Tom Cruise Will Save Us

By Derek On November 21, 2011 Under Uncategorized

From: Derek Hillen
Sent: November 17, 2011 11:25 AM

To: Derek Hillen
Subject: Tom Cruise Will Save Us

“I love kids. I was a kid myself, once.”Tom Cruise

The news from the Western Front continues to be grim and annoying in its persistence. I noticed amongst all the headlines that the head of the IMF’s European department just quit after one year in the role. You would think this a pretty important job but Antonio Borges apparently had more pressing things to do. It turns out like the new head of the ECB, Mario Draghi, Borges is also a former vice chairman at Goldman Sachs International (current chairman: Hank Paulson). Otmar Issing, former member of the Bundesbank also worked for the big squid. A little more digging reveals that the tentacles of this secret fraternal organization also reach to and include Mario Monti, the newly minted Prime Minister of Italy. Perusing the CV of the other new prime minister in Europe, Lucas Papademos of Greece, reveals he was governor of the Greek central bank and a central figure in the odious scandal involving Goldman hiding the country’s real level of debt to allow Greece to slither in to full EU membership. The scale of this quiet intrigue reminds me of Robert Ludlum’s “The Matarese Circle,” a gripping spy thriller about a secret ring of top level insiders belonging to the same shadowy group intent on world domination. The ultra conspiracy theory plot was inspired by the real life Trilateral Commission whose European Chairman is, wait for it, none other than Mario Monti. Nut bar Tom Cruise will star in the film to be released next year so you will probably hear a lot more about this ahead. Is our fate predetermined or will “Top Gun” Tom Cruise save us? These questions are too big for me to answer. I will wait for the film.


Qihoo 360 (QIHU US) reported an excellent set of Q3 results last night with the stock closing up 5% after market. Eric Wen reiterates this is his top pick in the China internet sector. Results exceeded his forecasts and although critical of the company’s “large” share-based compensation, Eric still believes Qihoo represents “the most exciting growth opportunity in the Chinese internet space.” As a browser in China that also provides anti-virus protection, Qihoo boasts an installed user base of 370 mn and now has surpassed Internet Explorer in terms of weekly usage time spent. Qihoo’s largest advertiser, the wildly popular e-commerce platform Taobao, intends to increase ad spending by 75-100% 2012.

Most intriguingly, Qihu is expected to launch a “Google-like” contextual ad product soon. Contextual ads (Google AdSense) are Baidu’s soft spot and contribute 50% of Google China’s revenue but only 5% of revenues for Baidu. By leveraging their browser advantage into this lucrative new area, Qihoo is posing a direct threat to Baidu’s current internet dominance in China. Although the company today has a market cap of only US$2.3 bn, there is enough going on here that is worth a serious look. See Eric’s note attached.


Forget the dress, look at the time

Samsung Electronics (005930 KS, Buy), as we all know is an amazing company that has the number one global market share in mobile phones (24%). The stock has been a winner with many happy analysts: 43 Buys, 0 Holds and only 1 lonely Sell. The stock has rallied a thrilling 47% in the last three months, which means you should seriously think about TAKING PROFIT NOW. First, as General Patton said, “If we’re all thinking the same way, somebody ain’t thinking.” It is crazy the entire street is on one side of this trade at these levels. Second, look at the chart: the stock has tested the KRW 1mn level twice this month and failed. It briefly broke through 1 mn back in January, only to plummet 30% afterward. I am sure everything is hunky dory in Samsung Town, HQ and a major office “park” in Seoul that is “twinned” bizarrely with Disneyland Paris. But at these levels with the good news known and with the chart saying “run,” I think time is up and running may be a good idea before 43 analysts downgrade the stock at the bottom.


You can get our research by typing MASR <Go> on Bloomberg.


Derek Hillen, CAIA

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