Mecox Lane Is A Bargain Here

My investment thesis for why I like Mecox Lane at these current prices before next Tuesday's earnings.

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Dangdang's Problems

Read the full Forbes Post

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Don't Bail on China Tech Stocks

By Eric Jackson
RealMoney Contributor
6/28/2011 1:30 PM EDT
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The second quarter has not been kind to Chinese tech stocks. After flying high from January to April, big China techs such as Sina (SINA - commentary - Trade Now), Sohu (SOHU - commentary - Trade Now) andBaidu (BIDU - commentary - Trade Now) got walloped. Newbie China tech IPOs such as Youku (YOKU -commentary - Trade Now), Dangdang (DANG - commentary - Trade Now), and Qihoo 360 (QIHU -commentary - Trade Now) got hurt even more.

There were many reasons for the sharp pullback in these China tech stocks, some of which are listed below:

• the general market pullback meant that these high-beta names pulled back even more;
• more evidence of fraud in China stocks spreading from smaller reverse takeover companies to larger companies such asSino-Forest and Longtop Financial (LFT- commentary - Trade Now);
• continued worries about a China Internet bubble and concerns that this was the beginning of the end; and
• Jack Ma transferred out Alipay from Alibaba, sending Yahoo!'s (YHOO - commentary - Trade Now) shares down and worrying Americans that there is no rule of law in China.

In the midst of this wave of bad news and worry, I happened to be traveling through China, meeting with several tech companies. I was asked about if we were in a bubble more than anything else while I was there.

What I said then and what I still believe now is that this is not the beginning of the end but the end of the beginning. The Chinese Internet bubble is not bursting now, and I don't believe it will burst this year. I still think we have six to 36 months of good times ahead of us. It's hard to know more precisely than that when the party will end -- at least at this point.

Translated for investors, that means you shouldn't miss out on a second-half bounce-back for these stocks.

There is a range of quality out there, however, so you need to do a lot of research and due diligence before jumping in.

I recommend you stick with two of the biggest quality names: Baidu and Sina. They are solid companies with great management teams that will continue to be in-demand sites for a long time. Everywhere I went in China, I would hear people updating their Sina Weibo status on their iPhones. That is a growing monster service, right there.

Similar to Baidu and Sina, Hong Kong-listed Tencent should also do well in the second half of the year.

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[*** This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required. ***]

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China Embraces Its Inner Tech Bubble

There will be a time when the China tech bubble pops - and it will be a severe reckoning - but that day is still likely at least two years away.

Read the full post here at Forbes.

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Most Competitive Spaces in Chinese Internet

By Eric Jackson05/04/11 - 07:00 AM EDT

NEW YORK (TheStreet) -- China is a hot investment theme -- and, more specifically, China Internet. Stocks like Sina(SINA_), Baidu(BIDU_), Sohu(SOHU_) and Youku(YOKU_)have had great runs this year.

I often see investors talking about relative valuation of Chinese Internet stocks on Twitter: "I think Dangdang(DANG_) is poised to pop here to close the gap with Youku."

However, not all Chinese Internet stocks are created equal. Two sectors within the Chinese Internet space are particularly competitive: group buying and online video. I'm bearish on both sectors for the next year.

What's not to like?

The group buying space in China has existed for years.Groupon is certainly in the space. It recently bought a Chinese company called Groupon.cn that set up shop the moment it became clear that Groupon in Chicago was on to something. More interestingly, Groupon.cn was much more popular in China than Groupon had been.

It looks like Groupon made the acquisition to strengthen its position in China and look more put together for its likely end of year Nasdaq IPO. Groupon might end up being successful in China, with a lot of help from its partner there, Tencent. However, I wouldn't bet on it.

There are literally dozens of group-buying clones in China. Some more popular than Groupon, some less. The big daddy of them all is Taobao (ju.taobao.com) with more than 75 million unique visitors in January. Taobao is the mega-ecommerce site owned by Alibaba Groupprivately (which is 40% owned in turn by Yahoo! (YHOO_)). Taobao has never been shy to compete on price. Ask eBay(EBAY_) about their experience competing against Taobao -- they were driven out of the market.

