JDMBA

Chinese Visa

2007-09-15T19:56:00.000-07:00

I received my Chinese Visa in the mail this week. Since I do not currently live in Chicago, Houston, Los Angeles, San Francisco, New York or Washington DC, I mail my passport to a visa agent in one of these cities instead of going in person. This time I decided to apply for a multiple entry visa which in many ways is superior to the single entry visas I used for my last few visits. The last time I was in China I had to go to the police station to extend my 30 day visa since my visit lasted longer than I originally planned. My multiple entry visa is valid for as many visits (up to 60 days each) as I can make to China within the next year.

New Websites

2007-08-19T02:15:00.000-07:00

I recently have launched new websites for my new law practice and China related business. For those who are interested, please visit:

China Education Consulting

Law Office of James Allen

Webzen Update

2007-08-12T15:24:00.000-07:00

I still own a large number of WZEN shares but I have not had the time to track it very closely as of late. I just Huxley is released according to the anticipated timeline unlike Sun which was delayed for what seems like forever. I also am eagerly waiting to hear the comments of NCTY relating to Sun on their upcoming quarterly conference call.

Next Trip to China

2007-08-10T01:12:00.000-07:00

I am excited about my next trip to China this October. I am not a big fan of the direction the US is headed and am worried about its long term economic prospects. China however has enormous potential. Therefore, I have decided that most of my entrepreneurial projects going forward will forces on either China or other fast growing emerging markets. It just makes mores sense to invest where the growth is.

Today more than ever, the best growth opportunities are being found overseas. 10 years ago a larger percentage of students from Asia who attended college or graduate school in the U.S. sought to remain here after graduation. Today many of these well qualified and bright students are leaving the US after graduation for better opportunities at home. Many high tech companies in the US are having a hard time finding enough qualified workers and the H1B visa restrictions and are not helping.

I believe in free markets. I also believe the best way to make money is to embrace change instead of fighting it. China will become the largest economy in the world during our lifetime. India and other countries will grow quickly as well. We should not be scared of outsourcing, we should embrace it. Instead of using tariffs and quotas as temporary Band-Aids, we should think long term and put more money into training out people for the industries of the future, instead of trying to artificially support the markets where we are losing our competitive edge.

Update

2007-08-10T00:50:00.000-07:00

I really have not made much of an effort to maintain this blog over the past year. Much has changed since my last post. Although I took the NY bar exam this July, I plan on remaining in Madison, Wisconsin where both my law practice and a China related consulting firm I co-founded with a former law school classmate will be based. Due to the amount of time I like to put into equity research and the lack of free time in my current schedule, I have not been trading very much as of late. Perhaps this will change in the future, but right now my primary focus is on building my business.

For those who are interested, I am building a law practice in the areas of immigration law, bankruptcy law, criminal defense (I am particularly interest in white collar crime) and anything related to doing business with China. Of course based on my business background, some people would wonder why I would not focus primarily on corporate law or securities law, etc. While I am still interested in these areas, I want to focus on areas that somewhat relate to my other businesses (such as immigration and Chinese related law). I also want to concentrate on practice areas where the revenue tends to come upfront (such as criminal defense, immigration and bankruptcy so that I do not have the economic pressures of having to deal with the economic strains of expensive litigation relating to cases based on a contingency fee arrangement. Criminal defense also happens to be one of the best areas of law for those interested in gaining lots of trial experience early on.

Back From Vacation

2006-09-06T15:04:00.000-07:00

I was out of state all of last week on a short vacation before school started. I still want to blog more about my experiences in China this summer once I can find some free time to do so. I am currently working on some business plans and may visit China again this winter.

Relating to the Chinese WVAS industry, this recent story seems to be pretty big news. A one month free trial is quite a large requirement, as new users will not generate revenue for the SP's as quickly making marketing and promotional activities less effective. I was also worried about churn among end users who might switch from SP to SP each month for certain WVAS services. Marketing activities and the decreased negative impact of churn are all positives of going back to the 72 hour period. In case of any further price declines I may be inclined to buy more shares of KONG and a few other WVAS providers.

Webzen Rebound

2006-08-17T22:34:00.000-07:00

I take back what I said the other day about taking profits in KONG too early. Webzen is currently up over 14% on the KOSDAQ with heavy volume. I bought more WZEN shares with my KONG proceeds on Tuesday. Now I just need to figure out the reason for the WZEN rebound. Let's hope it is part of a new trend! I still have a fairly big paper loss on my Webzen position.

