Hey Puda Longs, Chill Out
Big panic today on Puda Coal it seems. I feel really good about this investment since I’ve been in at .30+ (roughly $2.10 pre-reverse split). I continued to buy the stock up to $6.
So why the panic today? Because fresh investors do not understand the politics in China, the geography, and apparently how to read a news report. Lucky for us we have a great group of traders on Bulls that work together, not separately, and this makes us ever so deadly.
The news headline was:
“Shanxi’s Nationalizing of Coal Mines Riles Zhejiang Investors, Government”
China’s “coal capital,” announced it would nationalize 2,840 registered coal mines and finish signing the agreements with newly nationalized mines by the end of September, retaining only 1,000 open mines by 2010.
And Zhejiang Province is not happy about it.
Yeah, of course they aren’t happy about it. Good thing Puda Coal is based in Shanxi, and this is simply the next step before Puda likely goes into the coal mining business.
I’m going to keep this real short;
– Puda is currently *not* a coal miner. They are a coal washing company, preparing coking coal for steel manufacturers. They have a very low margin, and they have been working to increase their margin by expanding their business.
– Puda took an 18% interest of a coal mine in the Shanxi Province back in May. Remember, they are based in Shanxi, the coal capital of China.
– Puda is now working to get approvals on future mines, whether they get them approved by the government or not is yet to be seen.
– The article reads “and finish signing the agreements with newly nationalized mines by the end of September, retaining only 1,000 open mines by 2010.”
– Puda is based in Shanxi Province, while I won’t get into China Politics, I will say that the internal protectionism is there for a reason. It’s how they operate, and I’m pretty damn sure that the government does NOT want to put on a bunch of hard hats so they can go mine these fuckers themselves. They will likely award contracts to existing companies within the Province.
– Puda has had a strategy of becoming a coal miner since 2007 in Shanxi… The CEO is a genius, he knows how to run a company, and understands “shareholder value”.
I don’t know what it is about investors on this side of the pond – but the minute they read the words “Nationalization” or “Government Intervention” they lose their lunch, and their wallets. Back in the day, prior to Twitter, I would enjoy taking money from the faceless few — but now that people are actually following me I feel as if I have a responsibility to point out the obvious.
I do my research, I personally feel comfortable on this play – but that does not mean taking profits is a bad idea. It’s always good to take profits, but in the case of Puda I am *personally* holding out for the long run.
So for those of you who keep asking if I’m “still holding Puda”, yes I am, now it’s up to you to decide if you are… I’m simply stating the facts as I read them.
Disclaimer: I own more Puda Coal than you do. I am so long on this stock it’s crazy. If I dumped all my Puda today it would have covered the entire days volume and then some.. So don’t trust a word I’m saying about this stock – always do your own due dilligence and good luck!!