Mr. Astman: The investment philosophy is value investing. By "value," we mean we would first look for a strong balance sheet, cash in the bank and little to no debt. Very importantly, growth is a major factor in our value orientation. Cash flow, dividends, credible management, and other important factors go into our analysis. We have developed a checklist over the years to cover all the points we consider important.
Mr. Hood: I'll start with a little bit about First Wilshire. Fred founded the company in the late 1970s and value investing has been the strategy throughout the period, and I think we've gotten better at it over the years. We have attracted a group of analysts who are excited about value investing. There are not that many places out there that have done it over the long term, so that's enabled us to attract a great team. Currently there are seven analysts and two portfolio managers.
To look for those things that Fred described, we do all of our own research internally and we tend to find companies that are less followed by other analysts. Maybe they are at a geography that limits the ability of other analysts to visit them, and naturally small caps are not followed by many analysts. We're in business now for about 30 years. The assets under management are approximately $500 million.
Mr. Astman: One area that we've paid more attention to over the last ten years has been the U.S.-listed Chinese companies, which have been very rewarding on a performance basis. Scott spent a couple years in Hong Kong a decade ago and has maintained his familiarity with Asia ever since. We have an analyst in China right now that is constantly on the watch in the areas that we're invested in, as well as looking for new investments. Most of our Chinese stocks listed in the U.S. are 10 P/E and under, and China has been a great place to find companies that meet our value criteria. There are not as many American companies at 10 P/E and under, which is the kind of valuation we like. Growth level is very high with these companies and stocks can move fast when the growth potential is recognized. There's one Chinese company that raised money six months ago at $1.54 and today it hit $10. You don't get that kind of growth in the U.S. issues. That's 500% plus in six months. We are still holding it because the company should have 50% growth in the next three years and the stock is trading at 10 P/E.
Tickers included in this excerpt: ATNI, AWK, CTL, EDUC, HRBN, IMAX, NATR, VZ
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