Disclosure: I am long WZEN

Update: Webzen just hit its daily up limit (13,700) on the KOSDAQ. If it closes at this price that is a very good sign and may imply that WZEN could climb even further on the NASDAQ tomorrow!

eBay Auction Update

2006-08-17T18:14:00.000-07:00

My Bar Exam Auction still has 4 days left but I have already received more bids (13) than I ever expected. I have not yet decided how to spend my $3.93 ($5.25 minus the 25% SPLC donation =$3.93). I was thinking about buying another share of Webzen, but as of this moment I am not sure if I will have quite enough for another share. Webzen is currently up over 5% on the KOSDAQ today (Friday).

Disclosure: I am long WZEN

Strange TOMO Trading Activity

2006-08-16T12:50:00.000-07:00

Obviously I took profits in KONG a little too soon yesterday as it is up another 10% + today as of right now. Indeed the entire sector is up today. TOMO is up over 30% on no news! Somebody please let me know if they have a plausible explanation for the Tom Online trading activity today. I do not know if it is just short covering after a quick rise today (TOMO underperformed the China WVAS sector yesterday).

TOMO gave 3Q guidance was not that great (but they been known to give conservative earnings guidance) compared to their peers, so I am little confused today. Like I said yesterday, I feel like KONG and TOMO management is the best in the industry, but I am still baffled by this sudden rapid rise.

Just Took Profits in Kong

2006-08-15T09:32:00.000-07:00

Previously I had purchased KONG shares on 6/29/2006 for $8.15 which I sold on 6/30/2006 for $8.80. Then I bought shares on 7/19/2006 for $6.13 which I thought was a big mistake until today (I just sold all my KONG shares for $6.88). I listened to the conference call and felt that KONG is continuing to execute fairly well in this difficult time as compared to some other WVAS players. I continue to feel that TOMO and KONG have the best management teams in the WVAS space. However the 20+% gain today seems a little exaggerated so I decided to take my profits while I have a chance. I may buy back some KONG shares again if the price retracts back down towards six in the next month or so. I am happy that their 2006 guidance of 97-105 million was near the high side of their last guidance of 85-105 million. However, I still have some concerns regarding future regulations at China Mobile and the other carriers, and some longer term concerns about China Mobile itself moving further into content itself. I am also a little concerned that Java gaming and MMS revenue was down so much compared to the 1st quarter despite the seasonality arguments in the press release.

I wish WZEN came out with some news to let me exit with a profit in the near term. Unfortunately I think that is unlikely in the short term as I am down quite a bit on my WZEN position right now. I intend to hold my Webzen shares at least until SUN and Huxley commercialization.

Disclosure: I am long WZEN

Kong Zhong 2Q Results

2006-08-15T00:37:00.000-07:00

As of right now, I have a paper loss in KONG. Tomorrow the shares should rebound somewhat after a relatively good 2Q and decent guidance going forward. I still need to take time and listen to the conference call recording. I am most interested in hearing more about estimated 3G rollouts, future industry consolidation, stock buybacks and market share shifts in light of the recent China Mobile regulations. I am impressed that KONG management responded quickly to the new regulations by reducing headcount by 15%. I hope this step will allow them to remain profitable for the rest of the year before the market starts to rebound again in 2007 with the rollout of 3G. In the recent past KONG has executed as well as almost anyone in the sector (save perhaps TOMO). Lets hope KONG can parlay its lead in 2.5G services and Mobile Gaming as we move forward into the 3G realm next year. Based on their cash on hand and strong market position, I think KONG will rebound from recently industry challenges and rise again as we approach the 2008 Beijing Olympics.

Disclosure: I am long KONG

New York vs. California eBay Auction

2006-08-14T18:12:00.000-07:00

The eBay bids are coming in. As of right now there have been 10 bids already. Next Monday I will know if I will be taking the New York or California bar exam next year. I structured the auction so that everyone watching could tell which state was in the lead based on the last number in each bid. Bids ending in even numbers (0, 2, 4, 6, 8) mean I must take the New York bar exam. Bids ending in odd numbers (1, 3, 5, 7, 9) mean I must take the California bar exam.

