Seek out the headquarters with the hope that if it's not stuck behind a bowling alley, then it will be located in some seedy neighborhood where financial analysts wouldn't want to be seen.
-- Peter Lynch, One Up on Wall Street

Peter Lynch knew a thing or two about companies that allocated their resources wisely. In his 13 years at the head of Fidelity's Magellan Fund, Lynch averaged a mind-boggling 29% return per year.  

Lynch loved visiting headquarters to look for things that others wouldn't. Instead of hoping for a pristine boardroom with a gourmet cafeteria, Lynch was much happier to see a few chairs around a table and Sue's Mystery Meat being served.


Lynch knew that every dime that a company spent on its headquarters was a dime that wasn't being reinvested in the actual infrastructure of the company. Rather than go for glitz, Lynch was much happier to see that money show up on an earnings statement.

What does this have to do with China?
Investing in China has recently seemed more like Russian roulette than smart asset allocation. Investors have become so wary of investing in China that amateur blog posts were all it took to sink the stocks of Yongye International and Gulf Resources.

And then you have the recent IPOs of the Facebook of China, Renren; the McAfee of China, Qihoo 360; and the Amazon of China, Dangdang. Though these stocks experienced a serious pop after their IPOs earlier this year, they are all down more than 30% since then.

With all this in mind, our Motley Fool Global Gains team travels the world to get investing information right from the horse's mouth. They recently returned from their trip to China with stories to tell about dozens of companies.

The one I'm going to focus on today -- Country Style Cooking (NYSE: CCSC), which runs a chain of Szechuan-style fast-food restaurants -- reminded me the most of Lynch's advice.

A trip to headquarters
After walking away from his meeting with Country Style's management, Fool Sean Sun had several Lynch-like takeaways that were encouraging:

  • He was unable to find the office because it was in an old and unkempt-looking building that was hidden away to the side of a larger office tower (it was clean and tidy inside, though).
  • Frugality is part of the company's DNA, as it was started by a husband and wife who know a thing or two about getting by on a shoestring budget.
  • Even though institutional investors have encouraged the company to upgrade their headquarters, the company has refused, since it doesn't see it as a wise use of capital.

Clearly, if what our team saw was truly a fair view of the inner workings of this company, Country Style is nothing like some of their other small-cap brethren regularly accused of fraud.

A Foolish takeaway
With Yum! Brands' (NYSE: YUM) Kentucky Fried Chicken having a pretty good head-start on the fast-food industry in China, Country Style still has lots of work to do. I would go into more detail about Country Style, but to be honest, that wouldn't be fair to our paying members of Global Gains.

The team had lots to say about the visit, and you can have access to all of their reports from the trip completely free with a 30-day trial membership to Global Gains. Click here, and you can get started right away.

In the meantime, add Country Style Cooking to your watchlist to keep tabs on all of its latest news.

Foolish contributor Brian Stoffel owns shares of Qihoo 360.The Motley Fool owns shares of Yongye International and Yum! Brands. Motley Fool newsletter services have recommended buying shares of Country Style Cooking Restaurant Chain and Yongye International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.