MENU
 

PRE TAX NTA |$3.75

Value as at close of business on 3 January 2024

The fundie betting big on China – with help from AI

JO Hambro Asset Management senior portfolio manager Samir Mehta.

Chinese equities have staged a volatile comeback on Beijing’s latest promise of stimulus measures, but JO Hambro’s Samir Mehta isn’t one to follow the crowd.
 
With one eye on Beijing’s ­efforts to revive the Chinese economy, Mr Mehta is sticking to his well-worn strategy: he’s hunting for companies across Asia that aren’t battling intense competition and have management teams focused on costs, cash generation and high payouts to shareholders – and he’s using AI to do the early legwork.
 
“Particularly in the last five years, well-managed businesses in China have understood that for the first time in 40 years, neither the Chinese government nor the PBOC are going to come to their rescue in terms of big stimulus packages,” Mr Mehta said.
 
“We don’t know how big the latest stimulus package will be. But we do know that the better managed companies in China are cutting costs, reducing working capital, reducing capital expenditure, and assuming that growth is going to be quite challenged. And if they have excess cash, they’re buying back shares or returning money to shareholders.”
 
Along with cutting costs and spending, Chinese companies, in particular, have been preparing for a Donald Trump presidency, determined not to get burned like the last time. “Any company you speak to across Asia today is thinking about Plan B, about a contingency plan,” Mr Mehta said.
 
“Take the shoe manufacturing companies for the likes of Nike and Adidas. They used to have 90 per cent of their shoes manufactured in China. Today it’s less than 20 per cent in China. They’re in Indonesia and Vietnam.”
 
Technology giant Tencent is one of the biggest holdings in the Pendal Asian Share Fund, which Mr Mehta co-manages. The fund invests in Asia ex-Japan, with a focus on China, Taiwan, India and ASEAN countries. Tencent has bought back about $US8bn ($12.1bn) of shares so far this year, with estimates its capital return to shareholders could reach $US13bn by the end of the year, ­including dividends.
 
Alongside the tech giant, the fund’s biggest holdings include names such as chipmaker TSMC, Indian motorcycle maker Bajaj Auto and Tata Consultancy ­Services.
 
But one of the top performers in its portfolio, with a one-year share price surge of 150 per cent, is Jentech Precision, a Taiwan-based tech company that makes “heat spreaders” to dissipate heat to help cool AI servers.
 
Jentech is one of those companies that fits into the chain of manufacturing but is not well talked about. The decision to invest was only made possible with the use of ChatGPT.
 
“We had no clue about the company. We had no information,” Mr Mehta said. “Usually you have sell side coverage, so that would give us some information on the company, what the background was, but with Jentech there was no sell side coverage.
 
“We downloaded their annual reports, got hold of their presentations and fed them through the models, and then tried to understand who the competitors are. It was the first time we had used ChatGPT for analysis.”
 
The fund now uses ChatGPT as a core part of its analysis for stock picking. 

Mr Mehta will present at the Sohn Australia conference in Adelaide next month. While keeping quiet on his chosen stock, he said his top pick was a Chinese company with a peer listed in the US.
 
“I want to focus people’s attention on thinking around this country, that many say is uninvestible,” he said. “It fits into the category of having great management, doing all the right things, including buybacks of shares.
 
“They have a peer that is listed in the US and well admired … and it fits into my narrative of what I would call redemption.”
 
This year’s Sohn Hearts & Minds will be held on Friday, November 15 at Festival Theatre in Adelaide. The annual conference, which has been running since 2016, raises funds for medical research. It is on track to top $70m in total funds raised over the past eight years by November.
 
Themes for this year’s event will explore space, AI, geopolitics, biosciences and investing.
 
A host of top stock pickers outline their best pick for the coming year, including leading investment experts Jordan Katz, managing director at Advent Global Opportunities in Boston; Beeneet ­Kothari, chief executive at New York-based Tekne Capital Management; Ricky Sandler, CEO of Eminence Capital; and Sydney-based ­Vihari Ross, portfolio manager at Antipodes Partners.
 
It is being held in partnership with the South Australian government.


This article was originally posted by The Australian here. Licensed by Copyright Agency. You must not copy this work without permission.