Lashou.com is the next most popular company with 45 million unique visitors in January. Groupon.cn had 19 million visitors (which presumably Groupon Chicago will take over). Groupon itself (with its Gaopeng.com site which it had been using in China) didn't make the top 10 list of group buying sites in January in China.

There is money pouring into the sector. Lashou just received a Series C round of $110 million. This brings its total capital raised to date to $166 million.

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[** This post is an excerpt of the full article, which is available on TheStreet.com by clicking here. Free Site.**]

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To Unlock Yahoo!’s Value, Bartz Should Take a Hike

Yahoo! shareholders are likelier to see a $30 stock price sooner if they vote "against" Carol Bartz' and Roy Bostock's re-election at this June's shareholder meeting.

Please read the full post at Forbes here.

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If China Stocks Are Being Revalued, Why Not Yahoo!?

By Eric Jackson04/20/11 - 08:00 AM EDT

NEW YORK (TheStreet) -- China Internet stocks are on fire. The unstoppable SINA(SINA_) is now up 106% year-to-date. SOHU(SOHU_) is up 56%. Baidu(BIDU_) is up 53%. Even new IPO Youku (YOKU_) is up 94% year-to-date.

We are now starting to see new Chinese companies rushing to list their stocks on the U.S. exchanges.Dangdang(DANG_) has managed to hold a price at a big premium to its December IPO. Qihoo 360(QIHU_) is another high-flying IPO from last month. RenRen(RENN), the "Facebook of China," is planning to list next month.

The more these relatively smaller stocks go up, the more it seems that the bigger Chinese portal names keep going up. Look at Sina's performance in the last two weeks alone for evidence of that.

China observer and investor Bill Bishop said on Tuesday that he thinks there is a revaluation going on in the Chinese Internet sector:

Most U.S.-Listed Chinese Internet stocks are soaring, with some up 10%+ Monday, and some up 30% or more in a matter of weeks. Many of these firms, like Baidu and Sina, have great businesses and massive growth prospects, but the surge seems to be about more than just fundamentals.

Are investors in relative valuation mode, believing that because immature firms like Youku (6.7B market cap), Qihoo (3.7B) and RenRen (planned IPO valuation is $4B+) are so richly valued, then Sina, Baidu, Sohu, Shanda et al are dramatically undervalued on a relative basis?

There is logic to that argument, and it can sustain high valuations for a while, especially given the great wall of money that is both being reallocated to China by Western funds and is sitting in Chinese hands looking for speculative opportunities.

I agree with his logic. I think this revaluation is going on.

And I agree with him that this is not a bubble. It could grow into one -- but we have a long way to go. In "dot com" era terms, I would characterize the current Chinese tech sector as being in the equivalent of the fall of 1995. Netscape went public that year in August. As its price held up for the first few weeks after, it made people reconceptualize the value of tech.Yahoo!(YHOO_) went public in April 1996. And, after that, the race was on for tech billions.

But it would not be for another 3.5 years after Yahoo!'s IPO that the "dot com" bubble burst.

I think we still have another four years of growth ahead of us in the Chinese tech world. Buckle up: it's going to be a fun ride.

But, here's a question for you: If there is a revaluation going on in the Chinese Internet world, it has so far eluded the biggest Chinese Web company in the world (at least, as I see the Chinese Web world playing out over the next five years).

Tencent and Baidu may be the big dogs today with $50 billion market capitalization each. And they will likely triple in size over the next five years, as the wealth of Chinese people increases and Internet penetration doubles or triples from its current levels.

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[** This post is an excerpt of the full article, which is available on TheStreet.com by clicking here. Free Site.**]

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RenRen Is Set to Ride the Chinese IPO Train

By Eric Jackson
RealMoney Contributor
4/18/2011 1:40 PM EDT
Click here for more stories by Eric Jackson

If all goes as planned, RenRen, the "Facebook" of China, will go public in the U.S. in early May under the ticker "RENN." It hopes to raise nearly $600 million and be valued at over $11 billion.

