5/26/2011

FSIN: Fushi Copperweld evaluates strategic alternatives

Management is getting serious about the market’s inability to fairly value the company.


Fushi Copperweld evaluates strategic alternatives

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“Chinese wire maker Fushi Copperweld Inc FSIN.O said it will evaluate the buyout proposal from its co-chief executive officer and a private equity firm, and will also look at other strategic alternatives.”

Add to this announcement the current valuation and growing short position. Many of these Chinese companies have been all lumped into the … it’s a Chinese company therefore everything they report is suspect. But at a certain point some of these stocks become value plays or just a candidate for price mean reversion. I believe FSIN has value based on these and other criteria.

Price = 7.07
Cash per share = 3.52
Long term debt per share = .17
Market Cap = 270 Million
Enterprise value = 98 Million
Sales/FCF = 21.13%
Insider ownership = 44%

Since it’s a Chinese stock I won’t dig into the capital structure or challenge the reported earnings.

But with the 52 week return of -35.61%, cash balance and the large growing short to float ratio the stock deserves a second look .

Even with a short term view the future demand for the stock keeps growing with the short balance.

Growing Shares Short and date reported

6,105,459 5/13/2011

5,903,615 4/29/2011

5,461,412 4/15/2011

3,924,025 3/31/2011

3,379,303 3/15/2011

3,214,301 2/28/2011

3,263,519 2/15/2011

3,450,501 1/31/2011

3,280,538 1/14/2011

3,171,098 12/31/2010

3,143,632 12/15/2010

3,231,313 11/30/2010

2,674,133 11/15/2010

2,525,035 10/29/2010

2,185,473 10/15/2010

1,961,859 9/30/2010

1,508,162 9/15/2010

912,317 8/31/2010

544,587 8/13/2010

433,978 7/30/2010

322,219 7/15/2010

460,078 6/30/2010



FSIN: long position