Azvalor Managersthe fund managers of the firm founded by Álvaro Guzmán and Fernando Bernad, has just incorporated the Chinese firm Bin Yuan Capital to manage a part of the portfolio. It is the second mandate given to a firm from the Asian giantafter the entry of FountainCap before the summer, which means a significant commitment to this geographical area, taking into account that the fund delegates management to seven independent firms: Donald Smith, Moerus Capital Management, Goehring & Rozencwajg, Southern Sun Asset Management , 3G Capital Management and the two Chinese firms mentioned.
This restructuring occurs when Azvalor’s fund of managers celebrates its sixth anniversary, with a equity volume of 120 million euros and an annualized profitability close to 10% since its creation in 2018.
Bin Yuan Capital is an independent firm founded twelve years ago by Ping Zhou, Cicy Wu and Lily Qian with offices in Shanghai and Hong Kong. The partners met together during their time at General Electric AM and among their credentials are having beaten the Chinese stock market index by more than six points annually, with a 14% annualized return over your career.
Its strategy is characterized by investing in Chinese companies with a bias towards mid-cap firms and focused on the consumer, industrial, technology and health sectors, mainly in the local market (known as class A), although it also has exposure to listed companies. in Hong Kong (H class).
Among the main positions are two medical instrument companies, one technological services company, a leisure company and one industrial machinery company, explains Javier Sáenz de Cenzano, head of the Azvalor Managers.
“We have known this manager since 2019, and during these years we have been able to get to know them in depth until we have enough conviction to partner with them for the next decade. Bin Yuan Capital’s process is focused on the long term and is based on the selection individual companies through a deep fundamental analysis of each investment, which includes visits to factories, verification of the distribution and supply channel, contacts with sector experts, financial and business analysis, and close relationship with the management team. key go with a local partner when investing in a market as large, heterogeneous and complex as the Chinese market,” underlines Sáenz de Cenzano.
FountainCap, for its part, is a boutique investment firm founded by Xiaofang Ding in 2014, who has 30 years of investment experience at firms such as Manning & Napier, Jardine Fleming and Capital Group. In addition, he worked at the China State Planning Commission, the main economic planning body in China. The firm is based in Hong Kong and has 23 professionals, including 9 people in the investment team.
Small caps wallet
These are not the first changes made by the Azvalor Managers in its portfolio, since last year Mittleman Brothers, one of the four boutiques of investment with which it began its journey, to make room for SouthernSun Asset Management and 3G Capital Management. Sáenz de Cenzano has commented on many occasions that they do not set a limit of firms to which they can offer a mandate, but they also do not want to have too many so as not to become a quasi-index, although the managers’ strategies are usually based on medium-sized and small cap.
In fact, the small caps They currently account for around 70% of the portfolio, which has been a characteristic of the fund since its inception, highlights the head of Azvalor’s fund managers. “This, together with the very interesting valuations of the businesses in which we invest, has favored a high number of companies in our portfolio that have aroused the interest of other financial or strategic investments, receiving takeover bids in recent years in 22 of our investments, including 5 in 2024 alone, at an average price 79% higher than our average purchase cost,” underlines Sáenz de Cenzano.
Regarding the revaluation potential of Azvalor Managers, its manager assures that the portfolio “is trading today at less than 10 times earnings, which represents more than a 50% discount compared to the global stock market, and a 70% compared to the Nasdaq. “We believe this leaves the fund in a very good position to beat the market in the coming years.”
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