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This, after their earnings report came out SIMO dropped by over a third of its total valuation. It was a significantly undervalued stock to begin with, and it’s still a fast growing company. The NAND problems notwithstanding, I see SIMO as a long-term grower. As usual the market has an unreasonably short-term focus. At its current valuation, I couldn’t justify not buying any SIMO stock.

If necessary, I’ll sell some of my stake in BWLD. Buffalo Wild Wings has been executing its expansion well, but its price has also gone up over 50% since in invested earlier this year and the holding has grown to over 20% of my entire portfolio.

Right now, SIMO is trading at a P/E of under 6, and a price/book ratio of under 0.9!

Update:
07/31/2008 Bought 175 SIMO @ 7.42

Remember, you are responsible for your own investment decisions! See the disclaimer.

Along with the three companies to sell, pointed out yesterday, I’ve dug up three new companies worthy of a place in the Toshuo Portfolio: Henan Zhongpin, Famous Dave’s and Exelixis.
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Suntech shares have become compelling enough that I’ve decided to sell my United Fire&Casualty position. When I have more time, I’ll update this post with why.

03/03/2008 Sold 50 UFCS @ 34.6006
03/03/2008 Bought 47 STP @ 36.9

Whenever the stock market takes a hit, some people (and lolcats) act like the SKY IS FALLING. As scary as a drop like this seems, it’s a good thing for the vast majority of us. For people who are retired and living off of their investments, or those who need to sell them for one reason or another, a huge dive like this really bad news. Hopefully, those people invest more conservatively than I do. Whenever the market takes a dive, my portfolio seems to get punished twice as much as the rest of the market. That’s probably due to the fact that I tend to invest in either less known or less popular stocks that institutional investors would want to distance themselves from at the first sign of trouble. Losing a bunch of money by investing in the same thing that everyone else did, is one thing. Losing a bunch of money in some stock nobody’s heard of is something else. Fund managers buying into Microsoft at the end of 1999 had plenty of company. Those who loaded up on Gigamedia like I did last week might face some tougher questions.

As usual, there are some cooler heads at the Motley Fool. For the majority of us, a drop in prices is a good thing. That’s because most of us who invest plan to be net buyers in the near to mid-term future and when we’re buying, we want prices to be low. It’s only for those who chose to, or, due to excessive margin debt, are forced to sell now, that low prices are a bad thing. There’s an old Chinese chengyu related to this situation.

杞人憂天

Literally, 杞人 just means a person from the ancient country of and 憂天 means worry (about) the sky. This phrase comes from an old story about a man from Qǐ who often spent time sitting by himself considering all manner of problems. One day, he considered that the sky might collapse some day. The more he thought about it, the more worried he became. Realizing that everyone, good people along with bad would certainly be crushed by the sky when it collapsed, his spirits continued to sink. It disrupted his sleeping and eating and in the end, he worried himself to death. Ever after, “Qǐ man worrying about the sky” has been a short phrase associated with needless and possibly self-destructive worrying.

In the case of stock investing, selling out of everything after a sharp drop in prices is about as self destructive as it gets. A more logical position is that of Warren Buffet’s old mentor Benjamin Graham- be greedy when others are fearful. He should know, considering he made his fortune by buying stocks during the great crash early last century and then literally writing the book about value investing. The way I see it, whatever stocks I thought were good purchases three days ago are now even better purchases.

Right now, most of my portfolio is worth less than what it was in June, and most of the companies should be worth a bit more, since they’ve continued to grow. Considering the 15% plus dive in 盛大 prices, I was strongly tempted to buy more. It’s done so well since I bought it the last time the sky was falling that it represents a huge chunk of my portfolio, though. Buffalo Wings has dropped a bit, but it still isn’t what I would call cheap. Harris and Harris, Gigamedia, and Middlebury to a lesser extent, look awfully cheap, though. Other stocks I’ve been looking at also offer some bargains. A couple of Chinese power companies developing green power, Huaneng Power and Suntech Power, both look intriguing, as does online real estate company Loopnet. With this many bargains around, I’m very, very glad that I’ve been working so hard to keep a low margin balance and allow myself so much room for days like this.

In the end, I decided to make three investments.

