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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Pangolin Asia Fund delivered 8% returns in 2023 versus -3% for ASEAN markets, trading at 10x earnings with 29% ROIC companies. Fund offers 5.8% dividend yield from net cash holdings across Indonesia, Malaysia, and Singapore."
The Pangolin Asia Fund returned 8% in 2023, outperforming the ASEAN index which fell 3%. The fund trades at attractive valuations of 10x 2024 earnings with portfolio companies generating 29% ROIC and 19% ROE. The fund's dividend yield of 5.8% is the highest since 2009, reflecting strong cash generation from net cash companies. Key risks include continued US market strength overshadowing Southeast Asian valuations and persistent US Dollar resilience. The fund's two largest holdings underperformed in 2023 due to company-specific issues including a cyber-attack at Indonesian vehicle finance company BFIN and hardware supply concerns at an IT distributor. Looking ahead, Malaysia and Indonesia are forecast to grow 4.5% and 5% respectively in 2024, with continued foreign investment and expanding middle-class consumption. The manager remains optimistic that Southeast Asia's bargain-basement valuations will eventually be recognized, positioning the fund for strong returns when regional markets regain investor favor.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
High conviction evident through 97% invested position, concentrated geographic focus, and detailed fundamental metrics (ROIC, ROE, valuations). Manager provides specific portfolio characteristics and maintains positions despite headwinds, though doesn't name individual holdings which caps score below 0.75.
Growth Outlook
Manager expresses cautious optimism about Southeast Asian markets, acknowledging continued headwinds from US market strength but maintaining belief in eventual regional re-rating. Positive on economic growth forecasts but realistic about timing challenges.
Risk Appetite
Fund remains 97% invested, showing commitment to regional exposure despite headwinds. Manager maintains concentrated positions but acknowledges specific company challenges. Positioning reflects measured risk appetite rather than aggressive deployment.
Capital Deployment
Fund remains 97% invested with no indication of significant cash level changes or new deployment activity. Manager describes maintaining existing positions rather than active capital deployment, suggesting stable positioning.
Forward Guidance
Manager expresses hope for 2024 improvement, particularly for largest holdings that underperformed. Guidance is constructive but measured, with emphasis on patience and waiting for regional recognition rather than aggressive near-term deployment.
Language Signal
Language balances opportunity recognition with realistic assessment of challenges. Terms like 'bargain-basement prices' and 'undoubted value' are offset by acknowledgment of obstacles and timing uncertainty. Net slightly positive but cautious.
Perceived Risk
Manager acknowledges specific risks including US market strength overshadowing regional valuations and company-specific challenges at largest holdings. Risk discussion is present but not alarmist, focusing on market dynamics rather than systemic threats.
Opportunity Density
Manager sees abundant opportunities in Southeast Asia, describing 'bargain-basement prices' and companies trading at half their worth. Emphasizes continued value availability across the region despite market headwinds.
Time Horizon
Clear long-term orientation with references to multi-year themes, patient capital approach, and willingness to wait for regional re-rating. Manager quotes Charlie Munger on long-term investing and emphasizes being invested before regional recognition occurs.
