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Sell-off in FUQI overdone

October 27th, 2009 · 1 Comment

An already cheap stock is getting a whole lot cheaper..

We have written earlier about this company. The shares have experienced a meteoric rise, but that was wholly justified, in our opinion as they were really ridiculously valued earlier in the year. They’re still very cheap for a stable growth company with hardly any debt.

Have the Chinese suddenly stopped buying jewlery? That is very unlikely, especially considering the fact that there is a shift from export led growth to more emphasis on domestic consumption. The jewlery market grows by some 20% per year. We don’t think this is going to change any time soon..

The likeliest explanation for the sell-off is that it is related to fund selling big winners to net the tax effect with closing losing positions as well.

Here is a Business Week article that explains nicely just how cheap these shares are

Tags: FUQI

1 response so far ↓

  • 1 Richard // Oct 29, 2009 at 12:28 pm

    Yesterday another 11,73% down, on a big volume more than 4m with an 30-day avg of 1,5m.
    Does anybody know what’s happening??

    Short Interest (Shares Short) 4,866,000
    Short Percent of Float 31.74 %

    This isn’t good is it??