A week after shareholders were stunned by the delay of Focus Media's (FMCN) earnings report, they're smiling again. On July 2, the Co announced that it launched an internal inquiry regarding related-party transactions reported in 2005.
The stock, which hit an all-time (mid-day) high of $52.09 in the previous trading session, plummeted immediately. FMCN hit a low of $44.28 within the first 20 minutes of trading.
Suddenly, the breakout I'd jumped into was turning into a sore spot. Most longs stayed the course, however. Focus Media is the No. 1 advertising company in China and has a stalwart reputation. Most analysts and observers noted that the Co has a history of cautious behavior. In addition, the Associated Press ran a correction on Thursday regarding Focus Media CEO Jason Jiang's relationship with another company.
The longs have been rewarded, sort of, as the stock battled back and is trading at $49.25 as of 1:30 p.m. Eastern time. Low volume, yes, but any gust of hope that rights the ship is good news — and relief — for FMCN longs.
By the end of this week — or whenever FMCN's internal inquiry concludes — investors could hope for a resumption of the stock's technical breakout. Personally, the Co is positioned to be a strong long-term hold in China's exploding free-market revolution. The smart, gutsy longs picked up more shares on the dip.
Now that's focus.
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