Baoxiaodao

109% here with a small pool of money and concentrated portfolio. Winners included DEX.de, AMA.au, S4A.DE.

I highly recommend MartinWhitman. He is a native German and has recommended many excellent investments on the board. If anyone is qualified, it is him :P

I was impressed by your post. Thank you for the education!

As long as the pie is still growing, either the price cap or disputes between big retailers will be offset. There will be always ways to explore new revenue opportunities. When you own the only well in the village, even there is a price cap on the water, there will be plenty ways to make more money. Sooner or later the current payment model will be challenged, and that should worry MA and V.

Isn't APR kind of meaningless here? Imagine that I bought BRK and sold it one day later for a 1% real gain. The effective APR gain is 3678% Perhaps you did not mean to refer to APR? Talking about APR, just for fun thought, I bought AMA.ax @ less than 0.044 and now it is 0.013. All happened in 3 months. LOL

"STRATEC announces agreement with Abbott Diagnostics Birkenfeld, December 14, 2010 STRATEC Biomedical Systems AG, Birkenfeld, Germany (Frankfurt: SBS; Prime Standard, TecDAX) today announced that it has signed an agreement with Abbott Diagnostics, a division of Abbott Laboratories, Abbott Park, Illinois, USA (NYSE: ABT). The agreement covers the co-development of an analyzer system solution, using STRATEC technology and provides further details about the manufacturing and supply by STRATEC. Development of the system has already begun as part of a feasibility study. Further project and financial details have not been disclosed." This board is value-oriented so I guess people just do not like an idea trading @ 25xP/E. Anyways, I still believe we can do 20% per year for the next 3-5 years even at today's price. By simply reading all the stuff on the Stratec website, it is not hard to understand why Stratec will grow significantly in the next few years. Shai mentioned TZOO a while ago to me and it has been a real winner so far. It is not difficult to understand the business since I have hands-on experience with this industry, but I chose to pass it because my reluctance to dig deeper. I guess sometimes we have to fight ourselves to get out of our comfort zone. Have a great holiday guys. Fan

http://www.tyrepac.com/PressReleases/TYREPAC%20-%20Delticom%20AG%20acquires%20majority%20stake%20in%20Tyrepac.pdf I was wondering why the stock price did not shot up today after the news release. I am pretty sure I am not the only person who is excited here, but there seems not many. This acquisition opens a big door for Delti to enter the Asian market. Tyrepac has excellent customer service, and combined with Delti's deep pocket, operational expertise and buying power, this is going to be an explosive combination from day one. In NA and EU market, prices matter more because consumers are relatively educated about tires. However, in Asian countries, people are way more concerned about security, quality and potential fraud. A solid brand will help tremendously in the future. I believe if anyone can do it, it must be Delti+Tyrepac. The market potential in Asia is dazing. China along is projected to have 150 million replacement tires demand in 2013 by Tyrepac, and the management wants to capture 1% of the market by then. That is 1.5 million tyres!!!! For the first time since my last purchase @38, I am considering buying more Delti shares at current price. Fan

This is a great video. I enjoyed it. Myth, I do not believe this video has part 2 or 3 as it shows in youtube. What you are talking about? Fan

Just found out you can read the book for free on Google Books!

Parsad, you are right, I did not look at overstock closely. Sorry for the imprecise quote. Nevertheless, I doubt we will see a very meaningful margin improvement going forward due to the competition.

