| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 18.2% | - | - |
Diego Milano's Quercus Fund delivered exceptional performance with 137% cumulative returns over 5+ years, significantly outperforming global indices. The concentrated portfolio focuses on buying assets at extreme discounts to intrinsic value, with selling decisions driven purely by opportunity cost considerations. Milano recently initiated six new positions as core holdings have appreciated, maintaining the strategy of targeting 3x+ upside potential. A notable new investment is Braskem Idesa corporate bonds, a defaulted Mexican petrochemical company trading at 60% of par. Milano views this as a liquidity rather than solvency issue, with the company now operating its ethane-based plant at full capacity through a new import terminal financed by Carlos Slim. The manager explicitly avoids gold and precious metals due to inability to assess intrinsic value, preferring productive assets as inflation protection. The petrochemical sector faces its worst downturn ever, but early signs suggest potential cycle inflection. Milano maintains his disciplined approach of extreme selectivity and concentration.
Concentrated value investing focused on buying assets at extremely low prices compared to intrinsic value, with recent emphasis on distressed opportunities as core positions have appreciated.
Manager expects continued focus on finding opportunities with extreme price-to-value discounts as core positions have appreciated. Acknowledges the petrochemical cycle inflection point remains unclear but sees significant asymmetric opportunities in distressed situations.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Mar 2 2026 | 2026 Q1 | BAK | Concentration, distressed, LatAM, Opportunistic, Petrochemicals, value | - | Concentrated value fund targeting 3x+ upside opportunities delivered 137% cumulative returns over 5+ years. Manager recently initiated distressed petrochemical bonds position in Braskem Idesa, viewing default as liquidity issue with significant asymmetric upside. Avoids gold, preferring productive assets. Six new positions added as core holdings appreciated, maintaining extreme price-to-value discount discipline. |
| Dec 31 2025 | 2025 Q4 | 0142.HK, 1208.HK, 3301.HK, HLYB.L | Banking, China, Conglomerates, Petrochemicals, small caps, value | - | Deep value fund buying assets below 0.3x intrinsic value in unconventional places like Chinese small caps and complex structures. Portfolio concentrated in 6-12 positions including Tianjin Development, China Sanjiang Fine Chemicals, and Halyk Bank. Delivered 14.5% annualized returns since inception despite expected volatility. Manager charges zero management fees with all personal wealth invested alongside clients. |
| Sep 27 2025 | 2025 Q2 | 0142.HK, 2233.HK, ACWI, ICBP.JK, SPY | Africa, AI, Bonds, catalysts, Cement, China, value | 3369 HK | Milano delivers strong 2025 performance but warns against complacency as drawdowns are inevitable. His value approach focuses on extremely undervalued securities with patient capital deployment. Recent West China Cement bond trade exemplifies opportunistic positioning during stress periods. Maintains optimistic outlook on African expansion opportunities while acknowledging Chinese market headwinds and systemic volatility risks ahead. |
| May 24 2025 | 2025 Q1 | ACWI, FPP.L, OTIS, SPY, UMG.AS | Asia, Banking, dividends, emerging markets, Petrochemicals, Resilience, value | HSBK.L | Milano's emerging markets value fund recovered from April's tariff-driven selloff, posting 6.5% YTD returns. Portfolio trades at 25% of estimated intrinsic value, anchored by high-dividend Asian banks and industrial conglomerates. Key catalyst includes Maynilad's $2.5bn IPO. Manager maintains defensive positioning while capitalizing on market dislocations in undervalued, cash-generative businesses across frontier and emerging markets. |
| Feb 6 2025 | 2024 Q4 | 0700.HK, ACWI, SPY, UMG.AS | Concentration, Conglomerates, global, Media, Spin-Offs, value | - | Concentrated global value fund delivered 35.8% returns in 2024 through five core positions including exposure to Bolloré Group's media empire restructuring. Despite Vivendi's successful four-way split, newly listed entities trade below expectations. With €6 billion cash and active buybacks, the manager anticipates strategic deployment into mispriced assets while maintaining concentrated positioning. |
