Peter Schiff Proposes Another High-Tech High-Yielder

By Travis Johnson, Stock Gumshoe, September 2, 2010

I wrote about one of Peter Schiff’s teaser picks a few weeks ago, and today I’m finally following up to cover the other one.

For those who don’t know Schiff’s work, he runs a brokerage firm that specializes in international investing and precious metals, with a focus, historically, on helping investors buy foreign-listed stocks that pay high dividends in some currency other than the dollar, which he believes will inevitably collapse. One of his communication vehicles is a newsletter called Global Investor, but the model is a little bit different than most of the teasers I write about: he’s not trying to snag subscribers, he’s using the newsletter to encourage people to call up his brokers and get full information about the stocks he teases (and, presumably, he’d like to have them sign up for a brokerage account at the same time).

When I last wrote about this latest newsletter of his, which came out in early August, it was to cover the second pick he was teasing — it caught my eye because it was in a similar sector to a past barnburner pick he had teased, you can see that article here if you’re interested (all about a Chinese maker of monitors and flat panel TVs — the stock is down a bit in the few weeks since I wrote about it).

But the newsletter teased two picks — so let’s now take a look at the other one, shall we?

Schiff’s newsletter says that this company …

“… mainly designs mobile phones and bluetooth chipsets. It is a global provider of testing, hardware, software, and exterior design solutions. The company lists its stock on the Singapore Exchange. It sells its products globally, but more than half of its revenue is generated within the Chinese market alone.

Investment Highlights
“A fast-growing company, its recent quarterly sales were double those of the same period last year. We like this company for its exposure to the growing market for 3G handsets throughout Asia. This small-cap company trades at a single-digit valuation and has offered consistent dividend payout for many years. At current prices and projected distributions, the dividend yield is approximately 5%. Its 52-week high was 78 Singapore cents, and its 52-week low was 38 Singapore cents.”

One thing that I like about reading Schiff’s letter, not least because it provides a refreshing change, is that he’s writing to a lot of folks with whom his firm has a much tighter fiduciary relationship — he can’t just spew out ideas willy-nilly like I can, or like a typical newsletter can from a publisher that doesn’t have a broker or financial advisor’s responsibility to keep your feet at least close to the ground. So he always includes some comments about risks …

Risks
“Risks in owning this company are: competition from other mobile handset designers, dropping prices if the market becomes saturated, and a general slowdown in purchases if a recession develops.”

As well, of course, as the standard tagline:

“Investing in foreign securities involves risks, such as currency fluctuation, political risk, economic changes and market risks. Precious metals are volatile, speculative, and high-risk investments. As with all investments, an investor should carefully consider his investment objectives and risk tolerance as well as any fees and/or expenses associated with such an investment before investing. International investing may not be suitable for all investors.”

All of which I’m sure all the good Gumshoe readers know already, but it never hurts to be reminded that yes, stocks are risky … and stocks that may be thinly traded in other countries with different laws and business standards can sometimes be more risky than the big multinational stocks we’re used to. Or at least, differently risky.

But as I said, you probably know that already — intuitively, if not by dint of personal experience. So what is this company that Schiff is suggesting to his clients?

Well, we toss that all into the Thinkolator, after carefully applying the Singapore filter, and learn that this stock is …

Longcheer Holdings (LHL at home on the Singapore exchange, LGCHF on the pink sheets — it’s thinly traded in both places, but, as you might expect, dramatically more so on the pink sheets)

This is a small company, the share price is about 71 cents in Singapore Dollars (about 53 cents US), which means it has a market cap of just over US$200 million. The price hasn’t changed since Schiff teased it, at least not substantially, so the trailing dividend yield is just over 5% — and yes, they have had the earnings to support that dividend, with a trailing PE ratio of just under 8.