Disclaimer: This material has been prepared by The Australian, published on 5 November 2024. HM1 is not responsible for the content of linked websites or content prepared by third party. The inclusion of these links and third-party content does not in any way imply any form of endorsement by HM1 of the products or services provided by persons or organisations who are responsible for the linked websites and third-party content. This information is for general information only and does not consider the objectives, financial situation or needs of any person. Before making an investment decision, you should read the relevant disclosure document (if appropriate) and seek professional advice to determine whether the investment and information is suitable for you.

Recent Posts

Read the latest insights
A curated list of HM1 investor updates, portfolio news and other interesting articles.
Read More
10 top fund managers reveal their long-term stock picks
With valuations stretched and geopolitical tensions high, the new year offers plenty of potholes for investors. 
Rikki Bannan – Don’t get caught up in momentum
Conference Fund Manager Rikki Bannan, Executive Director at IFM Investors, joins Equity Mates to discuss her standout 2023 stock pick, Telix, and explore what opportunities lie ahead.
Professor Jane Butler: Sparking Hope for Spinal Cord Injuries
In this episode of the Hearts & Minds Podcast, we sit down with Professor Jane Butler to discuss her groundbreaking research into spinal cord injuries.
Nick Griffin – The Nvidia story is not over
Nick Griffin, Founding Partner & Chief Investment Officer of Munro Partners joined the Equity Mates podcast in their Summer Series.
 

10 top fund managers reveal their long-term stock picks

With valuations stretched and geopolitical tensions high, the new year offers plenty of potholes for investors. 

Read More
December 28th, 2024
 

Rikki Bannan – Don’t get caught up in momentum

Conference Fund Manager Rikki Bannan, Executive Director at IFM Investors, joins Equity Mates to discuss her standout 2023 stock pick, Telix, and explore what opportunities lie ahead.

Read More
December 19th, 2024
 

Professor Jane Butler: Sparking Hope for Spinal Cord Injuries

In this episode of the Hearts & Minds Podcast, we sit down with Professor Jane Butler to discuss her groundbreaking research into spinal cord injuries.

Read More
December 10th, 2024
 

Nick Griffin – The Nvidia story is not over

Nick Griffin, Founding Partner & Chief Investment Officer of Munro Partners joined the Equity Mates podcast in their Summer Series.

Read More
December 9th, 2024
 

HM1 CEO Succession

Hearts and Minds Investments Limited advises that Paul Rayson intends to retire from the position of Chief Executive Officer, effective 19 February 2025.

Read More
December 5th, 2024
 

Trump unifies top investors in decade-long bullish outlook for US

Nick Moakes, CIO of the $72 billion Wellcome Trust, told the conference that too many investors were banking on a return to the ultra-low interest rates that prevailed over the past decade.

Read More
November 20th, 2024
 

These rock-star stock picks could get markets talking next year

Eleven rock stars of international and local funds management took to stage – each tasked with picking and pitching one company whose shares will take off over the next year.

Read More
November 18th, 2024
 

Is anyone brave or stupid enough to bet against America?

Stock pickers have been punished for betting against the US. The choice between consensus and contrarianism on American exceptionalism is now harder than ever.

Read More
November 17th, 2024
 

Sohn: NYSE-listed Estee Lauder’s Northcape Capital pick

Northcape Capital’s Fleur Wright this gives a rare opportunity to buy a high quality company at an attractive price.

Read More
November 15th, 2024
 

Sohn ASX stock pick: Ellerston Capital’s Chris Kourtis backs Perpetual

Chris Kourtis has put his biggest bet on embattled Perpetual – picking one of the most hated stocks on the ASX – that he believes will soon be the ‘cheapest listed asset manager of scale in the universe’.

Read More
November 15th, 2024
 

AI start-ups a threat to incumbent big companies

Paul Bassat predicts emerging artificial intelligence companies will disrupt sectors and overtake established incumbent companies just as rapidly as the seismic shifts that took place when the internet emerged in the mid-1990s.

Read More
November 15th, 2024
 

Howard Marks and Sohn’s big stars reveal seven rules for investing

Among the stock picks and stunts at the Sohh Hearts & Minds event, Howard Marks and Nick Moakes provided investors with long-term rules for playing markets.

Read More
November 15th, 2024
 

Sohn investors position for bullish but bumpy Trump ride

Australia and the rest of the world must adjust to a new Trump presidency that will deliver an expected bull market but also disruption, with the leader in waiting prepared to “create pain” to get his way.

