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Brian Choi

 
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  • Tianli Agritech - A Significantly Undervalued And Oversold Stock [View article]
    Thanks for the question. If you read the Catalogue (2011 Amendment) carefully, it says the following about the prohibition in breeding (i.e., animal husbandry):

    "Research and development, breeding, and planting of China’s rare and special varieties and production of relevant breeding materials (including quality genes in planting industry, animal husbandry, and aquaculture)"

    The restriction is for "rare and special varieties". Hog production is actually an encouraged industry. If you read the latest OINK10k, which was released after the Catalogue, it says the following on page 12 and 13:

    "We are engaged in an encouraged industry......businesses in encouraged industries are not subject to restrictions on foreign investmenet, and, as such, foreigners can own a majority in Sino-foreign joint ventures..."
    Jun 20, 2012. 05:02 PM | Likes Like |Link to Comment
  • Tianli Agritech - A Significantly Undervalued And Oversold Stock [View article]
    irish2b1,

    I'm sorry you lost money on these stocks. I feel your pain. Investing in US-listed Chinese stocks has definitely been a gut-wrenching experience for a lot of us. I don't blame you for casting aside everything related to China. That being said, I also think that calling every US-listed Chinese stock a fraud is unwarranted.

    I believe OINK is different. I've done quite a bit of due diligence on this company (i.e., reading through SEC filings, talking to company management and Investor Relations, participating on conference calls, conversing with other investors, etc.) and on the whole, I do not think OINK is a fraud. As I mentioned on my comment above, I can't be 100% sure, but when I add up everything I've learned about the company, the reward far surpasses the risk.

    In the article, I mentioned that the negative sentiment towards US-listed Chinese companies is at an all-time high. I've been investing for 10 years now, and it is at these times that the best opportunities for investing appear. That is how Warren Buffett made his money. OINK is trading now at 1.86x P/E and at a liquidation value that is at least $3.25 / share.

    I'm long OINK and will continue to long OINK. I'm not a short-term trader, nor do I try to pump up stocks. I try to be rational in my investment decisions, and so far it's worked out well for me. OINK has it's earnings call in the next few weeks. I'm looking forward to hearing what management has to say.

    Brian
    Apr 30, 2012. 11:08 AM | 1 Like Like |Link to Comment
  • Tianli Agritech - A Significantly Undervalued And Oversold Stock [View article]
    Thanks for your comments. A couple of additional thoughts, which I may formalize into another article in the near future:

    So the question everyone asking is whether OINK is a fraud. How can the financials be trusted? How can I be absolutely sure that everything that I read and everything the management team says on the conference calls is the truth. The short answer is that I can't be 100% sure. But here are my arguments for why I believe OINK is the real deal:

    1) OINK became public through the traditional IPO process, not a Reverse Merger (or RTO). The IPO process is much
    more stringent than the Reverse Merger merger process and requires an extensive amount of due diligence by US regulators. If Tianli wanted to defraud US investors, why would they go through the painful process of the traditional IPO process?

    2) Tianli is a very simple company. The assets (i.e., pigs, farms, feed, etc.) and locations of the hog farms are easily verifiable: all locations are listed on the website (http://bit.ly/HKErcv). The company even gives tours to investors (http://bit.ly/HKEtRx).
    Also, the retail products can be found in the retail superstores in Wuhan (Wal-Mart, Zon 10, RT Mart).

    3) Crowe Horwarth, an audit firm that I would rate "2nd Tier" also
    looked at financials for Q2 and Q3 2011. The fact that the financials
    did not change during the switch from Sherb most likely means the assets are real. I have a hard time believing two different auditors along with the management team are all conspiring together.

    4) I've been in touch with other large long-term investors in the stock and they've also spoken to Management (CFO and Board of Director members) numerous times on their business, strategy, etc. They are all long-time holders of the company and don't have plans to sell their shares any time soon. They also believe OINK is grossly undervalued.

    So I added this all up and asked myself, what side would I want to be on: the short side or long side? And the answer is simple: I'd rather be long.
    Apr 19, 2012. 11:45 AM | 2 Likes Like |Link to Comment
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