Horrific Fall in New Oriental Education (EDU)

Just an amazing fall in New Oriental Education (EDU) today, down 30%. Again "what have you done for me lately" - yes you beat estimates on both the top and bottom line, but you didn't beat expectations for future guidance. Away goes nearly $1 billion in market cap in 1 afternoon. It is now not only below the 50 day moving average but the 200 day moving average.

Well I could be setting myself up for a "Croc's" moment (catch falling knife, get fingers ripped off), but at $56 I just have to pull the trigger. Again I am buying in layers... $4000-$6000 tranches. I am already down $14 on the last layer bought at $70 this morning when it was down 12%. Just incredible action... most foreign stocks are seeing no mercy.

I can only imagine what penalty would hit this stock if it had missed. Next year's earnings are $1.80ish so a 30x multiple puts us at $54. Again, not a cheap stock, but much like WuXi Pharmatech (WX), a smaller Chinese stock that reported very good growth but didn't raise, beat, smash etc etc (and got hammered) EDU is simply being decimated despite the type of growth which is hard to find in the US market. I'll hold the line here as I don't want to make this position more than 3%. If it's worth $56 it might be worth $26 the way the market is thinking right now. Or I suppose -$6.

All eyes move to Intel earnings tonight. If they can simply say "look the world is not ending" we should get some decent rally but if they are negative we could be in trouble. With IBM reporting good business overseas, I would expect the same from Intel - but that game will probably only last another quarter or two until we start seeing "we noticed weakness in so and so foreign market" type of language. Other than coal, HOGS (of all things), and the 2 healthcare stocks, nothing in the entire watch list is green. Oh wait, all those Ultrashorts I lightened up on 7 days ago are green... blah. I have not really applied much of the cash I raised this morning, but will wait until the last 10 minutes to assess. Usually markets this bad do not end the day well, so we'll see if we can find some 'bargains'.

Long New Oriental Education, WuXi Pharmatech in fund; long New Oriental Education in personal account.