Here’s how the company describes itself on their website:

“Longcheer Holdings Limited (hereinafter referred to as the Company) is a high-tech company specializing in handset research, development and design in mainland, China, providing total design solution for all segments of the handset value chain, from hardware and software to system testing and exterior design. Headquartered in Shanghai, the Company takes less than three years from foundation in 2002 to be successfully listed on the main board of Singapore Exchange Limited on May 2005. In FY2010, the total revenue reached RMB4.28billion, and shipment about 27.5 million units, making the Company one of the stable growing high-tech companies in China.”

The company reports its results with very cheery-sounding press releases, as you can see from the most recent earnings result from last week [pdf file]. From a quick look at their past results, it looks like they sell a lot of relatively unsophisticated cell phones — a few 3G phones, some “2.5G” phones, particularly for export to developing markets, and a huge number of GSM phones for the domestic market in China (they’re listed in Singapore, but this is really almost entirely a Chinese company).

So … like some successful picks we’ve seen from Peter Schiff, this one does have a decent-sized dividend (though not outrageously high or indicating a huge disconnect), and it’s in a challenging industry with heavy competition — if you’re interested in the shares I’d suggest starting out with their investor relations pages to get familiar with what drives their earnings and sales.

And, as always, if you’ve got an opinion … or if you develop one after looking into the stock … please let us know with a comment below. Thanks!


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31 Comments on "Peter Schiff Proposes Another High-Tech High-Yielder"

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john
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September 2, 2010 1:04 pm

Peter Schiff is pretty much a financial genius on the order of the gumshoe himself – so any picks he is making are far more "substancial " than the majority of these "teasers."

Clay
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Clay
September 2, 2010 1:11 pm

"you're" giving me a bad name

Bob
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Bob
September 2, 2010 1:51 pm

why not talk about the stock instead of your favorite neurosis?

Stan
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Stan
September 2, 2010 2:33 pm

Guys perhaps better if the Jock Stap Chatter ceases, and some meaninful posts relevant to the stock in question LGCHF is posted.
Getting yout balls in an uproar over nothing is meanigless!

harry12
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harry12
September 2, 2010 2:38 pm

I was required to wear Jock Staps in High School jim classes.

DZang
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DZang
September 2, 2010 3:34 pm

Yeah…

Those staps sure do chafe

signed – Mr. Jim Shorts

aardvark
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aardvark
September 2, 2010 4:24 pm

Hey, Shoe! Wipe the comments clean and start over. Worthless!

Willis
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Willis
September 2, 2010 6:21 pm

Loving you guys's intense debate 😀

rich
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rich
September 2, 2010 10:07 pm

Investing scares me a lot…

mpch
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mpch
September 3, 2010 8:08 am

Any infantile exchange of remarks is completely out of place among the highly intelligent comments we are otherwise used to on these pages. It would be better for all of us if such remarks were texted to intended recipients personally instead of boring us all. mpch

katie pie
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September 3, 2010 10:31 am

The status quo sucks.

Sent from my iPad 4G

DumbInvestor
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DumbInvestor
September 3, 2010 6:47 pm

Off topic, Can someone recommend an online broker that sells stock on the pink sheets. I know the following do not: Sharebuilder, Trade King, And Choicetrade. At least not all of them.
Thanks.

Stan
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Stan
September 3, 2010 11:46 pm

I'd rather own CNTF. It's only going up.

theaccusersgift
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theaccusersgift
September 4, 2010 1:41 am

Gumshoe, I can't see what I am typing in this comment block.
I had to cut and paste from Notepad.
Please make these comment box characters visible when typing.
Thank you.

george
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george
September 8, 2010 4:02 am

hello "learnthehardway". I like what you wrote and how you wrote it. so, you have natural intelligence. I am a chef in France, who wants to come to usa to do something never done before, yet the potential is staggering. please enter into a dialogue. i am financially illiterate yet clever in well versed business basics.
sincerely,
georges_capps@yahoo.com
paris france

dane
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dane
September 9, 2010 11:07 am

what are those 5 stocks?

