AuM: >USD 150m
Strategy: Greater China Long Short Equity and Small-Mid Caps
Sport: Golf, swimming and jogging
Drink: Red wine
If you could time travel back to day one of your fund and have 15min with your former self to communicate any lessons you’ve acquired with the intention of saving yourself headaches, what would you tell yourself?
Pay a little more attention to the global macro economies and be more relaxed during times of market volatility. Stressing out during bad times will cloud your investment decision making process. Our fund was badly hit by the European credit crisis in 2011.
How do you manage your portfolio?
We are primarily bottom-up stock picker, but we don’t just buy for the sake of value. We will analyze whether there is a catalyst to trigger the rerating the stock before committing our capital in it. Very often, we take the role of activist on some of our portfolio positions. We have a very close relationship with the Hong Kong media, including TV stations, newspapers and financial magazines and the institutional investor community here, which aid our “Active Value Investing” strategy.
What is the difference between you and all the other Greater China managers out there?
We are more focused on the small and mid-caps space. As said earlier, we are acting more like an “Activist” on certain positions while the rest of competition here is mostly a passive investor. In addition, we are very active in the space of “Reverse-Takeovers” (aka RTOs or shell companies). We are usually an early mover in this space.
How do you generate alpha?
We identify overlooked and small capitalization stocks in early stage, which might potentially become a multiple baggar. We run a concentrated portfolio and take a medium to long term view on our key positions. Riding out the short-term volatility is the key to success.
And what is the real difference?
Some of our investments have returned several-folds for us.
You returned 86.8% Year to date (up to October 2015) and over 589% over the last three years(to October-end) while the Hang Seng Index only returned -4.1% and +8.6% during the respective periods. How did you do that?
We do not follow the market that much as most of our ideas are original and most of our positions are little known to the market during our early stage of investment.
What does your risk management look like?
My COO monitors the positions and the overall portfolio (like margins and cash level) through a Portfolio Management System on a daily basis and reminds me of any large fluctuation. We also make use of technical indicators to set up different alerts.