China Power Equipment, Inc (CPQQ)

[Bobwins]

The Chinese microcaps present a great opportunity to make or lose money. The Chinese economy is exploding and the microcaps represent a tremendous opportunity to buy cheap, fast growing companies at a discount!

With reward comes risk. Many do dilutive financings that seem crazy. I'm not sure if it's bad advice from their American advisers or that the Chinese owners are shady. Certainly the ownership structure is something I try to figure out because they have silent owners, complicated cross ownership and ownership thru multiple companies.

My approach is that the rewards compensate for the risk. I look for fundamental situations that I like and load up. If the fundamentals change or they prove to me that they are going to dilute the stock, I exit. We can only research so much from here. I try to do the best job I can but occasionally I get fooled. I could get mad and never invest in China again but I think that is crazy.

We are investors looking for opportunity. China represents the world's next economic superpower. How can you not invest in that country? The high growth creates some of the dilutive situations you mention. Their high growth creates the need for financing, even though the companies are typically very profitable. Internal profits can't finance 200% YOY annual growth rates or new factories that will quadruple output.

Overall I intend to continue to kiss a lot of frogs until I find a prince! or Princess, I hope! CPQQ is my next princess and should go much higher.