Derm
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Derm
September 10, 2010 2:41 pm

Whats with the hit & run slander? Either tell us the stocks to back your case, or we can only consider this to be hearsay.

Kiwi
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Kiwi
September 10, 2010 10:54 pm

If you will not tell us the stocks EP recommended, can you tell us when the recommendations were made? Were you caught on the wrong side of the US$ surge in 2008?

Steve
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Steve
July 5, 2011 2:02 pm
LearnedTheHardway appreciate your honest review about Europac. I am a Europac customer and had a few stocks that didn't do well but most have held their value and have paid dividends in the last couple of years. If you had held Oz minerals it went upto $14.28 in May 2011 and would have made a lot a money. Peter Schiff is a very sharp investor and has admitted that occasionally he has made some bad investment picks. Most of his strategy is invest in a country with economic freedom and good investment environment: Australia, Singapore, China, Canada, and New Zealand.… Read more »
John Doe
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John Doe
October 30, 2011 6:56 pm

I wore jock straps in high school. They are good to prevent any odd events in front of the ladies.

batdawg
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September 2, 2010 1:06 pm

substantial – your giving me a bad name –

CreditCardProcessing
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July 14, 2011 3:53 pm

You took the words out of my mouth John.

Stan
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Stan
September 2, 2010 2:35 pm

Yes meaningful and meaningless 2 typos!

spreadtrader
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spreadtrader
September 3, 2010 7:58 pm

It's pretty…..well…..dumb………to buy pink sheet stocks. It's like buying cocoa or orange juice futures. You can get in ("slippage" is not just a word), but try getting out.

Everyday People
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Everyday People
September 4, 2010 9:19 am

You can buy them thru E Trade

Adams
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0
September 7, 2010 6:51 am
InteractiveBrokers.com. You'll need $10k to open an account. But you may prefer to open RothIRA instead, and put whatever you like. Or maybe something like $2,000 mininum. The max annual contribution is $5k. I recommend RothIRA because you wont pay taxes on profits, if you happen to have any. At least not immediately. And because as you said you're still learning then I guess your trading account is not bigger than $5k anyway, right? IB trades virtually everything: stocks, options and whatnot. They are a primary broker, so expect much lower commission fees than anywhere else. If I remember correctly… Read more »
DumbInvestor
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DumbInvestor
September 4, 2010 5:27 pm

Then why are these ( some of the ones ferreted out by SG) stocks listed on the pinksheets? Is there a way I could access them on their home exchanges instead?

Also, What is the difference from pink sheets and otc?

I picked my moniker because I love to ask the dumb questions I do not know the answer to. Everyone who has done this for a while already had ther dumb questions answered, or lost their a$$ learning. I prefer to lessen my expense curve and increase my profits.

DumbInvestor
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DumbInvestor
September 4, 2010 5:29 pm

Thank youEnter text right here!

AnnFace
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AnnFace
September 5, 2010 8:45 am

Dumbinvestor: I love you. I would love answers to these questions as well, and would prefer to ask novice questions, rather than learning the hard way by losing my hard-earned $.

spreadtrader
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spreadtrader
September 5, 2010 5:14 pm
http://en.wikipedia.org/wiki/Pink_Sheets "Pink Quote, informally known as the Pink Sheets, is an electronic quotation system operated by Pink OTC Markets that displays quotes from broker-dealers for many over-the-counter (OTC) securities. These securities tend to be inactively traded stocks, including penny stocks and those with a narrow geographic interest. Market makers and other brokers can use Pink Quote to publish their bid and ask quotation prices. Starting in 1913, and prior to the creation of the electronic system in 2000, these quotes were printed on pink colored paper by the National Quotation Bureau. The term Pink Sheets is also used to refer… Read more »
JT Meade
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JT Meade
November 3, 2010 12:14 am

You can buy stocks via pink sheets at Scottrade.

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