Dick Davis Investment Digest quotes advice from Global-Investing.com:
“Given Chinese steel growth, I looked at Ossen
Innovation Co. Ltd. (OSN 3.00 Nasdaq), a Nasdaq-
listed steel-wire maker which also makes rare-earth
coated steels. These are used for building suspension
bridges. While a likely beneficiary of the Chinese boom
in infrastructure spending, it also engaged in complex
self-dealing with its CEO, who owns a tad under 60%
of OSN stock. Of the remaining shares, most were in
institutional hands but they seem to be selling, so the
instituional share has fallen from 25% to about 5% in
2011 to date. A shortage of stock in a closely held firm
among other things leads to its reporting with delays,
and it only just put out its 2010 annual numbers. It also
increases volatility, as does the market’s current taste for
shorting recently issued Chinese shares (this one came
out in December 2010). The share fell Friday by about
10% despite the figures looking good but recovered a bit
this morning. OSM is hardly tracked by Wall Street as
only one firm covers it. It has a P/E ratio of 3.69 (TTM)
which is appealing. Its growth has been rapid and its
margins are around 20%. It trades at 1.1x book. It is a
gamble but I am taking it. … Buy OSN with restraint.”
I wanted to warn you all not to take too seriously the latest ominous chart pattern, named after the Blimp Hindenburg. Yes, it blew up and set back the cause of motorless flight for decades. But a Hindenburg is clearly not as disastrous as a Death Cross, the last chartist panic call two months ago, which was followed by a normal flat market since then. Neither chart pattern has a long-term convincing history. They are just used by bears to scare us off the stock market.