Steve Forbes Interview: Jim Oberweis, President Of Oberweis Asset Management, Part 2

Jim Oberweis is the president of Oberweis Asset Management and editor of The Oberweis Report, a top-rated growth-stock investment advisory letter. Recently, he sat down with Steve Forbes to talk about investing in China, international markets, and what stocks he�s buying. Video and a transcript of the second half of their conversation follows. Watch the first half of their conversation here.

Forbes: In China, how do you know what the political winds are?  Somebody connected today could be on the outs tomorrow.

Oberweis: That�s true.  Although it tends to move �

Forbes: Glacially?

Oberweis: Yeah, it tends to move slowly.  What we look for is � read the five year plans.  In the 2012 five year plan, we see money being funded for environmental protection, environmental cleanups, so we�re investing in companies that clean up waste water.  It isn�t rocket science, it just requires some detail thinking.  For most of the companies we�re investing in, they�re needles in haystacks.  They�re unlikely to �

Forbes: Get the wrath of the government.

Oberweis: Yeah, exactly.  It tends to be more in some of the larger companies, where it is a little bit more important.  They�re also entrepreneurially owned, which helps to eliminate some of the political influence.  If I was investing in a bank in China, I would be concerned because if the government says, �Loan,� you loan.

There�s no opportunity to take shareholder value as a reason to disobey the government.  In a more entrepreneurial company, they kind of stay out of it a little bit. That�s why we really try to focus on some of the smaller names where state ownership isn�t really as much of a factor.

Forbes: How do you navigate waters like capital gains?  You�ve observed in the past that, yes, they may be on the book somewhere, but nobody pays attention to them.

Oberweis: I understand what you�re saying.  So we talked a lot to our tax people on this, as well.  As it currently stands, nobody pays it and you have to be aware of it.  I think you�re going to see clarification on it, though.  I think, within the next couple years, there�ll be much sharper clarification.

It�s not only a question of China, but what about other companies that are listed elsewhere or = have part of their business elsewhere?  Or companies where their headquarters are elsewhere, but all the businesses are in China?

That�s one of the challenges of investing in China, is the lack of clarity with respect to tax positions.  We have experts on our team who try to help advise us.  I�ll be the first to tell you, it is not a crystal clear area and you have to make the best decisions you can under the circumstances that you know.