| Oct 22 2024 | 2024 Q3 | 0142.HK, 0743.HK, ACWI, SPY | China, Concentration, dividends, Hong Kong, Patience, value | - | Milano delivers 35% year-to-date returns through concentrated Hong Kong value investing, adding zero new positions while existing holdings trade at estimated 25% of intrinsic value. Portfolio benefits from all-time high dividends and fundamental improvements that markets ignore, requiring patience for value realization despite recent Chinese stimulus providing some uplift. |
| Jun 7 2024 | 2024 Q1 | ACWI, BAK, LYB, OTIS, SPY | China, Cyclical, Patience, Services, undervalued, value |
1826.HK 002110.SZ |
Milano's concentrated China-focused value fund delivered 28.8% in four months through patient investing in Otis China's growing elevator services business and a cyclical petrochemical play. Despite substantial gains, he estimates the portfolio still trades at 4.5x below fair value, emphasizing patience as corporate developments unfold over multi-year periods. |
| Oct 31 2023 | 2023 Q3 | 0142.HK, 6425.T, ICBP.JK, INDF.JK, IOG.L, MPI.PS, TEL | Asia, circle of competence, Conglomerates, Post-mortems, value | 0142.HK | Milano's fund suffered two total losses from circle of competence violations but maintains conviction in First Pacific Company, a Hong Kong conglomerate trading at massive discount to intrinsic value. Through dominant Indonesian noodle business Indofood and Philippines infrastructure assets, FPC offers 200%+ upside potential at current 3x P/E valuation. |
| Jul 20 2023 | 2023 Q2 | AAPL, AMZN, GOOGL, META, MSFT, NVDA, NVG.LS, SEM.LS, TSLA | Concentration, Margin Of Safety, Portugal, small caps, undervaluation, value | - | Value manager Milano delivered 12.3% in H1 2023 with portfolio trading at 0.25x estimated value. Concentrated approach focuses on margin of safety over benchmark tracking. Detailed Sonagi case study shows 35% annualized returns from Portuguese micro-cap through patient value realization. Emphasizes permanent capital preservation and finishing the investment race rather than short-term performance. |
| Jan 20 2023 | 2023 Q1 | 067280.KS, 1652.HK, 603002.SS, ODET.PA, SPY | China, Concentration, Cyclical, Petrochemicals, undervalued, value | 1652.HK | Milano's concentrated value fund underperformed in 2022 but the manager believes intrinsic value increased significantly. The portfolio is heavily weighted toward Chinese companies including a major new petrochemical position that completed capacity expansion. Despite macro headwinds, the fund maintains its disciplined approach of buying extremely undervalued companies with wide margins of safety for long-term value realization. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
PetrochemicalsManager discusses the petrochemical industry facing its deepest and longest downturn ever, with naphtha-based plants burning cash while ethane-based plants remain profitable. Braskem Idesa represents the only world-scale ethane-based plant in Latin America, now operating at full capacity with its new import terminal. |
Ethane Naphtha Polyolefins Cycle |
DistressedManager initiated a position in Braskem Idesa corporate bonds trading at 60% of par after the company defaulted on coupon payments. Views this as a liquidity problem rather than solvency issue, with significant asymmetric upside potential in restructuring scenarios. |
Default Bonds Restructuring Chapter 11 | |
GoldManager explicitly states the fund has never held positions in precious metals or related companies because he cannot estimate their intrinsic value. Disagrees with gold as protection against currency debasement, preferring productive assets instead. |
Precious Metals Intrinsic Value Currency | |
| 2025 Q4 |
ValueFund follows deep value philosophy buying assets at extremely low prices versus intrinsic value. Portfolio trades at less than 0.3x price-to-value ratio with look-through P/E of approximately 3.5x. Manager emphasizes patience and waiting for price-value gap reduction over several years. |
