Jumei International (JMEI, Financial) and Leju Holding (LEJU, Financial) are both net current asset bargains with significant ownership from guru money manager Jim Simons (Trades, Portfolio)’ Renaissance Technologies, which owns 5.48% and 3.75% of the total shares in each company, respectively.
Jumei International is an online retailer of mostly beauty products that has built up a business that currently generates over $945 million in annual sales. It has a book value of $4.06 compared to a stock price just $2.44, but has a negative enterprise value thanks to $462 million in cash. Jumei’s market capitalization is approximately $366 million. The profit margins aren’t great and neither are the returns on equity or assets; however, considering its financial position with positive net current assets and one of the best hedge funds ever holding a significant position, the stock looks like a bargain. The reason to get in now is simple: Macro events have dragged on the stock since the start of the year, and given the price is off $1.42 (36%) it’s worth a flyer. The stock trades over a million shares a day, so taking a small position should be fairly easy.
Leju Holding is a little different story. This is an online real estate information provider like Zillow here in the U.S. And, while its not as big, the chance for it to build into a useful platform for buyers, sellers and agents in China is worth a flyer too.
It’s also a net current asset bargain with a market capitalization of $168 million and net current assets of $257 million, including $154 million in cash. The company is struggling to get profitable, but reaches an average of 5 million people all organic search, mostly from inside China. When compared to Zillow’s 180 million it has a lot of work to do.
Yet, when you look at the last three years, Jim Simons (Trades, Portfolio)’ RenFund has added to its position in LEJU every quarter, all the way back up at $6. So, if they’re right and the stock rallies, investors at $1.24 are going to make a killing.
Disclosure: I have no positions in either stock mentioned in this article but may buy LEJU in the next 72 hours.
