Monday, May 27, 2013

Navigating the Investment Landscape in Asia and Beyond: Manual of Ideas Interview

I was interviewed in early May 2013 by John Mihaljevic, the Managing Editor, The Manual of Ideas.   Please click here for the splash page and access to the taped interview: Navigating the Investment Landscape in Asia and Beyond

The cut-and-pasted introduction page below.


Navigating the Investment Landscape in Asia and Beyond

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asia investment landscapeInvesting in the local markets of Asia can seem like a daunting task for investors based in North America or Europe. Asian markets have proved quite treacherous at times, including due to economic volatility, corporate governance, accounting, and other concerns. While some Western investors have given up on investing in Asia or have relegated their Asian investments to ADRs or ADSs, others have continued to prosper in Asian local markets.
How can you improve your analysis of Asian investment candidates? That is one of the questions I sought to answer in my conversation with Asian equity research expert Michael McGaughy. Mike is the sole-owner of Kaiko Limited, a Hong Kong-based independent consultancy. The firm provides research, manager selection, and due diligence to institutions and family offices. Mike was previously a managing director at StoneWater Capital, a New York based fund-of-funds that specializes in allocating capital to Asian managers.
Mike has developed a number of unique insights into investing in Asia as a result of his long experience on the ground. He stresses the importance of understanding who the ultimate owners are of publicly traded entities, as incentives play a large role in driving long-term investment returns. He also differentiates between “research alpha” and “research beta”. According to Mike, research alpha covers what is not included in consensus earnings forecasts, while research beta is what most analysts focus on and what constitutes the basis for consensus earning forecasts.
In the conversation below, Mike McGaughy refers to the following companies and people:
  • China/HK: Fosun International (HK:0656), Focus Media, Guo Guangchang; Folli Follie
  • Indonesia: Sinar Mas Group, UIC, Widjaja Family, Eka Tjipta Widjaja, Asia Pulp and Paper (APP), Astra International, Astra Group, Soeryadjaya family
  • Malaysia: Khazanah Nasional Berhad, Petronas, Permodalan Nasional Berhad
  • Greece: Folli Follie, OPAP, Latsis family
Feel free to leave your comments here or contact Mike on LinkedIn.

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