On January 12, 2021, Shen Ruoyu took over the management of Huitian Fu Ying An Hybrid and officially became a fund manager. At that time, the market enthusiasm was high, and the core assets soared. However, behind the hot market, he vaguely felt a little uneasy.
In his view, the overall valuation of the market at that time was not cheap, and only those high-growth companies could offset the negative impact of valuations. So he focused his energy on finding such companies. After the Spring Festival, the market turned from hot to cool, the Shanghai Composite Index experienced a wave of nearly 10% decline, the core assets bore the brunt, and a long-brewing position adjustment plan was implemented.
On the one hand, he significantly reduced the software and military industries with higher valuations and mismatched growth rates in the portfolio; on the other hand, he added semiconductors and new energy vehicles that accelerated the upward trend of prosperity. Such an adjustment is not simply "patting the head", but after a series of in-depth research, the selection of additional varieties is more cautious, after repeated comparison and consideration.
For example, he chose automotive semiconductors and high-price elastic varieties that benefit from automotive intelligence in the semiconductor industry, while new energy vehicles are equipped with power batteries, upstream resource products, and electrolytes, diaphragms and other key links in the industrial chain.
The repositioning soon saw results, and the net value of the fund was quickly repaired, reaching a record high at the end of June. Shen Ruoyu did not hesitate, against the trend of adding positions in the photovoltaic plate at the bottom of the cycle, inverters that are not affected by the price increase of silicon materials and auxiliary materials with large price elasticity have become the main configuration direction. After the third quarter, he gradually cashed in part of the profits and adjusted the position structure again.
This series of operations has yielded remarkable results, thanks to his long-term deep knowledge of the technology industry over the past 10 years. According to Wind data, Huitian Fuyingan Hybrid recorded an investment return of nearly 24% in 2021, ranking in the top 15% of the same category.
Yang Yao, head of the TMT industry group of HuiTianfu, commented on Shen Ruoyu: his market sensitivity is very good, and the operation is very flexible; the industry strategy is also very good, often put forward some good ideas, and can soon be put into practice in investment.
In fact, Yang Yan and Shen Ruoyu, who also belong to the TMT industry group, have many similarities in both investment philosophy and investment framework. For example, look for high-quality securities from the perspective of fundamentals, technological growth styles, and top-down and bottom-up stock selection ideas.
In Shen Ruoyu's eyes, Yang Yan is an example for himself to learn. "He has implemented the concept of value investment very thoroughly, and he has high requirements for the quality of individual stocks, including his diligence, self-discipline and dedication, which are all worth learning from," Shen Ruoyu said.
What I am curious about is that the two are also TMT researchers, and now they are in the same team as fund managers, what are the differences in their understanding of investment? Why is there such a difference? What kind of sparks will be sparked if the two join forces? This will be the problem that this article will solve.
01
Each has its own edge
Investment is the realization of cognition, and it is also a reflection of the worldview and values of each fund manager. Even two people with very similar styles will have different judgments on the company due to different personal experiences, knowledge structures, etc. The difference between Yang Yan and Shen Ruoyu is mainly reflected in the focus of the company, the tolerance of valuation, the grasp of the timing of the transaction and the circle of ability.
Yang's stock selection framework can be summarized as "5 circles": management and corporate governance structure, business model, competitive advantage, fundamental trends and valuation. Among them, he attaches the greatest importance to the company's management and governance structure. In the past few years, he has won a big victory in a connector leading stock, and the persistence in a camera leading company is very important because he believes that the management of these companies is excellent and willing to accompany such a company to grow together.
The management focuses on the company's strategy and execution, whether there is a lofty goal, whether there is an entrepreneurial spirit, and whether there is a motivation to become bigger and stronger; and the corporate governance structure is to focus on understanding whether the company's interests are consistent with the interests of small and medium-sized stocks. In his investment system, business models and competitive advantages are secondary, and fundamental trends and valuations are the last things to consider.
Complementary to Yang Yao's dimension, Shen Ruoyu pays more attention to the prosperity of the industry and the growth of the company when selecting stocks, and the industry space, competitive advantage, and the inflection point of the company's fundamentals are also the targets of his key investigation. He cares more about the company's gross margin, R&D expenses, ROE level and other financial indicators.
