Those who know me well know that I look for value. I strongly believe that markets are inefficient and that investors are emotional creatures driven by fear and greed regardless of the fundamentals. As a matter of fact, I even developed a theory called the Cyclical Efficient Market Hypothesis (CEMH) to help me, as well as help fellow investors, better profit from market inefficiencies.

However in this article I will not deal with CEMH, but I will look at stocks which are deeply undervalued or perhaps “insanely” undervalued; If you are looking for companies trading for 50c on the dollar, fast growth companies trading at under 2 P/E or companies with 0.5 or lower PEG, in this article you will learn about them, and you will see that there is a whole lot of them: they are called the Chinese Micro Caps.

In another case of a company outgrowing its name, China Organic Agriculture (CNOA.OB) has decided to buy a vineyard in California called Bellisimo Vineyard and will start selling wine in China. Bellisimo produces grapes for other wineries (including E&J Gallo) and also bottles its own Bellisimo-branded chardonnay, merlot and cabernet. CNOA calls this wine "premium", but those familiar with E&J Gallo will know that this is hardly the case. Perhaps they can fool the Chinese consumers by calling it premium California wine, but soon enough the truth will out. If there's one thing that defines the nouveau riche in China, it is that they are not stupid. At least not for long.

And of course, these grapes are not organically produced. How that fits into a company called China Organic Agriculture is far from certain.

I have been investing for more than 25 years. And with quite a bit of success, I might say. I have a MBA from a name US school, and a degree in economics from Oxford across the pond. I have traveled widely, and know the world. I have taken a company public myself, and understand the stock game both from the perspective of the insider and the outsider.

Above all, I am not easily impressed. I tend to be skeptical by nature, especially when it comes to investing. However, the opportunity I see right now in Chinese micro-caps is the single most attractive play I have ever encountered in my many years of following the market.

Agriculture has been one of the hottest industries for an investor to be in. However, a majority of the market has already had significant gains. And although I do have positions in the large agriculture companies; as a value investor, I feel somewhat uncomfortable buying into companies that have already had tremendous returns.

I’m still very bullish on agriculture, and I’ve been trying to find value plays, particularly in China’s emerging market. In this article, I will introduce a few of the companies that I’m interested in and high-level rationale behind why they might be good investments in the coming months. But first, let us explore the agricultural landscape in China.

Tuesday's press release by China Organic Agriculture (CNOA.OB) is important in letting us know that the company now has an IR firm - Winning IR Company ("WIR"). This is the same IR firm that has been doing a good job with Gulf Resources (GFRE.OB) lately, which similarly provided a 2007 overview not too long ago. It has to be noted that while GFRE only signed up WIR in February 2008, we have gotten a total of four press releases so far from the company, all within the space of a month. WIR also represents China's Jade Art Group (JADG.OB).

And while CNOA's 2007 review looks good, there is a curious and crucial omission - its previously announced acquisition of Dalian Baoshui District Huiming Trading Limited ("Huiming"), the food transportation company. What happened? Is the deal off? If so, why? Or perhaps the deal is yet to be closed. But if this is the case, why wasn't it referred to in Tuesday's announcement?

It has been called the worst snow storm in half a century and it is still going on. Many parts of China, especially the central and eastern regions, are paralyzed, due to disruption in transportation leading to brown outs (coal not getting through), a drag on the upcoming Chinese New Year celebrations, and as is becoming more and more evident, a disastrous impact on winter food crops.

According to reports, this is what is happening:
1) Heavy snow is causing many greenhouses to collapse leading to crop destruction;
2) Disrupted rail service is stranding food that cannot be adequately refrigerated thus causing spoilage; and
3) Insufficient produce getting from the hinterlands to the cities leading to skyrocketing food prices and exacerbating out-of-control inflation.

As a quick preview of some of things I'll be looking at in the month of January:

1) Impact of the Beijing Olympics - on travel and tourism - Universal Travel Group (UTVG.OB), Intelisys Aviation [IAVA.OB], outdoor advertising - Network CN (NWCN.OB) and transportation information system - China TransInfo Technology (CTFO.OB).

I've written quite a lot about China Organic Agriculture (CNOA.OB) and despite the fact that I do like the stock, I haven't found it in me to put money into the company. For while CNOA is growing at an amazing clip, two things keep bothering me:

1) Its recent management shuffle resulting in a company without a CEO; and
2) The fact that all it does is produce organic rice, and nothing else.

Company Description

China Organic Agriculture (CNOA.OB) is one of the largest producers of green and organic rice in China, with approximately 7% of the green rice market and 4% of the organic rice market. Unlike its competitors, the company is vertically integrated and controls all aspects of the process from R&D to seeding, planting, processing and distribution.