Deep Value Price Discovery Contrarian Patience Concentration |
Small CapsFund specifically targets unconventional places including small caps with low free float and little institutional coverage. Current positions include small-cap names like Tianjin Development Holdings and China Sanjiang Fine Chemicals that institutions avoid but retail cannot access. |
Small Cap Overlooked Illiquid Institutional Gaps | |
ChinaSignificant exposure to Chinese companies including Tianjin Development Holdings trading at 4x P/E with 250%+ upside potential, and China Sanjiang Fine Chemicals with 56% YTD returns. Manager sees extreme valuations in Chinese markets creating compelling opportunities. |
China Hong Kong Undervaluation Petrochemicals | |
| 2025 Q2 |
ValueManager emphasizes finding extremely undervalued securities and waiting for re-rating. Cites Walter Schloss philosophy of buying low enough that something good may happen. Focuses on securities trading at significant discounts to intrinsic value. |
Undervalued Intrinsic Value Discount Re-rating Fair Value |
CementDetailed analysis of cement industry dynamics, particularly in China versus Africa. Chinese market is highly competitive with overcapacity, while African markets offer better pricing power and growth opportunities. West China Cement represents exposure to African expansion. |
Cement Africa China Capacity Infrastructure | |
AIDiscussion of AI's usefulness as research tool for understanding industries and companies, particularly for summaries and explanations. However, limitations exist when you don't know what questions to ask, and human analysis remains important for finding opportunities. |
ChatGPT Research Analysis Automation Limitations | |
| 2025 Q1 |
ResiliencePortfolio has always been curated with resilience in mind, aiming to withstand most macro developments. Manager believes they continue to be in the resiliency spectrum despite potential impacts from paradigm shifts like tariff changes. |
Resilience Macro Portfolio |
DividendsMultiple portfolio companies offer attractive dividend yields. First Pacific provides 5% dividend yield while distributing only 20% of profits. Tianjin Development offers 7% dividend yield at less than 30% payout. Halyk Bank provides more than 15% dividend yield at current prices. |
Dividends Yield Payout | |
BuybacksBolloré group is very active in buybacks whenever price and liquidity provide an opportunity. The company has a huge pile of cash worth more than its whole market cap that is yet to be deployed. |
Buybacks Cash Deployment | |
PetrochemicalsSanjiang Fine Chemicals operates in the petrochemical cycle, delivering 10.3% EBITDA margin even near the trough. The company announced plans for building VLECs to transport ethane, which is expected to be twice as advantageous as using naphtha as feedstock. |
Petrochemicals Ethane EBITDA | |
| 2024 Q4 |
MediaDetailed discussion of Vivendi's split into four independent listed entities including Universal Music Group, Canal+, Havas, and Louis Hachette Group. The manager notes that despite expectations for re-rating post-split, the newly listed companies are trading at lower levels than before the spin-offs. |
Universal Music Group Canal+ Vivendi Spin-offs Media Conglomerates |
| 2024 Q3 |
ValueManager emphasizes buying stocks trading at significant discounts to intrinsic value, with portfolio estimated at 4x market prices. Describes positions as wildly mispriced with high opportunity cost for new ideas. Focus on getting more for less through patient value realization. |
Discount Intrinsic Mispriced Undervalued Fair Value |
DividendsThree of the four largest positions are distributing all-time high dividends. Manager highlights dividend increases as one of the positive developments happening while markets aren't paying attention. Dividends being redeployed into remaining attractive positions. |
Dividend Growth Income Distribution Yield | |
Hong KongSubstantial part of portfolio is listed on Hong Kong Stock Exchange. Recent stimulus by Chinese authorities created noteworthy movement in Hong Kong stocks, though fund positions didn't benefit to same degree as the index. Manager remains agnostic about Chinese stimulus effectiveness. |
