3SOF

Nothing new on SNDA, I'll keep holding.

SNDA seems to be stealing NTES leadership position in China's online gaming market. It's revenues are expanding, net profit margin can also expand and the market cap is lower. It is already hard for me to be letting go of NTES, it would take a lot to shake me out of SNDA too.

I'll keep holding SNDA, nice 1.16% advance day yesterday.

It looks like someone is buying my "leadership takeover" theory, look how SNDA went up on strong volume in the face of Friday's weak general market. My hands on SNDA are stronger now that I've sold NTES, because I don't think I can afford not having at least two stocks of the online gaming sector in the Main Portfolio.

In the green in SNDA now, I hope it sticks and grows. Will keep holding the stock.

Volume was above average for the second trading day and the stock recovered well from the lower open. No news out. I'll keep holding SNDA.

SNDA has been showing some relative strength, both against the general market and its industry peers, like NTES, GIGM and NCTY, for example. This tells me the market sees SNDA's taking market share in the Chinese online gaming market, or it feels its expansion efforts to international markets will bear fruits.

I'll keep holding SNDA.

Wow, quite spectacular white marubozu today on SNDA. Volume was also above average, at 868,300 shares.

However, just after the close there was a Form S-8 filed with the SEC that means about 5% dilution for existing shareholders. Nothing unexpected, because it is related to the stock options plan previously approved, but it will nevertheless make me revise my dilution factor from 1.01 to 1.05.

The good news is people exercising options are buying 4,449,235/2 = 2,224,618 ADS at $28.55 for $63.5 M in net proceeds for the company. Well, the stock closed just 4.7% above $28.55 today.

I think the stock will react well to the news. I'll keep holding SNDA.

It seems Dracull wasn't able to buy SNDA at the lower end of the ascending channel and the stock is now 12.83% above my entry price. This sure was a nice "surprise".

The stock reacted very well to the news I posted over the last update:

Quote from: David Randolph on June 27, 2007, 06:05:45 PM
Wow, quite spectacular white marubozu today on SNDA. Volume was also above average, at 868,300 shares.

However, just after the close there was a Form S-8 filed with the SEC that means about 5% dilution for existing shareholders. Nothing unexpected, because it is related to the stock options plan previously approved, but it will nevertheless make me revise my dilution factor from 1.01 to 1.05.

The good news is people exercising options are buying 4,449,235/2 = 2,224,618 ADS at $28.55 for $63.5 M in net proceeds for the company. Well, the stock closed just 4.7% above $28.55 today.

I think the stock will react well to the news. I'll keep holding SNDA.

Even though the stock stands at the top of its ascending channel, I feel I shouldn't take profits here, both because the technical trend is bullish and also because SNDA is still cheap relative to its fundamental trends.

I'll continue holding SNDA.

fyi:
Exclusive game-operating right sends Shanda price to record high
Tuesday , July 03, 2007 05:25ET

BEIJING, Jul 3, 2007 (Xinhua via COMTEX) -- China's leading online game operator Shanda Interactive Entertainment Ltd. (Nasdaq: SNDA) announced on July 2 it has entered into an agreement with the Japanese game developer TECMO for an exclusive license to run online game "DOA ONLINE" in China's mainland, Hong Kong and Macao.
The game will be the online edition of TECMO's flagship 3D combat game.
Shanda said it will join hands with the Japanese company in developing the game. And both the two will make profits from the new technologies derived from that development.
Shanda revealed that the game will go into the market before 2008 Olympic Games and finally be provided to the world market. It also said the two companies will continue their cooperation in network entertainment area. The share price of Shanda went up 4.55 percent to close at 32.41 US dollars, hitting a record high in one year.

SNDA makes another accretive acquisition:

• Shanda Acquires Online Game Company Aurora Technology
PR Newswire (Thu 7:30am)

No financial details revealed, at least not yet. SNDA really needs to rise a lot to compensate for my weak hands and NTES miss arrrgghhhh

Well, I already talked a bit about SNDA after the open, there were some news out:

Quote from: David Randolph on July 05, 2007, 08:56:15 AM
SNDA makes another accretive acquisition:

• Shanda Acquires Online Game Company Aurora Technology
PR Newswire (Thu 7:30am)

No financial details revealed, at least not yet. SNDA really needs to rise a lot to compensate for my weak hands and NTES miss arrrgghhhh

Not a lot of movement in SNDA's shares, it goes to show how diversified this online gaming company is.

I'll keep holding SNDA.

SNDA is, according to my valuation model, the least attractive stock in the Main Portfolio, because there's just 35% to go to the optimal selling price. I see that I considered 30 as my earnings multiple estimate, which seems quite high, but the Internet Software & Services industry trades at 40 times earnings.

I feel sad about selling NTES essentially due to a technical breakdown and what that could mean for the future fundamentals, I can't take the risk of letting SNDA go just because it is at the upper end of its trading channel.

I'll continue holding SNDA.

David,

  If you consider NTES a mistake in selling, why don't you buy it back now? It is at about the same levels as it were when you first bought it. If your fundamental value model provides a support for this decision, then why not buy again? Or, perhaps, you think now that you got the cash, you don't have to rush and look for another/better opportunity?

Thank you.
Berloga.

Quote from: berloga on July 09, 2007, 09:08:55 AM
David,

  If you consider NTES a mistake in selling, why don't you buy it back now? It is at about the same levels as it were when you first bought it. If your fundamental value model provides a support for this decision, then why not buy again? Or, perhaps, you think now that you got the cash, you don't have to rush and look for another/better opportunity?

Thank you.
Berloga.

I've been thinking about buying back NTES, but you're right, I've been actively searching for a more promising opportunity, because NTES catalyst was the company buying back shares, but it still looks like it is losing its leadership role to SNDA.

I'll probably buy two new stocks this week (as I'll have about 16% cash available after selling GW), but I'm still studying to see if I can come up with better ideas than buying back NTES or SILC, for example.

Thanks

just FYI:
Shanda to Acquire Homegrown Online Game Operator
Monday , July 09, 2007 07:12ET

SICHUAN, Jul 09, 2007 (SinoCast via COMTEX) -- Shanda Interactive Entertainment Limited (Nasdaq: SNDA), a top online game operator in China, is set to spend more than CNY 100 million acquiring a Chinese homegrown online game operator Chengdu Aurora Technology Development Co., Ltd., announced the purchaser on July 5, 2007.

Its CEO Chen Tianqiao indicated that the acquisition was a support to its 3D online game production line and good for the expansion of its research and development base in Chengdu, capital of China's southwestern Sichuan province.

After the deal, the purchaser is expected to still take a leading position among its counterparts. Its revenue from online game hit CNY 505 million in the first quarter of 2007, slightly surpassing its major rival NetEase.com, Inc. (Nasdaq: NTES) to turn to be the No.1 in the sector again.

The Chengdu-based company, founded in 2004, is operating two types of self-developed 3D online games and one of the game has more than six million registered users presently.

Yeah, that's it la-onda, SNDA is taking the lead in online gaming in China:

«After the deal, the purchaser is expected to still take a leading position among its counterparts. Its revenue from online game hit CNY 505 million in the first quarter of 2007, slightly surpassing its major rival NetEase.com, Inc. (Nasdaq: NTES) to turn to be the No.1 in the sector again.»

There's nothing new from a technical or fundamental standpoint, I'll continue holding SNDA.