1) Panera Bread- My investment choices continue to reveal my love of food. Fortunately, it’s a pretty safe bet that Americans will continue dining out in greater and greater numbers. Like Chipotle, Panera has an experienced, successful leader at the helm, is in the midst of regional expansion, and offers high quality, fresh, yummy stuff. Unlike Chipotle, Panera has hit a couple of set-backs in terms of meeting estimated EPS, and its price reflects that. I bought 50 shares at $40.47.

2) Panacos Pharmaceuticals- They’ve got a promising HIV treatment that’s making it’s way through phase 2b trials. It works on a different pathway than existing treatments, and it’s showing effectiveness on people who have already been given other treatments. The risk on this investment is extreme, but so is the upside. I bought 600 shares at $3.23.

3) Gigamedia- I did a thorough analysis of Gigamedia last week. With absolutely no new news, its price is down by nearly 20%. Buying the exact same good for way less than I was willing to buy it for two days ago is a no-brainer. I bought 175 more shares at $10.96.

Legal Disclaimer: All of the information in this article is accurate to the best of my knowledge. However, I make no guarantee about the accuracy of anything written above. I’m not responsible for any mis-typings, or any other errors in the information. If you purchase any stock solely because I did, you do so at your own risk.

Harris & Harris (Nasdaq: TINY) is a publicly traded venture capital firm. Normally, I would prefer to invest directly in individual companies, rather than a venture capital firm, but this case is special. From everything I’ve been reading, I’m convinced that nano-technology is on the verge of profitability on many fronts. There are both short term opportunities such as building materials with altered characteristics, and long term opportunities that are currently in the realm of science fiction only.

There are some public companies investing in nano-tech right now, but the problem is they don’t offer a pure play. Sure, part of IBM’s great research team is working in nano-tech, but the company is so large that only a tiny fraction of its earnings are likely to come from nano-tech, even if their research goes well. Of the companies out there that are primarily focused on nano-tech, I haven’t been able to find any that are publicly traded. That’s where Harris & Harris comes in. Being a venture capital firm, they are investing in several of those little “pure” nano-tech companies- over 30 to date.

The Upside

There are exciting things coming out of several of the companies Harris & Harris is investing in. Molecular Imprints is already working with Motorola, Nanosys is working with Intel, and Xradia is designing and manufacturing ultra-high resolution imaging systems. The most exciting company in the Harris & Harris portfolio, though, is D-Wave a Canadian-based start-up that’s building quantum computers. That’s right. Quantum computers. Earlier this year, they provided the first-ever commercial demonstration of adiabatic quantum computing. It employed superconducting magnetic flux qubits, to solve simple sudoku puzzles. It was only a 16-qubit processor, but they plan to have a 512-qubit processor built by early next year, and a 1024-qubit processor before the end of next year. D-Wave believes that as their computers become more powerful, there will be a $9 billion market for its services. Considering the advantages quantum computing has to offer encryption, bio-informatics, and other tasks which would require exponentially more (non-quantum) computing resources as they scale up in size, $9 billion is a figure I have little difficulty believing.

The Risks

I could make a very, very long list. The main risks I see are as follows:

  1. None of the companies in Harris & Harris’s portfolio are profitable yet
  2. There are no guarantees when it comes to theoretical research
  3. Even if the research is fruitful, it may be other companies that benefit

Other Thoughts

The companies in the Harris & Harris portfolio have made a great deal of progress over the last year, but the stock price hasn’t changed much. Also I’ve noticed insider buying recently. That’s always a good thing. I’ve wanted to buy this stock for quite a while, but I just haven’t had the money to do so. Since I sold my Amgen shares that I’ve owned since way back, I was able to make this purchase without taking on more margin debt than I am comfortable with.

I bought 250 shares.

Disclaimer

Everything in this entry is true to the best of my knowledge, but I don’t make any guarantees. Don’t make your investment choices based upon mine. Only you can be responsible for your own financial decisions.

After today’s Q4 2005 Earnings Conference Call, Shanda 盛大‘s stock shedded nearly a quarter of its value. The amazing thing is, there really weren’t any surprises in the conference call. Sure, there were some one time expenses related to acquisitions, but nothing to justify this. I had been planning on investing in either Ctrip or Baidu next, but at these prices I’m selling my off toys in order to buy more Shanda. Seriously. I sold some of my things to finance the purchase of another 150 shares today (at $13.56 each).

Disclaimer: If you make investment decisions based on what I write, you do so at your own risk.