HKSE Stimulus China Underperformance | |
| 2024 Q1 |
ElevatorsOtis China's elevator maintenance portfolio has grown from 210k to 400k units, representing over 50% of Otis' global portfolio growth. With decades-long modernization needs for elevators installed 15+ years ago, the portfolio is expected to continue growing at double-digit rates as China transitions to a more mature, service-focused market. |
Maintenance Portfolio Modernization Services Urbanization |
PetrochemicalsChina Sanjiang Fine Chemicals completed construction of a transformational new plant after 3+ years, with 2H23 volumes 60% higher than 1H23 at superior margins. The petrochemical sector remains in doldrums but shows signs of supply-demand balance improvement, with companies expressing confidence in cycle normalization over 12-18 months. |
Cycle Margins Supply Demand Normalization | |
ChinaBoth major holdings are China-focused investments. Otis China benefits from ongoing urbanization and the transition to a mature service market, while China Sanjiang represents a cyclical bet on petrochemical recovery. The manager emphasizes China's growth potential in elevator services and chemical manufacturing. |
Urbanization Services Manufacturing Growth Market | |
| 2023 Q3 |
SPACsManager invested in SPAC warrants to gain exposure to Okada Manila casino but lost 100% when the deal was canceled due to legal disputes. The investment highlighted the risks and complexities of SPAC structures despite the underlying asset quality. |
Warrants Casino Legal Risk Deal Risk |
CasinosSignificant exposure to casino operations through Universal Entertainment's Okada Manila project and analysis of the Philippines gaming market recovery post-COVID. The casino business was expected to rebound as China reopened. |
Philippines Gaming Recovery China | |
FoodMajor position in Indofood through First Pacific Company, the world's largest noodle company with 70% market share in Indonesia. The business generates 50%+ returns on capital with significant growth potential in Africa and Middle East markets. |
Noodles Indonesia Market Share Returns | |
InfrastructureExposure to Philippines infrastructure through Metro Pacific, which owns power generation, toll roads, water, light rail and hospitals. The company operates in a 100 million person emerging market with abundant growth opportunities. |
Philippines Utilities Transportation Growth | |
| 2023 Q2 |
ValueManager emphasizes extreme undervaluation with portfolio trading at less than 0.25x estimated value. Focuses on price-to-value analysis and margin of safety principles. Cites Benjamin Graham's value investing philosophy and emphasizes long-term weighing machine concept over short-term voting machine dynamics. |
Undervaluation Margin of safety Price-to-value Benjamin Graham Intrinsic value |
Small CapsDetailed discussion of Sonagi investment, described as probably the smallest company the Fund will ever be involved with at EUR 30mm market cap. Manager acknowledges concentrated portfolio includes illiquid small-cap names and obscure holding structures across various geographies. |
Micro-cap Illiquid Small company Free float Price discovery | |
PortugalSignificant focus on Portuguese market through Sonagi investment and its cross-shareholding with Navigator, the third largest exporter in Portugal accounting for more than 1% of Portugal's GDP. Discussion includes Semapa, Secil cement company, and Lisbon Euronext listings. |
Navigator Semapa Lisbon Euronext Portuguese GDP Secil | |
| 2023 Q1 |
ValueThe fund focuses on finding extremely undervalued companies with wide margins of safety to prevent permanent losses of capital. The manager emphasizes buying at prices well below intrinsic value, citing Joel Greenblatt's principle of figuring out value and paying a lot less. |
Undervalued Margin of safety Intrinsic value Deep value Price to value |
PetrochemicalsDetailed analysis of China Sanjiang Fine Chemicals, a petrochemical company completing a major capacity expansion that will improve cost competitiveness by switching from methanol to cheaper naphtha and ethane feedstocks. The investment thesis centers on the cyclical nature of the industry and positioning for recovery. |
