Thursday, January 17, 2013

CNTF 1.36 China value play 5.00 cash

Recently I've noticed some parabolic runs in the China sector. Two that come to mind are CTC and CCCL which have run from the 1.50 area to the 3-4 range. I've been scanning my database for some possible sympathy plays and CNTF is one idea I'd like to highlight. Issue is trading in a tight bullish ascending triangle about to get a macd cross soon. I've highlighted some resistance lines that traders should watch closely for a technical breakout if taken out.

Two reasons I like this issue. First CEO was a buyer in 2011 in the 4 area and basically at this valuation your buying at a deep discount to his purchase (see weekly chart).

Second company has a pending legal battle with Samsung over patents which imo will be settled in CNTF's favor at some point in the future.

265m cash per last conference call
China Techfaith's Management Discusses Q3 2012 Results - Earnings Call Transcript

CNTF IPO was tier-1 firm Merrill Lynch not a RTO

This issue trades at a valuation that could get picked up soon from spec and/or value  players given the recent parabolic runs in the sector. I would also not be surprised to see the insider start adding shares again given the recent legal pr and valuation issue. Again China plays are very risky and not suited for most. I do own a small position right at the 50dma here as I like the chart and the aforementioned catalysts. Also any pr on a buyback, special dividend, asset purchase, or going private initiative would also move this beaten down issue.

                                                         FINVZ DATA BASE 5.00 cash

Chart idea was presented to me by KUNAL the BULLSONWALLSTREET guru. I did some further dd and I liked the fundamentals.