Sell Tonly Electronics, add to Dairy Farm & LiveChat

Something a bit odd happened recently with my holding Tonly Electronics. Due to re-structuring in the company which is the majority shareholder in Tonly, the HK exchange forced TCL to make a bid for the shares in Tonly. Since this was an involuntary bid, the bid premium was very small to non-existent. I had not to planned to sell my shares in this bid, since the company intended to let the company be listed. But over the last weeks it seems a lot of shares have turned over just around the bid price and I’m afraid the free-float will be so significantly reduced that this already illiquid company will be virtually impossible to trade in. Given this and that there are many other China related companies with attractive valuations I decided to sell my full holding as of close Friday. This was a very unusual sell for me, given that I think I’m selling my shares too cheaply, but given the strange circumstances I don’t want to get stuck holding these shares.

This increases my already pretty large cash buffer, so I choose to add to two of my holdings:

Dairy Farm – I’m bringing this back up to a 6% weight in my portfolio. I sold some of my shares at 9 USD and now I get to buy then back at below 6 USD. I’m expecting a terrible report given the situation in Hong Kong. This is truly a buying, when there is blood on the streets, investments. Go back to my old full analysis if you want to understand the company better. For example Dairy Farm’s holding in Yonghui Superstores is worth almost 3 USD per share. So you are getting large parts of this company for free right now. The HK situation does not look good, but I still think this is a buying opportunity.

LiveChat – Also bringing this to a 6% position. Have been experimenting with their sales process, which did not end up satisfactory according to the companies latest update. Nevertheless the company continued to grow the number of customers, which is impressive. I’m very interested to see the next set of financials, if we can see some early signs of increased revenue per customer. I think they might be getting there.

8 thoughts to “Sell Tonly Electronics, add to Dairy Farm & LiveChat”

    1. Hi Michael, yes I looked at it briefly, there is quite a lot of political risk as I saw it back then. What would be your take on the company?

      1. It is politically de-risked as a new government was formed. The government does not include and “socialist” party.

    1. Interesting one of this funds largest holdings is Osstem which i had on my watchlist for a long time. They are going through some serious tax troubles right now

  1. Funny! Today was I thinking that there had been nothing posted for… > 1 month… And voilà ! Ding-dong, new post !!

    Here a link to new ideas of some interesting companies. First sight I liked Bioteqe a lot, and a few others like Greatview,.

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