Based on the first 5 bids I thought that most people thought I would be better off with New York. However other people apparently think I should take the California bar and the current high bid ends in a odd number (California). Since the result of this auction will have such a major impact on me I am currently a little nervous and anxious to see the result. I am sure that I will feel better about it next Monday when I know for such which bar exam I will take.

I really appreciate everyone's assistance in help deciding this important issue for me!

Bar Exam Auction

2006-08-13T13:27:00.000-07:00

I am happy to report that my eBay auction to determine which bar exam I will take next year already has four bids! Although I am aware that bidding may slow down soon since the auction has already reached the high price of $0.17, I still think it is pretty cool that so many people are interested in helping make this hard decision for me.

I received an email from the operator of Way Out Auctions where they are always "watching weird, strange and downright bizarre auctions on eBay". Apparently I am being featured on their website. I recommend checking it out. They have some interesting auction listed.

Thanks again for your support and happy bidding!

Which Bar Exam Will I Take?

2006-08-11T16:39:00.000-07:00

I will know the answer in 10 days thanks to this assistance on this eBay auction.

Some people think this is a crazy idea, but I really cannot decide if I want to take the New York or California bar. Here are the details:

Please help!

I am currently a 3rd year law student who cannot decide whether to take the New York or California Bar Exam next year. I have talked to countless professors, lawyers and fellow law students about the issue and still cannot make up my mind. There are many things I like about both New York and California. I love large cities which both states offer. I am interested in international trade and New York and California seem to be the most important trade markets. I have many friends in both states. Every time I have visited New York or California I had a great time.

I really need to make a final decision but have been unable to do so to this point. Consequently, I am turning to eBay for assistance. The winner of this auction can decide if they would like me to take the New York or California Bar Exam next year. This auction is not a joke. I will abide by the choice of the auction winner and take either the California or New York Bar Exam in 2007.

The goal of this auction is not to get rich (although law school and bar exam preparation is expensive) but to make a final decision about which bar exam I will take next year. Accordingly there is no reserve price for this auction and bidding will start at $0.01. However I am aware that unusual auctions such as this can sometimes gather significant interest and bidding. Therefore, I hereby pledge that 25% of the final closing value from this auction will be donated to the Southern Poverty Law Center.

Due to the nature of this auction, I think it is most fitting to donate the money to a law related cause and choose the Southern Poverty Law Center. Originally founded in 1971 as a civil rights law firm, the SPLC has expanded and is now well known for numerous legal victories against white supremacists and other hate groups. The SPLC is also a leader in racism and bigotry prevention. By helping teachers teach their kids to embrace diversity and combat hate, the SPLC hopes to reduce the prevalence of racism hate crimes in future generations. You can read more here:
http://www.splcenter.org

In order to help you make an informed decision, I have listed some advantages for each state:

New York:
Wall Street (I have an MBA and background in finance)
I am from the Midwest, so I am more used to NYC weather
Better public transportation system

California:
Close proximity to both the oceans (surfing) and mountains (downhill skiing)
Easier to get around in a car (compared to NYC)
Better college sports

The winner of this auction will receive:
1. A thank you letter from me.
2. Proof of a charitable donation to the SPLC made on your behalf in the amount of 25% of the final auction price.
3. Proof of my Bar Exam registration in your choice of New York or California
4. As a further courtesy, a copy of my Bar Results after I receive them next year.

New Focus

2006-08-11T16:29:00.000-07:00

I have decided to change the focus of my blog so that I give less emphasis to individual stocks and more to finance, law, economics, China and FDI. I still am extremely interested in equity research, but my time is limited right now and I feel my free time is better spent on pursuing business opportunities instead of following news and updating my financial models for numerous equities.

For those who are wondering, I still own Webzen. Although I have been very disappointed in the seemingly endless delays for the release of SUN and its less than spectacular results in Korea thus far, I remain hopeful long term. However due to a need to diversify I am not currently planning to add to my WZEN position until they initiate a stock buy back, announce a commercial release date for SUN in Korea, a beta testing release date for China and more positive news regarding Huxley.

My most recent purchase was KONG, which is already down quite a bit since my entry point. The new China Mobile regulations will have a huge impact on the entire WVAS industry and I am afraid more restrictions will come in the future. Let’s hope that the major players such as KONG, TOMO, SINA, etc eventually will pick up market share from some of the smaller players who will be put out of business by the new regulations. In the meantime, the next few quarters will be tough. The only real positive I see for KONG in the short run is its current cash position and low valuation. Perhaps as 3G deployment schedules become clear, more interest will return to the stock.

