Small “Dip Buy” of a Watchlist Stock

By Travis Johnson, Stock Gumshoe, August 25, 2015

Almost exactly a year ago I suggested a few different insurance-related stocks to the Irregulars in an “Idea of the Month” piece, including Lancashire (LRE.L, LCSHF), Axis Capital (AXS), and Fosun Holdings (656.HK, FOSUF OTC in the US, or FOSUY for the 1:25 ADR OTC)… Lancashire I’ve owned for quite a while, but I’ve never owned the other two.

At least, until now. Fosun took off in the months after I wrote about it, enjoying the gloss of its growing reputation as the “Berkshire Hathaway of China” as they build a conglomerate with insurance companies at its heart… and it’s been on an incredible and headline-generating acquisition spree, so much so that it’s been hard to keep track of just what they’ve been buying, from iconic NY skyscrapers to Portuguese banks.

That attention helped to drive the price up, roughly doubling into this past Spring, a level it held for a while… but finally the price dipped on the China panic that really took hold last month, and fell further in the last week or so, and I bought some shares. I originally wrote about it when it was trading at HK$10 or so, and it’s back down to about HK$12 now. Back then it was trading at about 1.2X book value, now it’s at about 1.4X book… but I’ll have to dig into those numbers before I can say much of substance about them, the company has changed quite a bit in a year.

I opened a small position, and I’ll be looking more closely at their filings to give you some more detail about it and a more thorough update on Friday — just wanted to let you know that yes, I’m selling some stuff, particularly when it hits the stop less testing parameters I’m just starting to use, but I’ve also always got an eye out for a good long-term investment at an attractive price. If this is one that interests you, do take the time to understand it well — the stock trades in quite low volume in Hong Kong for a $10 billion stock, and is very illiquid in both of the US listings, so it’s not a stock you can get in and out of in a day or two without some friction (ie, paying more than you want to buy, or accepting less than you like to sell if ...

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