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Another Monster China IPO

On September 17th Sofun Holdings (NYSE: SFUN)- the Chinese real estate web portal, came public at $42.50- traded to $75 on opening day (the best IPO of 2010), and is still holding up at $66 today. Up 76% on its debut.

Today, another China IPO hit the markets. Country Style Cooking Restaurants (NYSE: CCSE), a China based restaurant chain, raised $82 million in an IPO priced at $16.50- now trading at $26- up 57% on opening day.

It's sure a market of the haves and have nots in the China space right now. I don't recall ever seeing such a divergence in any market environment. A few of the giants are being embraced by the institutional community, but the smaller stocks- and I'm not referencing bulletin boards- I'm referring to many stocks trading on AMEX, NASDAQ, and the NYSE- are being completely ignored regardless of corporate performance.

Obi-Wan Kenobi- I sense a ripple in the Force. There is evil afoot. We're in an upside down world that makes absolutely no sense. Large cap stocks in the China space are trading at great valuations- small caps are absolutely decimated despite churning out admirable numbers.

This Ripple in the Force must be resolved at some point down the road. As these larger cap stocks continue to do well, at some point the money will flow into the small stocks, and the recent beautifully engineered attack on China small stocks will shrink as the car pulls away and the image becomes smaller in the rear view mirror.

Like a Jedi Warrior of the small cap China space, I'm charging on and having faith in the Force- in this case- the Force being a whole generation of hard working and clever entrepreneurs, armed with cash, and catering to the largest consumer class in the history of the world. Their businesses are growing at rates the world has never seen. It's an irresistible force. 

New idea #3 coming tomorrow post close. Here's a glimpse- The Chinese government is still making billions available in stimulus money for rural China consumers- their main focus- solar and appliance.

98% of residents in Tier I and II cities now have a refrigerator- 23% of he populous in rural areas have one. That's a big ripple in the force, and a vacuum that needs filling.

One totally unknown company is filling that vacuum. Believe or not- this company is likely to earn about $1.25 in EPS this year. $100 million in revenues. 270% top line growth. Trading just over $3 per share.  I liken this one to buying Sears in about 1960 out in front of a 30 year expansion.

I'll introduce this one just after the close tomorrow. This could easily be the best of the three new ideas. So far, BOPH down a few cents, GHNA up $.10.

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