Netease is a great company:
- NTES has honest P/E ratio: Trailing P/E:18.38, forecasted to get even better: Forward P/E (full year 31-Dec-09): 17.45
- Netease enjoys nice growth: Quarterly Revenue Growth (yoy):7.60%, Quarterly Earnings Growth (yoy):21.70%
- NTES has a plenty of cash $596M, about 25% of its $3B market cap
- Netease will come out next week with earnings that are expected to be nice.
Then why did I sell such a nice stock?
- Because it hit my 40% target,
- Because I want back my invested $1066 that I spent in September 2006 when I bought 60 Netease shares at $ 17.77 each
- Because, by selling 45 NTES at 24.89 each I made $1120, so I made $60 cash
- Because now I can keep 15 NTES shares that are free.
- Because this is my “Free stocks strategy” and I like it.
Let’s try to learn from this good move by looking back to when I bought NTES:
It was a good move that did beat the NASDAQ as I can see from this chart.
Why did I chose Netease? Let’s cut and paste from the post I wrote as I took the decision:
- growing fast
- booming dot com in Chinese exploding Internet market,
- low P/E around 16,
- coffers full of cash.
Those are basically the reasons why I’m still saying Netease is a nice company. What happened to it is that, as earnings went up about 40% in this year and a half, its stock price had to go up about the same amount to keep the P/E figure reasonable.
I will keep my 15 NTES shares (hopefully) forever because they are free and I will look for companies with similar good numbers to make a few more 40% up!
BUY, SELL, KEEP 
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