However, he hopes to dynamically look at the company's ROE and find companies that can improve the ROE in the future and maintain a high level, rather than companies with a high ROE at a static point in time.
For example, some companies are honors students and may be able to score 100 points each time, which is good; however, he is more optimistic about companies with improved fundamentals. Some companies may only be able to score 60 points, but after hard work, they can get 90 points, and such companies are also very good.
The two have different focus on stocks, which is directly reflected in the tolerance for valuation. Fund managers from the TMT industry naturally have a relatively high tolerance for valuation, but compared with Yang Yao, Shen Ruoyu is much higher.
Shen Ruoyu's representative product Huitian Fu Ying'an's top ten heavy stocks, holding Sunshine Power, Ningde Times, Guanglianda, North Huachuang, Weier shares and other high-prosperity industry stocks, valuation is not cheap, 100 times PE is just the beginning. And Yang Yan once admitted that companies with more than 100 times PE are difficult to buy. Among the top ten heavy stocks of Huitianfu Culture and Sports Entertainment, the highest valuation of "Chinese medicine Mao" piece Zai Zhen dynamic PE is currently below 100 times.
The difference in the two people's tolerance for valuation may have something to do with the timing of the two people's involvement in the stock.
Shen Ruoyu prefers to buy on the left. He repeatedly mentioned that there are two requirements for his research and investment: forward-looking and in-depth. In his view, emerging industries change too quickly, many opportunities are fleeting, and if you can't do prospective research, you are likely to miss the early wave of growth and let yourself fall into passivity. In the early days of emerging industries, static valuations were often not cheap.
In contrast, Yang Is more conservative in trading, sometimes laying out on the left side, but most of the time choosing to intervene on the right side.
In Yang Yan's view, the technology industry is changing with each passing day, the probability of misjudging the industry trend is very large, the uncertainty of investment is high, and the demand for many innovative products is eventually falsified by the market. Therefore, he prefers to follow the trend, emphasizing the tracking of the trend rather than prejudging in advance, because the prejudgment trend often makes mistakes.
To put it simply, Shen Ruoyu prefers to invest in early and medium-term growth stocks, with a proper positive growth style, while Yang Yan prefers growth stocks that are in the middle of growth, late stage and with a clear trend, and the characteristics of value + growth style are more obvious.
Of course, the difference between Yang Yan and Shen Ruoyu is also reflected in the size of the personal circle of ability.
Yang Yan is a senior fund manager with the ability to select stocks in the whole industry, the core circle of capabilities is big technology + big consumption, and when building the portfolio, it is not allocated according to the traditional industry, but emphasizes "grasping the context of the times", such as consumption upgrading (including spiritual consumption), digitalization, scientific and technological innovation, domestic substitution and so on. Since a single investment vein may involve multiple industries, and the same portfolio contains multiple investment contexts, the entire portfolio looks more balanced.
Shen Ruoyu is more focused on the field of hard technology, hoping to find alpha in the industry he can grasp. "Pick the strongest stocks in the best industries", this is his basic requirement for himself.
For this year's market opportunities, Yang Yan, while adhering to the original investment context unchanged, believes that automotive intelligence can be seen as a new investment vein; Shen Ruoyu believes that semiconductors, new energy vehicles and photovoltaics will still be the strongest investment main line this year.
In terms of risk control, there are also certain differences in the practices of the two. Shen Ruoyu emphasized the front of risk control and controlled the overall fluctuation of the portfolio by selecting individual stocks. In contrast, Yang Yan's risk control system is more mature and comprehensive, running through multiple dimensions such as before, during and after the event, and selected individual stocks are only one of them.
In general, Yang Yan's requirements for the company's quality and valuation are more stringent, paying attention to the cultivation of basic skills, "heavy sword without edge"; in contrast, Shen Ruoyu's investment method is flexible and mobile, like a fast sword to kill decisively. But whether it is a heavy sword or a fast sword, the heart is one: to select good stocks and make more money for the holders.
02
The same end
Practice one breath inside, and practice bones and bones outside. Chinese Kung Fu pays attention to both internal and external cultivation. The same goes for investing. The cultivation of only moves and ignoring internal skills is, after all, it is only a fist embroidery leg, which is vulnerable.
