| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 14.5% | - | - |
| 2025 | 2024 | 2023 | 2022 | 2021 | 2020 |
|---|---|---|---|---|---|
| 24.5% | 35.8% | 8.6% | -17.1% | 23.2% | 3.7% |
Quercus Fund employs a concentrated deep value strategy, buying assets at extremely low prices versus intrinsic value in unconventional places. The fund targets price-to-value ratios below 0.3x with a look-through P/E of approximately 3.5x, focusing on complex structures, small caps, and overlooked geographies where institutional barriers create persistent mispricing. Current major positions include Chinese companies Tianjin Development Holdings and China Sanjiang Fine Chemicals, plus Halyk Bank of Kazakhstan. The portfolio is concentrated in 6-12 positions with significant exposure to Asia. Key return drivers include patient capital deployment in illiquid securities and multi-year holding periods for price-value convergence. Primary risks include extended underperformance periods and high volatility from concentrated, illiquid positions. The fund delivered 24.5% returns in 2025 and 14.5% annualized since inception, though severe drawdowns are expected and considered normal. The manager maintains zero management fees, charging only 25% performance fees above 6% annual returns, with essentially all personal wealth invested alongside clients.
Buy assets at extremely low prices versus intrinsic value (below 0.3x price-to-value) in unconventional places where institutional barriers create persistent mispricing, then wait patiently for multi-year value realization.
Manager expects continued volatility and potential drawdowns in short term but maintains conviction in long-term value realization. The approach of buying extremely undervalued assets and waiting for price-value convergence over multi-year periods remains unchanged despite market conditions.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Dec 31 2025 | 2025 Q4 | 0142.HK, 1208.HK, 3301.HK, HLYB.L | Banking, China, Conglomerates, Petrochemicals, small caps, value | - | Fund focuses on buying assets at extremely low prices versus their value, targeting price-to-value ratios below 0.3x with look-through P/E of approximately 3.5x. The approach… |
| Sep 27 2025 | 2025 Q2 | - | deep value, drawdowns, Margin Of Safety, Patience, volatility | 3369 HK | The letter stresses patience as the core edge in deep value investing, arguing that time, not catalysts, ultimately closes valuation gaps. Management highlights extreme undervaluation,… |
| May 24 2025 | 2025 Q1 | 2198 HK, 882 HK, FPC GR, HSBK LI, ODET FP | - | - | - |
| Feb 6 2025 | 2024 Q4 | ODET FP | - | - | - |
| Oct 22 2024 | 2024 Q3 | 1102 TT | - | - | - |
| Jun 7 2024 | 2024 Q1 | 2198 HK, TJN GR | - | - | - |
| Oct 31 2023 | 2023 Q3 | 142 HK, 6425 JP, IOG LN | - | - | - |
| Jul 20 2023 | 2023 Q2 | - | - | - | - |
| Jan 20 2023 | 2023 Q1 | 2198 HK, 882 HK, ODET FP | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
ChinaChina's economic rebalancing appears to be moving forward. Market liquidity, anti-involution and a measured consumer policy are likely to drive a sustained market performance in 4Q. Fiscal support and ongoing reforms in China is supportive of a stronger currency. |
Growth Policy Currency |
PetrochemicalsMajor position in China Sanjiang Fine Chemicals, which is expanding ethylene capacity and shifting feedstock from methanol to naphtha and eventually ethane. The company is positioned to benefit from improved margins as it moves down the cost curve with more efficient feedstock utilization. |
Ethylene Feedstock Cost Curve Capacity Expansion Margins | |
Small CapsSmall caps getting strong start in 2026 supported by easing monetary conditions and constructive fiscal backdrop. Small caps more sensitive to economic cyclicality which is overdue for expansion. Expected to grow at better pace than large caps in 2026 after long period of underperformance. |
Value Growth Cyclical Monetary Policy Fiscal Policy | |
ValueManager emphasizes investing in controlled companies trading at significant discounts to NAV, with European holding companies showing discounts of 30-68%. The strategy focuses on securities mispricing where real value exists, contrasting with overvalued technology stocks. |
Discounts NAV Mispricing Undervalued Controlled | |
| 2025 Q2 |
Patience |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Sep 27, 2025 | Fund Letters | Diego B. Milano | 3369 HK | West China Cement Limited | Materials | Construction Materials | Bull | New York Stock Exchange | Africa, Cement, Refinancing, restructuring, Value | Login |
| TICKER | COMMENTARY |
|---|---|
| 0142.HK | First Pacific Company trades at 4.0x P/E with 140%+ upside, holding stakes in Indofood CBP, PLDT, and MPIC with significant value in underlying assets. |
| 1208.HK | Tianjin Development Holdings trades at 4x P/E with upside of 250%+ based on sum-of-parts valuation including stakes in Otis China, TianjinPort, and Lisheng Pharma. |
| 3301.HK | China Sanjiang Fine Chemicals represents 20%+ of the Fund, up 56% YTD, expanding ethylene capacity 2x by 2024 and shifting to more efficient ethane feedstock by 2027 with 70%+ FCF yield potential at 15% margins. |
| HLYB.L | Halyk Bank represents 10%+ of the Fund, up 19% YTD, trading at 1.0x P/B, 2.9x P/E with 17% dividend yield and 25-30% ROE enabling high reinvestment returns. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
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| Industry | Prev Quarter % | Current Quarter % | Change |
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| No industry data available | |||