Read More
November 15th, 2024
 

Sohn stock picker experts name best shares to invest in for year ahead

‍Don’t overlook down and out silver miners, legacy skincare brands ready for a revival and a big financial company suffering from a severe case of shareholder wealth destruction.

Read More
November 15th, 2024
 

Eleven stock tips from Sohn to get you through 2025

“There’s no finer place for the finance festival than in the festival city,” said Matthew Grounds. He, along with fellow Barrenjoey co-executive chairman Guy Fowler and investor Gary Weiss, is one of Sohn’s driving forces.

Read More
November 15th, 2024
 

Sohn Hearts & Minds Investments fund targets $1.5bn valuation

‍Hearts & Minds Investments chair Chris Cuffe is hoping for HM1 to grow to more than $1.5bn in the next five years.

Read More
November 14th, 2024
 

Galaxy Digital CEO Mike Novogratz believes bitcoin will hit $US100k

Bitcoin’s bounce to record highs in recent days is only the beginning of a fresh surge higher for cryptocurrency, says US billionaire Mike Novogratz.

Read More
November 9th, 2024
 

Why this New York hedge fund manager sees opportunity in European stocks

Influential New York-hedge fund manager Ricky Sandler will turn to Europe for his next stock pick.

Read More
November 6th, 2024
 

Antipodes’ Ross says short-term wealth hinges on US election

The portfolio manager says defensive stocks pose a bigger risk than the magnificent seven for investors that are overexposed to the American sharemarket.

Read More
November 5th, 2024
 

Concentration risk key for investors: Antipodes Partners’ Vihari Ross

The concentration risk in global stock indexes that has built up during the strong rise over the past year must now be a key consideration for global investors, according to Vihari Ross.

Read More
November 5th, 2024
 

The fundie betting big on China – with help from AI

Mr Mehta is sticking to his well-worn strategy: he’s hunting for companies across Asia that aren’t battling intense competition and have management teams focused on costs, cash generation and high payouts to shareholders.

Read More
November 5th, 2024
 

Why this fundie wants you to ‘wince’ at his stock picks

When fund managers come to pitch their favourite stock at the annual Sohn Hearts & Minds conference, there are two ways they can go: they can play it safe, or they can take a risk and shock the room.

 

Read More
October 29th, 2024
 

IFM Investors’ Rikki Bannan backs small cap investments to rebound after mixed performance

IFM Investors executive director Rikki Bannan believes this year could be a good one to invest in some select small cap stocks.

Read More
October 27th, 2024
 

Meet the 2024 Conference Managers

Following a global search, the Conference Fund Manager Selection Committee is pleased to share eleven new managers for 2024. 

Read More
October 22nd, 2024
 

Chris Kourtis is on a winning streak. Here’s his next ASX pick

Chris Kourtis of Ellerston Capital thinks he’s found another winner and thinks it’s the last chance to have a bite at the cherry before the strategy plays out.

Read More
October 21st, 2024
 

Why Ellerston Capital’s Chris Kourtis plans to back a ‘hated’ stock

Chris Kourtis of Ellerston Capital plans to tip one of the “most hated” stocks in Australia when he presents at the 2024 Sohn Hearts & Minds Conference.

Read More
October 21st, 2024
 

Alex Pollak champions rewards of disruptive investment

Alex Pollak’s funds management company Loftus Peak rode the Nvidia wave and he is now looking at more opportunities in disruptive industry stocks.

Read More
October 14th, 2024
 

Buy Hold Sell: 2 Hall of Fame investors analyse each other's best ideas

Hall of Fame alumni Chris Kourtis of Ellerston Capital joins Livewire to analyse high conviction stock picks.

Read More
October 11th, 2024
 

Sumit Gautam - Why AI won't deliver in 2025 | Scalar Gauge

Sumit Gautam is the Founder of Scalar Gauge and speaks with Equity Mates ahead of his appearance at the Sohn Hearts & Minds conference.

Read More
October 8th, 2024
 

Missed out on Nvidia and Ozempic? This fundie says it’s never too late

Northcape Capital’s Fleur Wright is still kicking herself for not owning market darlings Nvidia and Novo Nordisk, the maker of the weight loss wonder drug Ozempic, before shares of those companies rocketed in 2023.

Read More
September 30th, 2024