On the surface, the company has all the makings of another mega-Chinese initial public offering. It has two of the more prestigious investment banks managing the IPO: Morgan Stanley (MS -commentary - Trade Now) and Credit Suisse (CS- commentary - Trade Now). And, most important, it is a Chinese company involved in the Internet.

That's pretty much all it takes these days. It's not unreasonable to expect its valuation to easily double or triple when it goes public, just as it did with Youku.com (YOKU - commentary - Trade Now) and Dangdang (DANG - commentary -Trade Now) in December, and Qihoo 360 (QIHU -commentary - Trade Now) last month.

It will actually be interesting to see whether -- expecting another hot placement from investors -- the RenRen investment bankers will try to up the offer pricing to capture more value for the listing company, rather than pad the bank accounts of the investment banks' institutional clients. Remember how Dangdang's CEO got into a Twitter-style scuffle on Sina's(SINA - commentary - Trade Now) Weibo, supposedly with one of the Morgan Stanley bankers, after their IPO a few months ago? The CEO complained -- among other things -- that the bank hadn't priced the offering high enough to benefit the company's coffers.

With Sina riding sky high these days and new private valuations for Facebook and Twitter seemingly every week, it's hard to see how RenRen doesn't have a great initial pop next week.

The company booked $77 million in revenue last year with an operating profit of $8 million. Though it still had a net loss for the year, revenue grew 64% from the prior year. RenRen describes itself as the leading real-name social networking Internet platform in China, as measured by total page views and total user time spent on social networking websites. RenRen stated in its initial filing with the Securities and Commission that it had 117 million "activated" users at the end of March. It also said that, according to consulting firmiResearch, monthly total page views are 2.3 times higher than those of its closest competitor.

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Why Would Any Investor Avoid China?

By Eric Jackson04/04/11 - 06:30 AM EDT

NEW YORK (TheStreet) -- The China bears, who include Jim Chanos and Hugh Hendry, have been wrong for two and a half years. Which is puzzling because if you are looking for a part of the world to invest in during the next five to 10 years, how could one ignore China?

If you want exposure to growth, you are going to be hard-pressed to find another place that offers as attractive a risk-reward scenario. Sure, there are other emerging markets to consider, like Brazil and India, but they aren't any more attractive than China, and they're certainly not as big a market.

Would you rather invest only in the U.S. or Europe? Sure, they are less volatile but they have also had a huge run in retracing their financial-crisis losses. I would argue that neither of those mature markets is going to be a more compelling buy than China when looking at potential risk and potential return.

The China bears' arguments have fallen flat so far. Remember when it was conventional wisdom that the Chinese property market was a bubble along the lines of "Dubai times 1,000"? Well, put a few policies into place to reduce speculation by boosting down payments and loan availability and -- guess what? -- the high-end market in coastal cities has appreciably cooled for the past six months.

Remember, more recently, when we heard China was going to have runaway inflation because the government was appreciating the yuan fast enough to the U.S. dollar? Well, the Chinese government has been hiking reserve requirements and interest rates feverishly for the past few months now. On Friday, George Chan of CLSA speculated that the next move from the Chinese government might be the last for a while. PMI numbers have shown that inflation is slowing.

I often hear American investors say: "I don't trust Chinese companies and their numbers (or their government's numbers)." The recent rash of Chinese reverse-merger frauds has demonstrated that there is a pervasive problem in that class of companies. There are major problems that persist to this day, and I have called on the Securities and Exchange Commission and the U.S. listing exchanges to clean up this mess. But for any investor who says he won't invest in China because of high-profile problems such as RINO(RINO_), China MediaExpress(CCME_), Fuqi(FUQI_) and China Agritech(CAGC_), I have a simple recommendation: avoid Chinese reverse-merger companies.

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[** This post is an excerpt of the full article, which is available on TheStreet.com by clicking here. Free Site.**]

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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:

• Sina (SINA - commentary - Trade Now)
• Baidu (BIDU - commentary - Trade Now)
• Youku.com (YOKU - commentary -Trade Now)
• Dangdang (DANG - commentary -Trade Now)

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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[*** This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required. ***]

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Video: BullHorn -- China's Internet Surge

Baidu and other Chinese online stocks may still be attractive to investors in the United States. But not all are worth buying

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Chinese IPOs Are Coming (Back)

By Eric Jackson
RealMoney Contributor
3/17/2011 12:15 PM EDT
Click here for more stories by Eric Jackson

After the successful U.S. market debuts of E-Commerce China Dangdang (DANG -commentary - Trade Now) and Youku.com(YOKU - commentary - Trade Now) in December, I expected to see many more Chinese companies file for initial public offerings in early 2011. Until a few days ago, though, there were none.

