Shesa's MAY 2016 INVESTMENT BLOG

        22 May 2016

MAY 2016 Investment Blog

Shesa Nayak

U.S. Stock Market Commentary: The second quarter earnings season is over for U.S. corporates. I would say it was not a great earnings season but not too bad either. DOW and S&P have come to the positive territory for the year. The commodities sector has bounced back to a reasonable level. Now the stock market is looking for two important events. First, the Fed meeting scheduled for June 15. Second, the Brexit poll is scheduled for 23^rd June when Britain will vote to decide whether it should leave or remain in the European Union.

Let’s first take a look to the U.S Stock Market Indexes.

U.S. Indexes	4-Jan 2016	Friday Close	Year-to-date change	YTD % Change	52 Week High	Change from 52 Week High (%)
DOW	17425.03	17,500.94	75.91	0.44	18,286.90	-4.30
S&P 500	2043.94	2,052.32	8.38	0.41	2,132.82	-3.77
NASDAQ	5007.41	4,769.56	-237.85	-4.75	5,231.94	-8.84

Economic Reports

• Fed Minutes and Interest Rate: On Wednesday, 5/18, Fed Officials said in the minutes, it would be appropriate to raise interest rates in June if economic data points to stronger second-quarter growth as well as firming inflation and employment. After the release of the minutes, traders were projecting a 34 percent chance that Fed would raise interest rates in June. Visualizing the data, I think there is only about 40% chance that Fed may raise interest rate in June. If the data remains strong than I believe they could potentially raise interest rate in July. Let’s wait and watch.
• Weekly jobless claims were 278,000 against projected 270,000.
• Consumer price index  (CPI) was 0.4% against projected 0.3%.
• Existing home sales were 5.45 million units against projected 5.41 million.

Please visit the following link for more economic reports:

http://www.marketwatch.com/Economy-Politics/Calendars/Economic

Source: Marketwatch.com.

What can we anticipate from the stock market at this point?

As we know, we are in the worst 6 months of the year, starting May 1 – October 30. As such, I do not expect any signification market up-turn during this period and it could be very volatile. After a few months, election news could paly a major role. I can expect market to go up in the later part of 2016. Buying the right stock or having a trading strategy may be helpful during this period. Oil may be approaching $50 per barrel. We will see how it plays as OPEC and Non-OPEC members meet on June 2nd. That’s important for oil price to go on either direction. I would anticipate some correction in Gold and Silver but I feel those could be buying opportunity. If Fed raises rate in June or July, I do not anticipate it to raise rate any time this year unless economy improves significantly, which is un-likely. Also, let’s not forget that it’s the election year. This may be good for commodities. Bottom line is, I do not expect any significant return in next couple of months and better to be patient.

JD.com, Inc. (JD)

JD.com, is a Chinese company but traded in NASDAQ as an ADR. The company, through its subsidiaries, operates as an online direct sales company in the People's Republic of China. It primarily offers electronics and home appliances products; and general merchandise products, including audio and video products, and books. In other words we can say it is Amazon.com of China.

Why do I like this stock? The growth of on-line shopping in China is increasing. It also hold majority of sales in-house and that allows it to have control on quality. Like Amazon, it also owns vast and growing order fulfillment network, which offers same day delivery.  The company has also developed reputations of dealing with authentic goods, national and international brands. Last year it also launched international sales platform to attract international brands to use its order fulfillment service. Last quarter the company had 47.3% revenue growth and it is projecting 40-44% growth in next quarter. It also increased its customer base 73% to 169 million in last quarter. But the problem is, it’s still not able to generate profit. However, that’s what exactly happened to Amazon. I believe BABA and JD.com are two companies who could dominate the future of China online shopping market. Bottom line is, JD.com has the potential to become the Amazon of China and a stock to hold for future. It’s currently trading at $23.45 and has 52 weeks high of $38, which gives a 38% discount from the top. The fundamentals may not look that exciting due to some large write-off the company made few months ago. But it has 47% revenue growth with a forward PE of 11.84 seems to be cheap. The institutional holdings for this stock are also going up and that’s a good sign. I have been holding this stock and continue to keep adding. As a principle, I never buy all the position at once rather buys in a phased manner.