I understand the potential of Delti long time ago, but it seems I still cannot predict where the limit is. In the last month, Delti raised its earnings guidance twice. Here is the news link: http://delti.com/Investor_Relations/pressemitteilung_IR54_en.html Last year Delti increased EBIT by 78.8% to 29.4 million, and this year it can do at least 44.5 million according to the guidance. That is another increase of 51%. If you roll in my estimate, Delti can probably do 50 million this year. That values the company at around 15x EV/EBIT after cash. For a company with such a growth history and potential, I would say this is a bit undervalued. For those who bought in this exceptional company when I first mentioned it @29 on this board, you have made more than 140% of your investment in a year. And in case you have missed the first post, I have recommended it again and again, recently @54. I do not believe this growth rate will persist, but the prospect is as bright as ever. Delti has only 5-6 percent of the replacement tire market, there is plenty room form them to grow in the future. What amuses me is that I doubt anyone here ever purchased the stock(let me know if you did and sent me a Christmas card!). The reluctance is understandable. When I first set sight on the German market, it was not a smooth sail. Everything is different, but I was lucky to have MartinWhitman(big thank you to you Marty!) as my guide. Still, I made a few mistakes and lost some money. But over the years, I realized that Germany is a terrific place for small investors. There are a few reasons. First, there are a lot less competition. Sharp guys like those on the board are reluctant to buy shares in foreign markets. Second, Germany has better corporate governance. Companies in Germany seldom have excessive option plans and the compensation is reasonable. Third, Germany has a unflattering stock market. The valuation is low. And finally, Germany companies have much more exposure to emerging markets than you can imagine. When looking at a lot of Internet companies like Overstock, Amazon, NFLX or TravelZoo, I could not help but wondering where all the optimism came from. To me, many of the growth projections are just too unrealistic and the multiples are outrageous. Youku went to the market today and popped 160% even though it has not shown a profit. It is true Internet companies are great investments when they have built the network, but investing regardless of price is just pure madness. We will see who is naked when the tide goes out. Fan

CR, thanks for the info! Will do if I found something interesting.

CR, thanks a lot! I almost missed the book. Any similar books you recommend? I have all ears to listen to you!

http://www.economist.com/node/17572160?story_id=17572160 I came across the Economist magazine today and there are a few great articles, especially this one. This article explained in detail the operating philosophy of small to medium size companies' management in Germany. It answered the question why the economy of Germany is doing so well where almost everybody suffers. I think this is the only economy now in the world relies almost totally on renovation and technology to grow. I am also a great beneficiary investing in Germany. The valuation is cheap because people think Germany is not very exciting. But the truth is when you looking at the listing companies one by one, as I am doing now, you will see a totally different picture. It is true Germany is not friendly to PE shops, but as a small investor, you will have the benefit of better corporate governance. And when there is upside, you do not have to worry about someone repricing the options and take your profit away. I know many of you folks are afraid of buying equities in foreign markets, and it was not easy for me when I first started. However, by reading a lot of annual reports, there were a lot of gems to be picked up. Fan

I used to have the same question as I think it does not makes sense, even though I know it makes sense quantitively. Now I adopt the method to calculate intrinsic value only. It helps me a lot in overcoming my hesitance to invest in excellent businesses while the price is a bit high.

I just want to point out that 99% of people are not as gifted as you. It is easier said than done even though we do have advantages in the micro cap world. Individual small investors have an advantage over professional money managers in that they can concentrate a larger percentage of their capital if they have a high confidence investment. There is a world of micro and small caps out there that are too small for the big boys (who can be quite dismissive of these) but yield to rational fundamental analysis. You're not wedded to portfolio management theory and don't have to answer to a panicked unit holder when things look grim. You can assume more risk and reap the rewards. (my 12 year annualized compound return on my trading portfolio is ~30% to Dec 2009, currently enjoying a banner +50% year in the world of small cap precious metals)

It seems to me everybody wants to be a low cost etailer. Just wondering how low it can go with identical goods offering.

I really like this idea. I will keep an close eye on the parent and praying it will spin off all other tangible assets and become a technology company. It will be worth billions easily if the technology is proven. It is amazing we can always come up with new ways to deal with existing problems, even though it is very heavy!