Disclosure: I am long WZEN, KONG

I am back!

2006-08-10T14:37:00.000-07:00

Sorry it has been so long since my last post. I had a wonderful time in China for the first half of this summer. As you know I took a short summer class and had a short internship in a Chinese law firm this summer. Being only my second trip to China I also did lots of tourist type activities in Beijing and Shanghai. I was also able to meet lots of lawyers, investment bankers, and other business people and government officials who helped better educate me about how business is done in China. Tentatively, I am planning my next trip to China for late December or early January when I will be pursuing potential jobs and or new business opportunities.

At this point I am no longer sure that I want to practice law at least in the long term. Although I might consider highly specialized legal training in a certain area (such as working for the SEC or a M&A boutique), in the long run I would rather be making the deals myself instead of drafting contracts for proposed mergers or litigating securities law problems after the fact. Right now I am more interested in Investment Banking or new entrepreneurial ventures relating to China.

Nevertheless, I am not going to complete my law degree without being admitted to the bar. New York and California seem to be the best fit for international trade, and are also the most difficult bar exams in the country. I will be taking either the New York or California Bar next year. Since I am not actively seeking legal jobs in either market, I am having a hard time deciding between the two. NYC is of course the financial capital of the world and has always been one of my favorite cities. I also like Los Angeles, San Francisco and Silicon Valley however and California whether seems hard to beat (where else can I either surf or ski/snowboard for most of the year?). I have many friends in both NYC and LA. I do not necessarily want to move to either city right now, I just want to pass the Bar for that state. Currently if I could move anywhere it would be Shanghai where I could do business and develop my Chinese language skill at the same time.

Perhaps my readers can give me some suggestions on which bar exam to take!

Back in the U.S. this Saturday

2006-06-21T01:30:00.000-07:00

Sorry it has been so long since I made a post. I have been in China (Beijing and Shanghai) since May 12th and have been very busy. You can expect more from me starting next week.

China is not manipulating its currency

2006-05-11T00:50:00.000-07:00

Here is a link to the China Daily article. This is important news. I wish I had more time to analyze its meaning. Instead I will likely be up all night finishing a take home exam

"The Bush administration on Wednesday announced it would not brand China as a country that was manipulating its currency to gain unfair trade advantages."
"A designation as a currency manipulator would trigger consultations between the two nations and could lead to trade sanctions if the United States won a case on the issue before the World Trade Organization."
"We are not satisfied with the progress made on China's exchange rate regime and we will monitor closely China's progress every step of the way," Treasury Secrectary Snow said.

Another SUN Pre-Open Beta Delay

2006-05-10T21:56:00.000-07:00

As of this moment Webzen is down a little over 4% to 24,250 Won on the KOSDAQ. This is likely the reason. It appears that SUN pre-open beta testing has been delayed again, rumored to be because of some server problems.

Here is an article about one persons opinion of the Webzen booth at E3 and more on Huxley from IGN. For those of you that would like more details on what Huxley is all about and how the XBOX 360 and PC versions will work together I highly recommend reading this preview from TeamXBOX.

Please do not expect much from me for the next few weeks. I am completing final exams right now. I am also leaving for China for almost month this Friday.

Disclosure: I am long WZEN

US Dollar Hits New Low Against Korean Won

2006-05-07T23:03:00.000-07:00

I have talked about this trend previously here and here. As of the time of this post 1 USD = 925.89 Korean Won. The Dollar depreciation against the Won (and other currencies) is happening even faster than I expected. Currently ALL of my equity investments are overseas. I am very bearish on the US economy long term. Instead of worrying about the fall of the US and the rise of other emerging markets, I intend to profit from the trend. I hope the US Dollar continues to fall, as I am making money as a result.

I better get back to studying. I have a Securities Regulations final exam in the morning.

PSPT Earnings

2006-05-04T10:55:00.000-07:00

People Support is currently up about 22% on the NASDAQ after reporting good 1st quarter earnings. 1Q revenue and 2006 revenue guidance was particularly strong. PSPT is investing for growth (additional building capacity, personnel, etc) so earnings are not truly taking off as quickly as some would like. Personally I like the continued investment as it will only improve their positioning long term.

