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Xinyuan Real Estate: A Lot Of Risk To The Story

July 8, 2019

Summary:

- Xinyuan recently announced the resignation of its CEO, and this comes shortly after the company appointed a new CFO.

- There are reasons to like Xinyuan at today's price but there are definitely risk factors that need to be considered.

- I hold a position in Xinyuan and I plan to stay long the stock.

 

Xinyuan Real Estate ($XIN) is a company/stock that I have followed for years now, and, in my opinion, the market has never been truly sold on the story for this Chinese real estate company. As soon as sentiment improves and XIN shares gain momentum, the stock sells off due to some type of broader market concern.

 

Notice the steep hills and valleys over the last three years. This makes sense though, right? Management has consistently failed to effectively communicate their strategy and, to make matters worst, there has been a revolving door in the C-suite. It's hard to keep momentum going when there's no one giving people a reason to stay long the stock (please take notice, management).

 

After saying all of this, I'm long Xinyuan (and plan to stay long) because I believe that there's a lot to like about the long-term business prospects of this company, even if I have to dig up the details myself. However, make no mistake about it, there's a lot of risk to the story.

 

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