In April of this year, several members of Heartland's investment team traveled to China to attend the Halter Financial Summit in Shanghai. Among the speakers were President George W. Bush, former Secretary of the Treasury, John Snow, author Peter Schiff and Heartland Advisors' founder and president, Bill Nasgovitz - who spoke on "Value Investing in China."
The purpose of this trip was to further due diligence on our current holdings, as well as to look for new ideas. Our visit to Tongxin International Ltd. (Nasdaq: TXIC) reinforced our conviction on the stock. Tongxin International Ltd. is a China-based manufacturer of cabs for commercial trucks and light vehicles.
At Tongxin, we saw a huge manufacturing complex with bustling production lines. We were able to grasp the scope of the operations there and gain confidence that the on-site management team shares our long term goals for the company. The current operations met our expectations and we were able to find several areas where we believe the company will add growth in the future.
The following press release from Tongxin indicates that the CEO "anticipate(s) the company to achieve growth of approximately 25% in 2010." We continue to believe the shares of this world class maker of truck cabs and parts are undervalued, selling at below stated book value, in our view growing like a weed, but just 7 times estimated earnings per share. In our view, despite Tongxin being a slow reporter, we believe the stock has plenty of capital appreciation potential.
Read Tongxin International Ltd.'s 2/23/10 press release, announcing their preliminary 2009 revenue projections
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Past performance does not guarantee future results.
As of 3/31/10, Tongxin International Ltd. was 0.6% of the Value Fund's total net assets. Portfolio holdings are subject to change.
Book value is the value of an asset as it appears on a balance sheet, equal to cost minus accumulated depreciation.
Earnings per share (EPS) are the total earnings divided by the number of shares outstanding.
Portfolio holdings and manager views are subject to change without notice, and discussions of portfolio holdings are intended as illustrations of investment strategy, not as recommendations.
The Value Fund invests primarily in small companies selected on a value basis. Such securities generally are more volatile and less liquid than those of larger companies and there is risk that the broad market may not recognize the intrinsic value of such securities.