Although Yang Yan and Shen Ruoyu have thousands of differences in investment moves, the underlying logic of looking at the company is the same - based on the company's fundamentals.
Yang Yan is one of the outstanding fund managers created under the independent training system of Hui Tianfu Fund, and has a good inheritance of the company's investment philosophy and core values. In 2010, Yang Yan joined Hui Tianfu Fund after graduating from Tsinghua University, and in his 7-year career as a researcher and nearly 5 years of investment, the most thoughtful thing was to judge the fundamentals of the enterprise and give the company a reasonable price.
In his view, the two most important factors when valuing a company are growth rate and growth certainty. Generally speaking, for companies that determine high growth, they can give high valuations, and if the growth certainty is not high, the industry pattern may change significantly, and the company's bargaining power will deteriorate, and the valuation may be greatly reduced. In the final analysis, this is determined by the company's business model and competitive advantage.
For example, the net profit is also 500 million yuan of two companies, some can only give 10 times PE, some can give 50, 100 times PE, the core reason is that there are differences in business models and industry characteristics. For companies in different industries and different business models, the returns it can generate for shareholders may be completely different. Some companies belong to the "capital addict" type, some belong to the "capital killer", some belong to the "power plant" and "cash cow", and different types of companies are valued in different ways.
Although Shen Ruoyu has not been in Hui tianfu for a long time, he has served as a sell-side analyst and a researcher of head fund companies such as Wells Fargo Fund and E Fund, and the investment research concepts and frameworks he came into contact with in the early days are very consistent with Hui Tianfu, and he has his own judgment on the reasonable valuation of a company.
In his view, whether it is value investment or growth investment, the core anchor is the value of the enterprise itself. Every company has a value center, the difference between growth stocks is that its value change may be greater at different points in time, but making growth stock investment also requires a judgment on the value center of the enterprise, and the core indicators are to judge the revenue, net profit and cash flow scale of the enterprise in the future period of time.
In short, both are based on fundamentals in investment, with value as an anchor, hoping to make money for the growth of the business.
In Yang Yan's view, breadth is the basis for the depth of research. Only by looking at the companies that are representative of the industry can we fully establish the criteria for judging good companies. In other words, only after actually meeting the most beautiful beauty can you know how to define beauty.
Shen Ruoyu also emphasizes the depth of research. In his view, only with a relatively in-depth understanding of the industry can we extract the core variables that affect the industry and the company, and can we keep ourselves sensitive to changes in the industry, without following the market sentiment and news surface back and forth, and going with the flow.
In the specific stock selection process, the two invariably chose a combination of bottom-up and top-down ideas. However, in the specific implementation process, the two still have a big difference.
Shen Ruoyu's method can be summarized as "casting a net where there are many fish". He divided stock selection into two steps: the first step is to use a top-down approach to find industries with greater future growth potential, broad industry space and better business models to study and ensure that the general direction will not be wrong. After all, the probability of getting an excess return in fertile soil is higher. The second step is to go from the bottom up to find high-quality companies that are truly competitive and unique.
The yang combination is built in the opposite way. He first selects stocks from the bottom up, includes the companies he is optimistic about into the allocation pool, screens them from top to bottom according to different investment contexts, and then does a total regulation of the allocation ratio of each investment vein in the portfolio to ensure that the proportion of positions in each investment vein is not more than 20%.
In short, Yang Yan is more focused on stock selection, while Shen Ruoyu's industry strategy is doing well.
Another similarity between the two is that they are both TMT industry researchers and trained in an international perspective.
TMT is a global division of labor industry, some marginal changes may not necessarily develop in China at the earliest, but some subtle changes in the global industrial chain, researchers want to keenly capture this change, you need to have a global vision. The research of the electronic industry chain is even more so, especially the excellent companies of upstream semiconductor equipment are overseas, and whether domestic chip companies are competitive with their international counterparts is also indispensable to global comparison.
The first fund managed by Yang Yan is a QDII product, Hui Tianfu Global Mobile Internet QDII, which can be invested in three markets: A-share, Hong Kong and US stocks, and has rich experience in cross-market investment. After Shen Ruoyu joined Huitianfu, he was the assistant fund manager of many products, including this fund, and also had a certain international vision, and both of them had a relatively high starting point.
