Alpha chances are plentiful! Private equity giants look forward to A shares in the second half of the year, the opportunities far outweigh the risks? New energy is the trend of the times

Under the multiple shocks of war, epidemic and energy crisis, global inflation is high, especially in Europe and the United States, which has hit a 40-year high, and the global economy is under pressure from top to bottom from consumption to production and supply chain. In this context, how investment should be laid out and which industries have long-term investment value has attracted market attention.

In addition, the strategy adopted in investment is undoubtedly the key to the long-term success of major private placements. There are private equity that combines quantitative and active management, there is a combination of private equity pursuit of small and beautiful, large and excellent, etc., many private equity institutions maintain their own characteristics through a variety of means.

On July 29th, the "Investment Power in the Era of Great Change - 2022 China Fund Industry Summit" and the "Golden Yangtze River" Private Equity Development Summit Forum were held in Shenzhen, and the guests participating in the roundtable discussion shared their views on the above issues.

In the face of market uncertainty, head private equity strategies are different

At the end of October last year, the scale of private securities funds exceeded the 6 trillion mark for the first time, becoming an important force in the capital market, and a number of private equity funds broke through the 10 billion mark. In investment, how to stand in the market for a long time and be stable and far-reaching, different private placements adopt different strategies, and uncertainty in investment is the first problem faced by private equity managers.

Talking about how to combine the difference between "active management" and "quantification", Wang Yiping, founder of Evolutionary Assets, shared his thoughts, active management is mainly fundamental research, characterized by very fine granularity, can put an industry, a company, and even several core products research is very clear and thorough, but subject to manpower, material resources, energy and other issues, the coverage is limited. The advantage of quantification is that the coverage is very wide, and the disadvantage is that the granularity is not fine.

"In the research, the company generally uses quantitative technology to do a lot of high-level data to help the research department improve the efficiency of research, and the researchers further refine and understand the data, which can study the target company and its industry very thoroughly." The combination of quantitative and fundamental investment allows for a more comfortable experience in investment. Wang Yiping said.

In investment, some investors like to pursue small and beautiful companies, because the profit space is large; Some investors prefer large and excellent companies because of the higher certainty. In this regard, Ding Yang, chairman of Conmand Capital, said that large and small can be classified, U&M can coexist, both want to get, we must establish a relatively objective systematic system, we ourselves summarized a set of KMD-SAB stock evaluation system.

SAB is the dimension of corporate fundamentals, and KMD is the strategic dimension of the transaction level. The fundamental dimension of SAB represents the leading companies of the good track, the general companies of the good track, and the leading companies of the general track. We consider the dimensions of the strategy, more from the perspective of valuation and catalyst to evaluate KMD.

At present, the stock market is very volatile, uncertainty is increasing, strategic response is very important, investment strategy dimension KMD represents buying, holding, and selling. Having such an evaluation system can help companies to evaluate "small and beautiful" and "large and excellent" enterprises within a framework.

It is worth noting that there is a recent article "investing in Tencent for five years without making money" is hot, for how to look at the phenomenon of holding excellent targets but not profitable, the executive partner of Yuanwangjiao said that investors invest in Tencent for 5 years without making money, but looking ahead, the previous 5 years may have earned 7 to 8 times, even if Tencent has not performed well in recent years, there is still a hundred times the increase, so the top-down research is very meaningful, even if there are great challenges in the process.

Specific to Tencent, on the one hand, Internet companies have grown rapidly in the past few years, and the way to pursue growth is cross-border, and even to a certain extent, monopolies and policies have collided in some fields. Second, the company's profit release has reached some bottlenecks to a certain extent. How to pursue certainty in investment, first of all, to acknowledge uncertainty, which is a very important point of thinking.

How do private equity firms maintain their own characteristics?

In recent years, with the expansion of management scale, the homogenization of private equity and public offering has become more and more obvious, and the "public offering" of private equity has become a major new phenomenon in the industry. In this regard, many guests participating in the roundtable discussion proposed that private equity institutions should maintain their own characteristics through a variety of means.

Liu Xiaolong, chairman of Juming Investment, said that from the perspective of overseas situations, the long-term yield of private equity funds is similar to that of public offerings, but it provides lower volatility. Some domestic private placements do not provide a better experience in terms of volatility after doing large-scale, which has a lot to do with the limited development of basic tools, and managers lack sufficient means to control volatility after scale.

"As a private equity firm, we need to pursue better performance or lower volatility. There are three things we can do around this goal: First, we must maintain the restraint of scale, and we must be clear about the scale of our team to maintain good long-term earnings; Second, to maintain flexible investment research team control, we will systematically pursue the eliteization of the team under the control scale, and do some subtraction for industries that we think may have little opportunity in the long run, so as to improve the communication efficiency and overall combat effectiveness of the entire team; Third, the appropriate introduction of a variety of types of trading means and tools, the overall drawdown control will be helpful, private placement in cross-market investment is less restricted, we now in addition to A shares, Hong Kong stocks, but also pay attention to the United States domestic companies. Liu Xiaolong pointed out.

Wu Weizhi, chairman of CEIBS Ruibo, also believes that any long-term private equity institution will definitely have a long-term plan for itself, exercise restraint on the scale of management, and the market will eventually reward private equity practitioners who adhere to long-termism. Because private equity funds have performance commissions, the scale of management is not the only variable that determines the income of private equity institutions, but more importantly, it is necessary to bring better returns to investors, and I believe that many private equity institutions with correct values will maintain great restraint on the scale issue.

