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The views expressed are those of the author at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.
We seek to invest where:
After a decade-long global equity bull market dominated by growth stocks, Jun Oh, manager of the Asia Advantage Equity Platform, believes Asia’s market dynamics, combined with a potentially reflationary environment, could make this a good time to be a contrarian in Asia. We sat down with him to find out why.
Jun: My team and I believe that sentiment and stock prices are more volatile than a company’s intrinsic value and that the long-term prospects of a business are rarely as good or bad as they seem at sentiment extremes. So while, like many of our peers, we base our investment decisions on extensive industry research and bottom-up analysis, we also believe that fundamental research is only part of the equation. In our view, the analysis and understanding of investor psychology and sentiment is the other part. By using a disciplined, dispassionate framework, we aim to take advantage of sentiment-driven dislocations to generate attractive returns.
Jun: We aim to buy future earnings growth or appreciating assets at prices that are deeply discounted due to prevailing negative fundamentals and sentiment. In our view, when a company is going through a rough patch, the market tends to get anchored to recent negative trends and often underappreciates the positives, such as the company’s financial strength, management’s proven track record, or supportive secular growth trends. We look for opportunities where 1) current earnings are below potential, 2) expectations are low, 3) the share price is down meaningfully from recent highs, and 4) the valuation is cheap versus the stock’s history and its peers. A combination of earnings growth, beating expectations, and valuation rerating can lead to big winners.
We invest in a wide range of companies where we believe the issues weighing on the share price are short term, can be overcome, and mask a positive long-term outlook. We need to clearly understand the issues that are weighing on fundamentals and share prices. Then we invest in situations where we have a clear, differentiated thesis that both fundamentals and investor sentiment will improve in the future. We want to invest in companies with scarcity value — that is, they offer products or services that are differentiated and valuable.
We are not wedded to any particular type of company. Rather, our approach leads to a relatively balanced portfolio of companies exhibiting different characteristics across industries, business models, and phases of their life cycle. The common underlying theme in each case is our conviction in the company’s ability to turn the situation around and the identification of a catalyst to trigger this.
Jun: There is a common misconception that only growth or momentum investment strategies can do well in Asia. In 2019 and 2020, growth dramatically outperformed. However, since 2010, growth and value have…
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