Company Fundamentals:

Market Cap: $32.17 Billion

Revenue: $30.48 Billion. Revenue per share: $22.17

Quarterly Revenue Growth: 47.30%

Profit: -$1.47 billion Million

Earnings Per Share (EPS): -$1.47

PE Ratio: N/A

Forward PE: 11.84, Price to Sales: 1.03

Profit Growth: N/A

Institutional Holding: 56.8%

Return on Equity (ROE): -25.92%

Total Cash:  4.77 billion

Debt: 1.76 billion, Beta: N/A

52 Week High: 38, Low: 21.55

Risks:  JD.com is a Chinese company. The Chinese economy is not in a great shape at this point. In addition, it may be difficult to judge the real financial situation for the Chinese companies. The stock is obviously dependent on how overall China economy grows. JD is a volatile and may fall further with market downturn. However, I feel that it’s a very good buying opportunity for long-term investment and the company seems to have a great future.

Shesa’s Blog Portfolio (Updated: 5|5|16).

Equity	Suggested Price (USD)	Current Price (USD)	Suggested Date	% Changes	My Opinion (see disclaimer)
STOCK
AAPL*	54.09	95.22	1/25/13	76%	HOLD
BIDU	86.43	170.05	4/18/13	97%	HOLD
SLW*	21.8	19.13	10/1/13	-12%	BUY
FB	47	117.35	11/13/13	150%	HOLD
TSLA	135	220.28	11/13/13	63%	HOLD
MA*	78.06	95.47	12/12/13	22%	HOLD
AMZN	311.73	702.8	4/12/14	125%	HOLD
GILD*	100.92	82.64	1/11/15	-18%	HOLD
ALNY	89.1	55.11	2/6/15	-38%	HOLD
SFUN*	9.57	5.55	6/14/15	-42%	SOLD @5.15 on 5/3
MO*	52.03	62.96	9/13/15	21%	BUY
ILMN	171.15	140.51	1/15/16	-18%	BUY
SKX	31.88	29.98	2/21/16	-6%	BUY
BABA	67.28	78.79	2/21/16	17%	BUY
JBLU	20.44	18.11	4/24/16	-11%	BUY
JD	23.45	23.45	5/22/16	0%	NEW BUY
ETF
GDX*	26.88	24.05	4/1/13	-11%	BUY
INDA	31.94	26.31	3/15/15	-18%	BUY
ASHR*	28.46	23.11	3/15/15	-19%	HOLD
INCO	34.46	30.79	5/15/15	-11%	BUY
IHF*	139.1	122.91	8/16/15	-12%	HOLD
XLY	77.76	77.7	8/16/15	0%	BUY
PJP	69.43	62.35	10/18/15	-10%	HOLD
EEM	32.5	32.21	11/15/15	-1%	BUY
MUTUAL FUND
FBIOX	117.73	173.05	3/1/13	47%	HOLD
PRHSX	55.17	61.68	2/2/14	12%	HOLD
FSCHX*	135.91	138.44	4/12/14	2%	BUY
FSCRX	27.3	27.2	10/25/14	0%	HOLD
GASFX*	28.31	27.34	12/20/14	-3%	HOLD
PRMTX*	63.38	70.41	12/20/14	11%	Accumulate
MINDX	26.94	25.73	6/14/15	-4%	BUY
MCDFX	14.11	13.16	12/9/15	-7%	BUY
FSRPX	95.46	103.47	1/15/16	8%	BUY
FBSOX	38.78	40.28	3/20/16	4%	HOLD
* Indicates dividend adjusted

Positions closed in after my last blog:

Equity	Sales Price	Buy Price	Date Sold	Gain / Loss (%age)
VIPS	10.42	22.68	5/20/16	-54%

Company Updates

VIPS: The Company has been consistently falling on revenue guidance for last several quarters and stock is not going south. I was holding this with patience for a long time but finally decided that the future of this company does not look promising. Hence sold all my positions. Rather, JD.com seems to have much better future potential so adding to that position could provide better ROI.

SFUN: The Company has not declared the earnings result yet. It’s expected to declare in next few days/weeks. I am keeping an eye on this. It’s another loser thus far. If the earnings and future projection is not good then I may get rid of this after the earnings.

That’s all for today. Wish you good investing! Stay tuned for my JUN 2016 blog. Thanks for your time. If you want to get alert on my action then please subscribe to shesagroup_invest@googlegroups.com. Also, feel free to send me your comments and suggestions or alert request to shesa.nayak@gmail.com

Disclaimer: This blog is meant to provide my personal opinion rather than professional recommendation to buy/sell any stock, ETF, mutual fund or any other security(s). As an investor, it’s your hard earned money and you decide what is best for you. The above are merely my own opinions and some of the information provided may not be correct. Please contact a professional money manager to buy/sell any security. I do not earn any commission by writing the blog. I have position(s) on whatever security I write on my blog and avoid recommending any security that I do not own or follow.

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