OINK a solid company with strong fundamentals and growth prospects
By Dan France GeoTeam Contributor
A Tale of Two Recent Chinese Small Cap IPO's
The performance of two recent Chinese small cap IPO's last summer peaked my interest. The companies' stocks, both with strong fundamentals and outstanding growth prospects, initially declined following the IPO and then churned sideways for extended periods before finally coming to life. The first of the two to go public in June was China New Borun Adr (NYSE:BORN), a producer of edible alcohol that is used in China's national drink, baijiu. BORN was priced in a volatile market at $7.00, well below its original targeted price range of $12 to $14. BORN frustrated its IPO investors by trading on low volume and with little price movement after the offering. I researched BORN and published an article on GeoInvesting.com ("Raise a Glass to BORN") just as the stock was starting to stir at the end of July. Since then the stock has been 'discovered' by Investor's Business Daily, among others, and has rallied strongly recently reaching $18 in active trading.
Since BORN's saga unfolded ,Tianli Agritech (NASDAQ:OINK) completed its IPO on July 21 at $6.00 and the share price initially plunged to below $4.00 during the first week of trading. The trading pattern since then has been eerily similar to BORN's. Volume until recently has been almost nonexistent and the share price churned sideways just under $4.00. One curiosity I noted with both OINK and BORN was that during the darkest days of low volume and investor indifference it seemed both stocks consistently had bids with size below the market and few shares offered at the ask price. It appears both stocks were quietly and patiently accumulated as discouraged IPO players gave up the ghost and sold at deep discounts to true value. Now the pigs in OINK's pen are stirring and the shares have rallied from around $3.70 to its recent price of near $5.00. Could OINK be the next BORN?
I bet IBD is going to discover OINK soon and I sincerely believe that it is a golden opportunity for those who regret for missing the BORN boat. I added some more at $5 today.
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A general Caution and Advise -As I always advise in my posts, Do not chase stocks. please keep in mind that I am not a Stock Market Analyst or an Investment Adviser to count on my recommendations/alerts. As always please do your DD before investing or speculating, start with a small position, always keep your stop losses in place and emotions out. Finally thank me for your profits but do not blame me for your losses because you are the one who pulled the trigger!!!