The recent development is noteworthy and my delti series continues. In the 3Q, Delti hinted that the company will retain the rights as to the distribution of earnings due to working capital needs. The market panicked and the share price was in the free fall. In a matter of days, the stock dropped from 59 to 49. What is interesting is insiders reacted with buying more shares in the open market. All together, the top management bought 2.3 million worth of shares. Notably, CFO bought(rarely) in as well. The price range is 49-54. No wonder Delti would never buy back its shares. The insiders are buying them back using their own money! If I remember correctly, after the IPO the two founders own 52% of the company; now they own 54.7%. Delti is now trading around 25 times 2010 earnings, which is reasonable considering its growth. What surprised me is insiders are buying shares relentlessly in the open market at today's price. Unless the management is very bullish about the prospect, they will not do so just to support the stock price. We all know at 25x earnings, there are little juice left to be squeezed. Insiders are far more knowledgable than us. So why? My guess is that someone recently made an offer to Delti. It was turned down but it indicated the true value of the company. German market is cheap, I have no doubt about it because I looked through the stock list there. So the multiples of Delti is depressed compared to similar companies like TZOO or NFLX. In the last quarter, business in the US and CA grew by an astonishing 52%. By my research, Delti is nearly 20 times bigger than its nearest competitors. So sooner or later, someone will notice and pick them up; or Delti will simply dominate this niche. I will make my prediction here although I am not so sure when I first wrote this on this board(I predicted 20% annually over the next 5 years). If you buy the shares today and reinvest the dividends, you are likely to get 15% return over the next 5 years even at today's price.

We have Tudou and Youku, Chinese version of Youtube.

I am glad you liked it. This video was posted on other websites initially, and then Youtube. As long as the content is not against the government, those videos are free to be posted. We do have certain degree of freedom in the cyber space!

I know we investors are rather successful people in the society, but it does not mean we can ignore the other side of it. In the country where I was born, there was a enormous divide between the rich and poor. When we were talking about the macroeconomics, we should not forget those numbers and data represent real people in the world. By listening to the song, you can gain a rare glimpse in a society where huge changes have been happening. This song was performed by two people who the media defined as "migrant workers". They migrated from the countryside to the city, doing work local people who has "HuKou" do not want to do. Their salary is minimal; job is risky, and when they stop working, they have no benefit, health insurance and pension. If you noticed, the reason that singer has perfect muscle is that he has to do very heavy labor work all year around. Even under those conditions, their salary are not guaranteed to be paid. So when the lyrics say "If there is a day, I become old and nobody cares about me, please leave me in the old times;", it really means the worry that if those migrant workers can not work anymore, there will be no one to support them, to care about them when they get old. I think the singer says it all in the song. I spent sometime translating the lyrics into English. Not perfect, but you can read it. Song link: Lyrics: In the Spring Still remember the Spring many years ago, when I still had the long hair. No credit card, no girl friend and do not have home with 24 hour hot water. But I was so happy, although I only have an old guitar. On the street, under the bridge and in the field, singing the songs no one remembers. If there is a day, I become old and nobody cares about me, please leave me in the old times; If there is a day, I passed away and no one noticed, please bury me in the Spring(time). Still remember those lonely springs, when I had no beard; There was no Valentine's, no gifts, and I had not my little sweetheart; But I do not think it is so bad, although I was only longing about love; In the morning, the night and in the wind, singing the songs no one remembers; If there is a day, I become old and nobody cares about me, please leave me in the old times; If there is a day, I passed away and no one noticed, please bury me in the Spring, in the Spring. Enjoy, Fan

Could you explain why? Yes just about everyone thinks the stock is overvalued. When your stock is too high. You have to close the value gap. You can buy assets with it and as long as the assets are cheaper then your stock the value gap will be closed or you can issue a ton of shares for cash as well. Amazon should be using pricey stock to buy not so pricey assets. If they are using cash then they are just paying a boat load of money for assets. If you pay 20x earnings for Zappos then you are only getting a 5% return on your cash unless Zappos grows significantly. Henry Singleton was the best at doing this when he was at Teledyne. But the problem is that Amazon overpaid with its shares as well........

You just got my pushback, and here again :P Excellent thoughts on the business model. The two acquisitions delivered only a message that Amazon is not fighting the competition; instead it will buy out the competitors. I think there will be unintended consequences.

I think anyone who wants to understand the competitive landscape in the etailer business should read this post. Well done. I could not agree more with your opinion. Amazon is obviously struggling to find revenue sources to justify its valuation while its core business is maturing. It will lead to unwise business decisions. It strikes me again how fast a dominant force in this industry can be challenged by niche competitors.