Shiner Attracts Successful Small-Cap Investor

by: China OTC Player
In a quiet filing made last week, I discovered that an investment firm called First Wilshire Securities had scooped up more than 1.9 million shares of Shiner International (NASDAQ:BEST), the Hainan-based manufacturer of packaging film for food and other products. Who is First Wilshire Securities? I decided to find out more about them.

A visit to their website reveals very little. They seem like a run-of-the-mill boutique investor outfit. Then a Google search turned up the name Fred Astman, who is cited as the founder and one of the principals of First Wilshire. This guy has been called "the David who slew the Wall Street Goliaths". According to R. Max Bowser, Astman and his staff at First Wilshire managed to achieve a whopping investment return of 853% over the course of ten years, and they did this by making shrewd investments in small caps.

This was what Astman had to say when asked why he was interested in smaller companies:

"Much more value there. You don't have half a dozen analysts recommending a stock, so it hasn't gotten much recognition. You probably don't have any institutions owning it. They may eventually -- that's what we hope."

Astman has been doing this for a long time, as this 1992 Business Week article shows. And in there, his track record for stock picking is clear. What is of interest to me is First Wilshire's recent interest in Chinese small-caps. Apart from BEST, they have made substantial investments in various rising Chinese plays including China Pharma (NYSEMKT:CPHI), China Information Security Technology (CPBY), and Chinacast Education (OTCPK:CAST). Still, Shiner International remains one of their largest holdings currently.

Does First Wilshire have information that we don't? I think not. A quick search revealed that BEST was recently ranked by China Analyst as one of the top ten Chinese stocks (at #9) with the best upside potential.

I tend to agree. BEST has had a tough 2009, but it turned a profit in the last quarter and should make a (very) small profit overall for FY2009. But I'm looking forward to FY2010 and I'm liking what I see. Apart from recently appointing a new CEO/President with a Cornell Masters degree, BEST has made important inroads into the food packaging area, including a partnership with Shineway Group, THE largest meat product manufacturer in China. It is also anticipating that its two main sector capacities will double by 2011 -- 30,000 tons/year for food safe packaging from its current 15,000 tons/year, and 20,000 tons/year for anti-counterfeiting packaging from its current 10,000 tons/year. Clearly then, the best is yet to be for BEST.

My Position: Long.