Model Portfolio mkoza:TGF

CCME's business is going strong. A material increase in buses under long term contract to carry their advertisements was announced. A prominent newsletter writer jumped on the "bus". As I have surmised, it is becoming more and more clear that CCME ($17) has a mandate to oversee the placement of clean ads as part of its partnership with the government, and such mandate could mean that the partnership is more likely than not to be renewed before it expires in 2012. Those betting the high margins and torrid growth are not for real are being proven wrong. The forward PE is still a small fraction of what it should be, although you can say that for many Chinese stocks right now.

CELM ($5) - electric motor manufacturer, new buy - 2011 EPS estimates are being increased, forward PE now about 4. Not a reverse merger, but carries a similar discount, perhaps due to pre-IPO transactions that would have been meaningless pre-Sarbox, and are meaningless going forward. There were substantial stock awards to employees in recent quarter, but there was no stock comp previously, so the shock should fade.

HRBN ($16) - CELM's big brother - this linear and rotary motor maker trades at a 33% discount to a credible buyout offer from the CEO. We will hold for the 50% gain, which I expect in the next six months. Forward PE is five, and GS is lined up to provide financing, so I expect this one to happen, and the stock should be much higher in 12 months anyway if it doesn't.

UTA ($6) - travel agency - keeps chugging along, cash is piling up, disclosures are improving. CEO took more of an active role on recent earnings call. More of the allegations from the Bronte and Blodget crowd were discredited. Hotel biz was flat, risk avoidance cited amidst scramble for rooms during Shanghai Expo. They need Priceline's help and should get it, after the learning curve in their partnership is scaled over the next few quarters. New auditor is a small US-based firm with no apparent blemishes for shorts to bash. UTA still has internal financial control issues, mostly related to lack of expertise. The new auditor may help, and a higher profile CFO is supposedly in the works and is sorely needed.

JKS ($25) - solar panel manufacturer, new buy - this one is growing fast, and only a crash in the euro can stop it. Margins are expanding rapidly, as are 2011 EPS estimates. Under an ideal scenario, JKS could earn up to $10 per share in 2011.

SUTR ($2) - steel processor - disappointing quarter, still very undervalued, but better options exist. Selling well below liquidation value, so we won't sell very much here.

XIN ($2.4) - homebuilder, new buy - EPS estimates for 2011 are being increased, stock sells at a forward PE just over 2. Valuation offers downside protection if 2nd and 3rd-tier Chinese residential real estate markets (XIN's markets) go bust - but a heavy-handed Chinese gov't will probably not let this happen. A number of promising projects are about to open for XIN, and market prices are increasing even for its troubled Kunshan project that is experiencing mass mortgage cancellations, so no writedowns appear to be in the offing. The psychology of the Chinese homebuyer is unique and misunderstood by many. That said, lower-priced homes do appear to be selling better in this environment, and XIN's business model of not overinvesting in land should pay off in this regard.