While there are plenty of investment opportunities in Greater China, one Hong Kong hedge fund manager says that finding under-researched, undervalued opportunities can offer good long-term upside.
“You know these opportunities when you see them. Last year we were in the Chinese property sector, including China Resources Land Ltd., where we made four times our investment,” said Eddie Wong, chief executive officer of Winnington Capital Ltd. and investment adviser to the firm’s US$140 million (euro109 million) Trophy Fund.
Wong said that when deciding where to put their money, the fund looks at a company’s future cash flows, future earnings, potential re-ratings and management.
“Another commonality is that when we make our first investment, there often are no brokerage reports on the company, although these generally come soon afterwards, which can help with the re-rating by bringing in institutional investors,” said Wong.
Another big opportunity last year was Chinese financials: “We invested in Bank of Communications and China Life (the largest insurance company in China), but have since sold down our holdings in this sector,” he said.
