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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Despite a minor 3.04% decline in 2025, Pangolin remains highly confident in its deeply undervalued portfolio and is actively using its block of independent shares to stop a lowball privatization bid for DKSH Malaysia."
Pangolin Asia Fund ended December 2025 with an NAV of US$547.51, up 1.00% for the month but down 3.04% YTD. Performance was dragged down by Bermaz Auto (impacted by Chinese EV competition) and Indonesian consumer staples. However, portfolio earnings are estimated to have grown 7% overall (11% ex-Bermaz). The manager is actively blocking a privatization offer of RM6.15/share for DKSH Malaysia by its Swiss parent, valuing the business at over RM11/share. Additionally, the manager critiques independent director structures in Malaysia and advocates for paying independent directors at least 50% of their fees in restricted stock to align incentives.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
The fund displays high conviction, maintaining a 99% fully-invested level with key geographic concentrations in Indonesia (52%) and Malaysia (33%). Furthermore, they control over 10% of DKSH Malaysia's independent shares and are actively taking a public stand to block a major corporate buyout because they value the stock at nearly double the offer price.
Growth Outlook
The manager notes that their holdings remain significantly undervalued and points out that a 25% premium offer across the fund would still leave the overall 2026 PE at a very cheap 12.7x. They are highly optimistic about the long-term potential of their cash-rich profitable companies in stable, high-growth economies.
Risk Appetite
The fund is extremely highly invested at 99%, indicating a very strong appetite to remain fully exposed to their target equities without hoarding cash. This allocation is heavily tilted toward Indonesia and Malaysia, showing high concentration in Southeast Asian equities.
Capital Deployment
The fund is already 99% invested, meaning cash levels are extremely low and stable (only 1% cash), leaving minimal room for net new capital deployment or additional accumulation without selling existing positions.
Forward Guidance
The manager is holding firm on current positions, especially blocking the DKSH Malaysia buyout bid, but does not outline any immediate plans to deploy new cash or aggressively rotate the portfolio, maintaining a steady-state exposure.
Language Signal
The letter features constructive terms like recovering, asset light, undervalued, cash-rich, and high growth economies. While acknowledging mistakes (Bermaz Auto) and recent performance drags in Indonesian consumer stocks, the overall language signals that the portfolio companies are fundamentally strong and cheap.
Perceived Risk
The manager acknowledges risks such as Chinese automotive competition in Malaysia and the narrow, high-multiple concentration of the Indonesian stock market. However, they view these as manageable, cyclical, or addressable through corporate governance alignment rather than systemic tail risks.
Opportunity Density
The manager asserts that their portfolio holdings trade at an average discount of at least 50% to private market values, with an overall portfolio valuation of just 10.2x 2026F P/E. This valuation profile indicates an abundant selection of highly mispriced, cash-rich, profitable opportunities within their stable, high-growth markets.
Time Horizon
The manager explicitly notes they intend to hold businesses like DKSH Malaysia for many years and states they would reject any 25% premium to take their entire portfolio private because they refuse to lose the opportunity to hold these compounders. This is reinforced by a reference to their 21-year track record.
