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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"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."
Diego Milano reports exceptional 2024 performance of 35.3% year-to-date, the fund's best since inception, though he cautions against expecting such results to repeat. The portfolio, substantially invested in Hong Kong-listed stocks, benefited from recent Chinese stimulus measures but not to the same degree as broader indices. Milano added no new positions in 2024, emphasizing that existing holdings are so attractive that new candidates pale in comparison. He estimates the portfolio trades at roughly 25% of intrinsic value, with three of four largest positions paying all-time high dividends. The manager draws parallels between value investing and watching a slow-moving film where subtle changes build toward a climax, arguing that positive developments like dividend increases and structural improvements are occurring even while markets aren't paying attention. A detailed case study of Asia Cement China illustrates the challenges of investing in companies with controlling shareholders who may not prioritize minority shareholder value, despite strong balance sheets.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
High conviction evidenced by concentrated portfolio with no new positions added all year, specific position sizing discussions, and declarative statements about portfolio being worth 4x market prices. Manager names specific holdings and provides detailed thesis explanations, though some hedging language prevents maximum score.
Growth Outlook
Manager is cautiously optimistic about his specific holdings but neutral on broader markets. He's agnostic about Chinese stimulus effectiveness and warns against expecting strong performance to repeat, showing measured optimism tempered by realism.
Risk Appetite
Portfolio remains fully invested with no new positions added, suggesting maintained risk appetite. However, the sale of Asia Cement and emphasis on selectivity indicates measured rather than aggressive positioning.
Capital Deployment
Slight de-risking through the sale of Asia Cement position in June, with no new positions added throughout 2024. However, dividends are being redeployed into existing positions, indicating rotation rather than significant cash raising.
Forward Guidance
Manager expresses willingness to sell at fair value and redeploy capital, showing selective deployment bias. However, he emphasizes patience and waiting indefinitely, indicating no urgency to deploy new capital.
Language Signal
Language is balanced with opportunity-focused terms like 'attractive,' 'mispriced,' and 'enticing' offset by risk acknowledgments and cautionary language about not expecting performance to repeat.
Perceived Risk
Low to moderate risk perception. Manager acknowledges the Asia Cement loss and controlling shareholder risks but doesn't express systemic concerns. Risk discussion is limited to specific position risks rather than macro threats.
Opportunity Density
Manager indicates sparse opportunities, stating that existing holdings are so attractive that new candidates 'paled in comparison' and opportunity cost is 'high indeed.' This suggests difficulty finding compelling new ideas.
Time Horizon
Strong emphasis on long-term investing with explicit references to waiting indefinitely and comparing investing to watching paint dry. Manager discusses multi-year holding periods and emphasizes patience over activity, indicating a multi-year investment horizon.