Yang Jianhai, a partner at Yuanle Sheng Asset, said that active private equity institutions have multiple investment goals, both to consider offense and defense, in a sense, the Sharpe rate is higher. In order to achieve both offensive and defensive aspects in investment, the first is to control our own scale and let our capabilities walk in front of the scale. Second, it is necessary to continuously improve the combat capabilities of the investment research team, try to broaden the coverage of industries and markets, and the short board in the A-share market cannot be too short, and cross-market coverage may reduce the volatility of the entire portfolio. Third, there must be corresponding risk control indicators to constrain investment managers, but this indicator cannot be designed too sensitively and need to be grasped.

Zhou Weifeng, co-chief investment officer of Yuanxin Investment, believes that the market volatility has increased in the past two years, and private equity institutions should strive to maintain their own characteristics. "First, to have clear pricing power for listed companies to invest, long-term investment in the A-share market, the volatility will inevitably become greater and greater." Second, from the investment method, we use more professional methods to reduce volatility, such as hedging tools; In addition, we will try to reduce the co-directional beta as much as possible in the combination configuration. The third is the construction of the circle of ability, we will spend a lot of effort on the medium and long-term pricing of stocks, which requires us to pay more attention to investment and research. Fourth, as an asset management company, how to cooperate with customers in the market, the matching of the liability side is very important. In order to cope with such a volatile market as A shares, on the one hand, we can broaden the scope of investment and go to Hong Kong stocks and US stocks; On the other hand, it is necessary to restrain a reasonable scale and try to reverse the trend on the liability side. He said.

There are many alpha opportunities, and new energy and electric vehicles are the trend of the times

Although the A-share market has faced twists and turns this year, the medium- and long-term trend is still optimistic about private equity giants.

Wang Penghui, chairman of Wangzheng Asset Management, said that after two decades of efforts, the two industries represented by photovoltaics and electric vehicles have truly reached the world's relatively leading level. Among them, new energy vehicles are very large industries, and photovoltaics can give birth to trillions of output value enterprises. We have experienced home appliances, light industry, real estate, the Internet in the past. Real estate and the Internet are non-trade goods, characterized by excellent and not excellent, and the value is not significant enough from the perspective of global competition. In the field of consumer electronics, Some companies in China have come out, but they are all working behind Apple.

In Wang Penghui's view, now is a good opportunity to invest in manufacturing, first, in terms of new energy and intelligence, Chinese enterprises are leading the world and have complete industrial clusters; Second, Chinese companies can solve key problems in the industry. From the perspective of stock market investment, the manufacturing industry will also have good performance in the future.

Liu Xiaolong believes that electric vehicles and new energy are the trends of the times, after the emergence of industry trends, it has brought about large or small changes in technology, derived many branch opportunities, many companies have undergone tremendous changes, and when looking at cars more than a decade ago, it was not a concept at all. This round of China's industrial chain to the forefront of the world, the branch opportunities will be in the form of performance cash in the next few years. The two major problems of epidemic control and real estate mine removal will eventually be solved, and next year will be seen more clearly, and the market may enter a good layout period in the fourth quarter of this year.

Wu Weizhi pointed out that with the liberalization of the epidemic policy, the recovery of consumption and services, and the bottoming out of the real estate industry, he is still optimistic about China's economy. "Back in the stock market, don't be too optimistic, don't be too pessimistic. The current stage is the same as the future, if you want to make money in the stock market and make money in China's A shares, you still have to seek excellent α, and find it is a bull market. For stock-picking investors, it is still in a golden period. He said.

Yang Jianhai said that China is currently in the process of very large economic changes, and the decision-making level has a particularly strong determination on real estate regulation. From the perspective of the big plate of the national economy, there must be other industries with large enough volume and faster growth to top the economic market. New energy and electric vehicles are two industries, and it just so happens that China has a relatively obvious competitive advantage in the world. In the photovoltaic industry, China's share in various global industrial chains has been relatively high. Wind power, which used to be the domestic market, has now begun the process of globalization. Electric vehicles have introduced various stimulus policies, which are expected to gradually form a global advantage.

Zhou Weifeng is also optimistic about the medium- and long-term market, in his view, the global development is still spiraling forward, whether it is the epidemic or the Russian-Ukrainian conflict will be resolved. Uncertainty means risk, but also opportunity.

"In the case of index risk being released, economic growth is within a reasonable range, which means that there are still many alpha opportunities. Now everyone is anxious that the valuation impact brought by the new energy track is relatively large, but the pull of new energy vehicles in China's manufacturing industry or Chinese brands has just begun with the rise of electrification and manufacturing advantages, and China is likely to become the center of global automobile manufacturing. The fourth quarter of each year is a better time for the layout of the next year, we see the background of the Chinese era after the normalization of the epidemic, one is that China's manufacturing is very strong, and the other is that the business we did in the past is low-end, but I believe that the downstream of the manufacturing industry, such as new energy vehicles, photovoltaics, including the consumer side of the manufacturing industry, will be restructured after China's manufacturing industry. Zhou Weifeng said.

Zhou Weifeng believes that the medium- and long-term opportunities in the market far outweigh the risks, specifically including three aspects:

The valuation of core companies in many fields of new energy vehicles, photovoltaics and semiconductors has not shown obvious overdrafts. There are many other opportunities, including the upgrading of manufacturing caused by new energy sources, and there are many opportunities in the field of new materials.

The automotive industry superimposed on the brand promotion opportunities in China at this stage means that many of China's high-end manufacturing will become more and more popular overseas, and this trend will also exist in many other areas.

Medical medicine has not been concerned by the market for a long time, but China's economy is facing the pressure of population aging in the medium and long term, and it is believed that the industry will be a spiraling process, and there will be many opportunities in the pharmaceutical industry.

Editor-in-charge: Yang Yucheng