Searching for mispriced assets

• Markets are subject to sudden events, leading to irrational responses. Individual stocks or the broad market might be overpriced or underpriced as a result. After the market resumes its rationality, the price will quickly revert to value. Therefore, such substantial deviation between price and value may represent excellent investment opportunities
• We combine fundamental study and quantitative model to identify underlying assets whose prices have significantly deviated from its value. We also build financial models to estimate the safety margin of the underlying in its extremity
• When the safety margin is large enough, we will decisively long or short into the position and gradually build it up to maximize return

Value discovery

• Stocks with strong fundamental might still attract little investor attentions and share prices may remain low for various reasons (small market cap, operating in unfavorable industries, few management presentation on the companies, etc.)
• Our principle of investing in such stocks is that there must be catalysts to share price, which are favorable factors that can attract market attention within the next 12 months
• Based on repeated study and research, we slowly build up the position and wait for the catalysts to occur, in order to harvest good returns in a short period of time

Thematic investments

• Amidst market volatility, thematic investment are prone to generate better investment returns
• Herding strategy works poorly for thematic investments, which usually require deep understanding and support from strong fundamentals of the underlying
• Firmly avoid severely overpriced underlying with unclear investment stories