data that we produce and consume everyday going up exponentially?

4. Virtualization of Hardware: Here is something on virtualization from VMWare - Virtualization essentially lets one computer do the job of multiple computers, by sharing the resources of a single computer across multiple environments. Virtual servers and virtual desktops lets you host multiple operating systems and multiple applications locally and in remote locations, freeing you from physical and geographical limitations. In addition to energy savings and lower capital expenses due to more efficient use of your hardware resources.

5. Trendy Devices (Niche Market): Have you seen the newly released Apple's MacBook Air? Way too cool. Same goes for iPod, iPhone, BlackBerry's and some more recent devices. It used to be that this kind of products were either cool and not functional or functional but not so cool. Not so any more and consumers are accepting these devices by droves. Even my 3 year old knows what an iPod is. This trend for cool niche products will only improve.

6. Realestate Investing: Domestic vs International ? Residential vs Commercial ? What are the trend here?

I will discuss each of these trends on separate posts.

Disclaimer Post

Please note that I am not a professional investor or professional adviser. I have established this blog out of sheer interest and passion for investing. I am person who takes a half-full glass approach to investing as well as lot of things in life.