Whether it is the investment philosophy, investment methods, or global vision, in fact, the emphasis is on the internal strength of the fund manager. Only when the internal skills are practiced to the point of pure fire, can we achieve a hundred passes, and will we have the confidence to respond to changes with no change. The formation of this confidence of the fund manager of Hui Tianfu is inseparable from the guidance of a strong corporate culture.
03
Trace the source
If the person at the helm of a fund company is born in investment research, it is more likely that he can better understand the importance of investment research personnel to the company, and also know how to cultivate talents and create a combative investment research team.
"Fund managers and researchers are well protected". This is the sentence I hear the most when I communicate with the internal staff of Hui Tianfu Fund.
Hui Tianfu's protection of investment and research personnel is all-round. More than one interviewee once said that Huitianfu's investment and research atmosphere is very good, the team is full of vitality, and the company is very tolerant of investment research personnel.
In the first three years of entering Huitianfu, the company's inspection of young researchers focused on work attitude and learning ability, and the main energy was spent on the research and precipitation of the business model and the enterprise itself. For senior researchers, they are not required to seize short-term market hotspots, but encourage them to think about problems in the medium and long term, capture industrial changes, and tap into big opportunities for value creation.
Correspondingly, Hui Tianfu's assessment of fund managers is also medium- and long-term, mainly looking at the relative ranking of three years of performance in the market.
In the past year, Yang's investment performance has fluctuated somewhat in the style headwinds, and no one has put pressure on him to adjust his position. On the contrary, General Manager Zhang Hui encouraged everyone at the internal conference that we must adhere to the consistent stock selection methods and concepts, buy high-quality companies, and do not follow the tide and chase the rise and fall.
"Although the marketing department didn't say it, I believe they have helped me take on a lot of customer feedback in the past year, and we are actually very well protected." The pressure is not from the outside world, but more from yourself, you need to adjust it yourself, think about what you can do better next," Yang said.
Shen Ruoyu is still impressed by the first day of joining Hui Tianfu.
On the day of induction, in addition to office supplies and training materials, he also received a work manual. Although he will have some information when he joins other units, it is the first time that such a systematic work manual like Hui Tianfu is the first time. The work manual clarifies the investment philosophy, investment purpose and other contents of Hui Tianfu, and even how to carry out the work of daily investment research, the content and process discussed in various meetings, etc., which are written in great detail.
There are many meetings of Huitianfu, including daily morning meetings, biweekly meetings, individual stock seminars, monthly investment decisions and quarterly strategy and summary meetings. The hierarchical conference system also allows everyone to take what they need and make up for their weaknesses.
For example, Shen Ruoyu was more optimistic about a semiconductor equipment company last year, although there was no profit release in the short term, the localization process accelerated, and the fundamental inflection point was very clear. In his view, after the company develops to a certain scale, the business model can form a closed loop and generate stable cash flow. But after talking to colleagues with different investment styles, he found that they always had other concerns about the company, which prompted him to think about those risk points and further deepened his understanding of the company.
The interactive culture of investment research based on a consistent methodology and then complementary in style and perspective also allows HuiTianfu's investment research to often jump out of its own perspective and examine the company in hand with a more rational attitude.
04
Write at the end
The culture of HuiTianfu is profound for an investor.
"My biggest feeling is that Hui Tianfu is a company with a clear mission, vision and values, and attaches great importance to systematic, institutionalized construction and cultural inheritance", which is Shen Ruoyu's strongest feeling after joining the company for more than a year.
There is no road in vain, and every step counts. From Zhang Hui writing down HuiTianfu's investment philosophy, investment system and investment decision-making process on a piece of paper, to today's thick workbook. Experience precipitation and cultural inheritance make HuiTianfu's "flywheel" turn faster and faster, and it is no longer necessary to spend more effort to keep this nearly trillion-scale "giant wheel" turning rapidly and will not stop.
Hui Tianfu is an excellent company with a strong culture and centripetal force, and each fund manager can form an independent army and together they have the power bonus. Not only the TMT group, but also other groups of HuiTianfu.
Back to the original question of the article - Yang Yan and Shen Ruoyu, who have complementary advantages, if the two swords are combined, it may be the most vivid reflection of Huitianfu and different investment cultures.
End of the full article, thank you for your patience to read.