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Day 26: Netease NTES I'm loving China


A six day gap and no blog posts! Yep, get a grip, I'm not looking at this every day and neither should you. That's the whole point of making a buy and hold long term investment; it doesn't require daily hand rubbing.

Two stocks stood out today in what was a big day in the markets anyway. Netease and Pacific Premier Bancorp. Netease, the Chinese gaming and internet software company delivered a blistering 2.36% gain today to close at $254.45 (that's a 13.18% gain in MLH), while Pacific Premier Bancorp, the California bank focused on small the middle market businesses delivered a 9.03% gain today coming in at a 13.28% in the MLH portfolio.

NetEase, Inc. (NetEase) is a technology company. The Company operates an interactive online community in China and is a provider of Chinese language content and services through its online games, Internet media, e-mail, e-commerce and other businesses. The Company operates through three segments: Online Game Services; Advertising Services, and E-mail, E-commerce and Others. Its online games business primarily focuses on offering personal computer (PC)-client massively multi-player online role-playing games (PC-client MMORPGs), as well as mobile games to the Chinese market. The NetEase Websites provide Internet users with Chinese language online services centered over three core service categories, which include content, community and communication. Its online advertising offerings include banner advertising, direct e-mail, sponsored special events, games, contests and other activities. It offers free and fee-based premium e-mail services to its individual users and corporate users.

I've owned Netease in my personal portfolio since it traded at $19. Frankly I was really surprised to see the name show up in final buy list for MLH since it had run up so much already, but I was looking at price instead of looking at value. After a deeper dive I came away with the opinion that Netease trades at a very fair price. Netease trades at a discount to it's peers, a discount on the price/earnings ratio, a significant discount on price to projected earnings, a discount to sales and it's earnings growth rate should exceed its peers by a significant margin. So it's no surprise that Netease has risen to the top of the MLH portfolio

Todays rally was about the news. The market has been begging for specifics from the new administration and today they got a little taste. After a few more tastes investors will demand to see execution and eventually results.

Stay Invested

Clay Baker

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