以下转摘高盛组织的安东尼波顿的近日演讲纪要。
Anthony Bolton_20100720_Speech and Q &A
Why China
Thesis:
1)In a low growth context, China is growing relatively higher than US/Europe
2)Drivers for China’s growth are changing: export/manufacturing -> domestic consumption/service
3)China’s equity market is less developed (he shows a chart of stock performance, indicating that value is working even better in China than elsewhere)
Initial impressions from company meetings in the past 4 months
Positives:
1)Market is indeed under researched, in particular for those medium and small caps
2)Balance sheets for a lot of companies are actually better than expected. A few of them net cash position.
3)Authorities encourage industry champions
Negatives:
1)Quality of management, corporate governance
2)Regulation risk
Findings:
2 kinds of companies
Growing at 10-15%
Growing at 20-25%
Key sector of interest:
1)Avoid commodities and general industrials
2)Prefer those related to domestic consumption
3)Also banks, proxy of China’s economy, can’t avoid
Market outlook
1)Think 2H2010 will start to see another bull market.
2)This is different from last round of bull market, where cyclical outperforms. This time, the outperformers will be quality stocks.
3)Invested 12% in A shares (primarily dual listed with a valuation discount to H shares)
Q what’s the most important information source?
A spend a lot of time talking with management, but also a lot of time doing cross checking.
Cross checking Methods include:
1)Market research
2)Experts/consultant (for instance, he talked to 3 competitor company which is not listed)
3)Firms doing due diligence
Q How to evaluate a company? Seems you are using a lot of parameters rather than absolute valuation?
A 1) I do look at a lot of things, for instance, management quality, franchise etc. In UK, I even consider the M&A possibilities (where M&A market is quite mature, while in China there is not such market yet). 2) Believe it is a bit dangerous if you only look at valuation
Q Outlook for China’s real estate market?
A 1) L-T positive. 2) less keen on developers, believe they can be dangerous 3) prefer real estate investors (has one of the real estate investor listco as his top 10 holdings)
Q Why don’t like to bench mark your portfolio with the index?
A 1) As Warren Buffet put it, prefer a volatile 10% over a smooth 6%. 2) Might do some bench marking work for those very large caps.
Q Why like China’s domestic consumption idea?
A 1) found that there is a lot of relevance between China and western world 2) want to be early for those business models that have been emerging in China, which have previously proved successful in western world.
Q Will you bet on RMB appreciation to invest in China?
A 1) My basic thesis to invest in China is very simple, i.e., China is growing relatively faster in this post-crisis low growth environment. 2) The bet is not on currencies. 3) Believe there can be headwinds for a variety of currencies during certain period.
Q How to deal with a position that you believe have right investment thesis, somehow just didn’t work out?
A 1) keep open-minded. Be cautious if others know something that you don’t. 2) be patient. It’s easy to find a stock than knowing when it will work out. Some of the stock ideas only work out after 1/a few years. 3) for those large size position, will do a technical method + thesis, if the price went down too much, will cut it to a certain position and do more analysis, if still have the conviction, will add positions afterwards.
Q what’s your typical day now and at your early stage of career?
A 1) spend a lot of time meeting companies. Believe this is very important part. 2) try to know what you don’t want to know. 3) advice for beginners: read a lot of books written by successful investors.