Thursday, March 31, 2011

A First Quarter Report Card

By Eric Jackson
RealMoney Contributor

3/31/2011 9:00 AM EDT
Click here for more stories by Eric Jackson

On Dec. 24, I gave my top four picks for the Chinese Internet sector for 2011. The video, with my picks and rationale, can be accessed here.

It's time for my report card.

In the video, I offered the following picks for the quarter:

Of these, Sina has been a monster. It's risen 56% this quarter, having touched new highs this week above $100. The stock has come a long way since I said it was deeply undervalued, given the performance of its Weibo microblogging platform, as compared with Twitter. I still love everything the company's management is doing and will continue to hold it likely for the balance of the year.

Baidu has also had a stellar quarter. It's up 39% so far. Early in January, the stock was below $100. It's going out above $130. There's a bit of a tempest in a teapot going on over there at the moment, with some fellow RealMoney contributors accusing Baidu of illegally posting their content online. There are copyright negotiations ongoing, but it's a sideshow. Baidu remains the top dog in search in China, and it's poised for more gains for the balance of the year.

Youku has also been a winner. It's up 45% for the quarter so far. However, you'll notice in my video that I suggested waiting until the company's first quarterly numbers in March before buying -- because I expected the stock to stay lower. It didn't. If you had taken my advice, though, you would still have had a 14% gain for the quarter. Still, as I noted in a RealMoney piece Monday, I'm now bearish on these shares. I believe it has run way ahead of itself, and that its competitive environment has changed even since December. I'm now short the stock


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