I like that they are starting to diversify their revenue base and are not going to be relying primarily upon their 3 biggest customers (currently 51% of revenue) forever. I have been following the stock for quite a while. Unfortunately I never pulled the trigger to buy shares last month as I was considering. Here is the press release. After final exams I may start to analyze the company further.

As many of you know I primarily track just emerging markets. While I am most interested in China, I also follow developments in India, Indonesia and other countries. If anyone has any Asian ADRs they really like, please let me know and I will consider researching it as well and discussing my findings on this blog.

Webzen Performance Today

2006-05-04T10:17:00.000-07:00

Currently Webzen is still trading a nice discount (several percent) on the NASDAQ relative to its KOSDAQ valuation. We all know that the Webzen NASDAQ price follows the KOSDAQ price not the other way around.

Although I feel that Webzen had as good of a quarter as we could have expected, Webzen (KOSDAQ ticker = 069080) fell over four percent on the KOSDAQ last night. This is not unheard of, as similar thing happened last year. What is encouraging to me is that institutions and both domestic and foreign were net buyers of Webzen after earnings on May 4th. That means that individual investors (generally the least informed) were responsible for driving the price down last night. Since the rise and fall of Webzen over the last few months has correlated closely with the net buying or selling of institutions this is good news for WZEN shareholders as E3 approaches.

Disclosure: I am long WZEN

Webzen 1Q 2006 Earnings

2006-05-03T08:33:00.000-07:00

Webzen reported its 1st quarter earnings this morning. No real big surprises as they lost $5.91 million primarily due to the continued aging of MU. Some people actually expected them to lose a little more. Look for marketing expenses to rise dramatically in Q2 due to E3 and expenses related to the upcoming SUN launch. For more details on Webzen 1Q results visit their website here.

I still think SUN will do best in Asia, but look for to be licensed in the US and Europe as well. Huxley will likely go into closed beta testing this year. Webzen may start experimenting with its pricing models with the Wiki launch (perhaps the free to play avatar model will be used by Webzen?).

On another note, I have made an interesting note about the KOSDAQ/NASDAQ discount/premium issue as of late. Based on the current Dollar/Won conversion of 1/932.47 and the 3/10 KOSDAQ/NASDAQ ADS conversion, the KOSDAQ shares are trading at a healthy premium over the last few days. Historically they track very closely, and earlier this year the NASDAQ shares were frequently at a premium. From a trading perspective, it may be better to buy shares on the NASDAQ when they are at a discount and sell when they are at a premium to the extent possible. Webzen frequently moves in about a 20 cent range each day on the NASDAQ.

Since the premium is not that large it is nothing to really worry about at this point, I just feel it is interesting. If anyone wants me to email them a simple excel spreadsheet to automatically pull the KOSDAQ, NASDAQ and currency data from the web and do the conversion, let me know.

Disclosure: I am long WZEN

Webzen Press Release

2006-04-26T10:50:00.000-07:00

According to this press release "Soul of the Ultimate Nation" (SUN), MMO first person shooter "Huxley," and the mass-appeal casual MMORPG "Project Wiki" will all have playable versions available at the Webzen E3 booth this year. To this point I have had a hard time estimating the commercial potential of Project Wiki. Perhaps after E3 we will have a better idea about its prospects.

This press release may be important to online gaming investors as well. Microsoft reportedly plans to pay $200 to $400 million to buy Massive Inc., a private company specializing in placing virtual ads inside online games. According to some studies this market may grow ten fold by 2010 and generate hundreds of millions in advertising revenue, some of which may go into the coffers of Webzen and others. It would be nice if Webzen would let us in on their plans to accept or prevent advertising being placed in their games going forward.

Disclosure: I am long WZEN

Webzen Volatility

2006-04-24T12:36:00.000-07:00

WZEN shares have been extremely volatile over the past few weeks. Since early last fall, we have seen a substantial increase in implied volatility reflected in both WZEN call and put options. Perhaps the recent decline last week was due to rumors about a further delay of SUN, which is now viewed as less important since we now know it will only be for two weeks and will include numerous improvements over the last pre-open beta testing. I remain confident holding my shares going into E3 and SUN open beta testing.

Disclosure: I am long WZEN