Commodity chemicals Feedstock advantage Capacity expansion Cyclical recovery Cost competitiveness | |
ChinaSignificant exposure to Chinese companies including Tianjin Development Holdings and China Sanjiang Fine Chemicals, representing approximately 40% of the portfolio. The manager sees opportunities in Chinese markets despite macro headwinds including economic deceleration. |
Chinese equities Hong Kong listed Mainland China Economic deceleration Regional exposure |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jul 20, 2023 | Fund Letters | Quercus Fund | - | Sonagi | Real Estate | Real Estate Investment Trusts | Bull | Unknown | asset value, Cement, Cross-shareholding, dividend, illiquid, Navigator, Paper, Portugal, Pulp, Real Estate, related-party transaction, small-cap, Value | Login |
| Mar 2, 2026 | Fund Letters | Quercus Fund | - | Braskem Idesa | Other | Commodity Chemicals | Bull | Deutsche Börse / Frankfurt Stock Exchange | asymmetric opportunity, Bond, Carlos Slim, Chapter 11, Distressed debt, Ethane, Liquidity crisis, Mexico, Petrochemicals, polyolefins, restructuring, Special situations, turnaround | Login |
| 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 |
| May 24, 2025 | Fund Letters | Quercus Fund | HSBK.L | Halyk Bank | Financials | Banks | Bull | London Stock Exchange | Banking Penetration, Banks, dividend yield, Emerging markets, Frontier Markets, high ROE, Kazakhstan, market leader, Value | Login |
| May 23, 2024 | Fund Letters | Quercus Fund | 002110.SZ | China Sanjiang Fine Chemicals | Materials | Specialty Chemicals | Bull | Shenzhen Stock Exchange | China, contrarian, Cyclical Recovery, insider buying, margin expansion, New Plant, Operational Leverage, specialty chemicals | Login |
| May 23, 2024 | Fund Letters | Quercus Fund | 1826.HK | Tianjin Development Holdings | Real Estate | Real Estate Development | Bull | Hong Kong Stock Exchange | China, Elevator Maintenance, high-margin, market share expansion, recurring revenue, Service Business, urbanization, Value | Login |
| Oct 31, 2023 | Fund Letters | Quercus Fund | 0142.HK | First Pacific Company | Industrials | Industrial Conglomerates | Bull | Hong Kong Stock Exchange | conglomerate, consumer staples, Emerging markets, Food Manufacturing, Indonesia, infrastructure, Noodles, Philippines, Power generation, Southeast Asia, Sum-of-parts, telecommunications, Value | Login |
| Jan 20, 2023 | Fund Letters | Quercus Fund | 1652.HK | China Sanjiang Fine Chemicals | Materials | Specialty Chemicals | Bull | Hong Kong Stock Exchange | capacity expansion, China, commodity, Cyclical, Downcycle, Ethane, Feedstock, Methanol, Naphtha, Petrochemicals, turnaround, Value | Login |
| TICKER | COMMENTARY |
|---|---|
| BAK | Its controlling shareholder (Braskem NYSE: BAK) is in an even worse situation, and the industry is facing the deepest and longest downturn ever. Its majority shareholder is Braskem, which owns 75% of the company. Being owned by both Odebrecht and Petrobras, the company was in the midst of the carwash scandal in Brazil in 2014 - which took its multibillion dollar toll in terms of fines. As a result of the carwash scandal, Odebrecht went bankrupt, and the banks received Braskem's controlling shares as collateral. The banks put Braskem for sale since 2019 - it was almost bought by LyondellBasell back then. But around the same time, the company suffered a huge environmental incident in its operations in Northeastern Brazil: a whole neighborhood sinking due to its salt mining. So, more multibillion dollar fines. A neverending horror, with uncapped potential liabilities... no willing buyer had the guts to buy the whole company. At the moment, IG4, a private equity fund specialized in special situations / distressed companies, is in the process of acquiring control of Braskem. Add to that the deepest and longest downturn of the petrochemical cycle ever, and Braskem is, well... not in a good shape. In theory it has no liquidity issues, but its bonds are nevertheless trading at less than 45% of par value. No wonder they decided not to capitalize Braskem Idesa in time for the payment of the coupon. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
|---|---|---|---|
| No industry data available | |||
