#16 Focus Media

Someone has to become the advertising king in China. Right?


Or maybe it just isn't going to happen. After all. FMCN is about small-scale advertising. Where's the growth? Where are the profits in a quickly rising economy?

Focus Media requests Nasdaq meeting, stock slips

Investors already skittish about Chinese ADRs got wobbly in the knees for a second time in two weeks about Focus Media.

The Chinese advertising company announced that it plans to ask for a hearing with Nasdaq regarding two letters received in June. When Focus Media first announced the problem, reportedly the result of a request from a short-seller, the stock sank from $50 to $44 in a 20-minute span two weeks ago.

This morning, FMCN sank almost $2 to $49.24 on the news of the hearing request. FMCN is currently trading at $49.39, which could be another buying opportunity for the most faithful of longs. For the skeptical, any press release or media story that mentions Nasdaq and/or the SEC has been a red flag, warranted or not.

Observers in Asia have collectively said that Focus Media's conservative approach has led to extreme caution in this situation.

Disclaimer: Pupule Paul is long FMCN. Just a skosh.

Regainging Focus

It's nice to be focused again.

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.