There are signs, however, that several new Chinese companies plan to come to market soon in the U.S. On Monday, Qihoo 360 Technologyfiled a prospectus with the Securities and Exchange Commission to hold an IPO. Qihoo says it is China's third-largest Internet company by user numbers (339 million). It makes antivirus computer security software and is the second-most-popular Internet browser in China after Microsoft's (MSFT - commentary - Trade Now) Internet Explorer. UBS and Citi are co-managing the offering.

Qihoo's revenue has exploded over the past two years, going from $17 million in 2008 to $58 million last year. Over this time, the business has completely remade itself. Previously, two-thirds of its revenue came from selling third-party security software, but now more than 93% of its revenue comes from selling its own software and Internet services, including online advertising.

Unlike Dangdang and Youku, Qihoo is solidly profitable. Its net margins were 15% last year. The company already has $61 million in cash on its balance sheet as of the end of December. In its filing, the company said it seeks to raise up to $200 million from this offering.

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[*** This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required. ***]

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Dangdang Must Step Up

By Eric Jackson
RealMoney Contributor
3/10/2011 1:45 PM EST
Click here for more stories by Eric Jackson

What happened to E-Commerce China Dangdang (DANG - commentary - Trade Now)?

It debuted with great fanfare in an initial public offering last December. The stock priced at $16 a share, which was considered high, opened at $24 and quickly went to the $30 range, closing at a high above $34 in mid-January. Since then, the stock has steadily been returning to its initial trading levels.

Yesterday, it released its first earnings report since going public. As usual with these Chinese stocks, it takes time for the market to digest the news contained in the results. The initial reaction was positive. The stock traded up in the premarket to almost $27 after closing the prior day under $26. But it immediately started selling off yesterday and hasn't stopped yet. Today, the stock is currently trading under $23, down nearly 7%. So what happened in the earnings report?

The e-commerce site, which still makes the majority of its money selling books, revealed that its net revenue for the fourth quarter was up 58% year-over-year to $108 million and its full-year revenue also grew 57% to $346 million.

They also boasted in their earnings call that non-book revenue grew 150%. They aim to reposition themselves -- much like Amazon (AMZN - commentary - Trade Now) did 10 years ago -- by selling a variety of goods via e-commerce rather than just books, which tend to be lower-margin sales. General merchandise revenues in 2010 were up 156% to $59.4 million from the previous year.

Yet, the scale of those general merchandise sales -- only 17% of overall sales -- shows that Dangdang still has a way to go to credibly saying it's no longer just a bookseller.

Its first-quarter guidance indicated that net revenue would be between $102.4 million and $103.6 million, representing a 50% increase year over year. That was in line with estimates.

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Video: Yahoo! Trading at Half What It Should Be

Contributor Eric Jackson explains that in the disdain for the Internet company's stock, the true value of Taobao and Alipay is being missed.

Wed 02/23/11 08:00 AM EST -- Eric Jackson

Stocks in this video: YHOO | AMZN | EBAY | DANG | YOKU | MSFT

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The Second-Order Effects of Goldman's Investment in Facebook

Eric Jackson says that you should look for other companies who will be valued from a 10-year potential revenue and profit stream projection, as Facebook was by Goldman Sachs. Eric owns YOKU and SINA.

Fri 01/07/11 11:00 AM EST -- Eric Jackson

Stocks in this video: SINA | GS | DANG | YOKU

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Video: Get Ready for the Next Big Chinese IPO

Eric Jackson says watch for a Renren IPO in early 2011: The Facebook/Groupon of China. Eric owns YOKU.

Tue 12/21/10 07:00 AM EST -- Eric Jackson

Stocks in this video: BIDU | DANG | YOKU

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