China’s Reopening and Corporate Expansion Overseas
– After a recent trip to China, Nicholas Borst reports on China’s reopening, the operating environment for the country’s private sector, and Chinese companies’ efforts to expand internationally.
MoreValue Investor Insight – Roads Less Traveled
– In an interview with Value Investor Insight, Andrew Foster explains that he searches for companies that can grow with sustainable profitability, and whose stocks are cheap enough to make them relatively immune to economic and cyclical risks.
Value Investor Insight InterviewPortfolio Review –
– Andrew Foster discusses vacillating perceptions about investment opportunities in China and why the diverse allocation of the Growth and Income Fund, relative to its benchmark, drove modest outperformance. He notes that 2023 may be a challenging year for EM corporate earnings, and that the Fund invests in companies whose fundamental performance is more likely to be secure in times of distress.
Portfolio ReviewPortfolio Review –
– Paul Espinosa and Brent Clayton describe how evolving expectations of China’s economic recovery drove volatility in EM equities and lifted Value Fund performance. They explain that for the Fund, intrinsic value is driven by long-term cash flow generation, not short-term earnings momentum.
Portfolio ReviewMutual Fund Observer – Seafarer Overseas Value Fund
– In Mutual Fund Observer’s profile of the Value Fund, Paul Espinosa describes EM corporates that are expanding internationally, led by management teams with experience in navigating challenging market conditions. : As of March 31, 2023, Samsung Biologics Co., Ltd. comprised 4.3% of the Seafarer Overseas Growth and Income Fund, Samsung Electronics Co., Ltd., Pfd. comprised 3.5% of the Fund, Samsung SDI Co., Ltd. comprised 2.6% of the Fund, Samsung C&T Corp. comprised 1.4% of the Fund, Samsung Electronics, Co., Ltd. comprised 1.4% of the Fund, WH Group, Ltd. comprised 1.3% of the Fund, Ambev SA comprised 2.1% of the Fund, Anheuser-Busch InBev SA comprised 2.2% of the Fund, and DFI Retail Group Holdings, Ltd. comprised 1.4% of the Fund. As of March 31, 2023, Samsung SDI Co., Ltd. comprised 3.1% of the Seafarer Overseas Value Fund, Samsung C&T Corp. comprised 2.0% of the Fund, Samsung C&T Corp., Pfd. comprised 0.2% of the Fund, WH Group, Ltd. comprised 2.7% of the Fund, Ambev SA comprised 2.3% of the Fund, Anheuser-Busch InBev SA comprised 2.8% of the Fund, Melco International Development, Ltd. comprised 3.5% of the Fund, Shangri-La Asia, Ltd. comprised 3.3% of the Fund, and DFI Retail Group Holdings, Ltd. comprised 2.4% of the Fund. View the Top 10 Holdings for the Growth and Income Fund and the Value Fund. As of March 31, 2023, the Seafarer Funds did not own shares in the other securities referenced in this commentary. Holdings are subject to change.
MoreCSIS ChinaPower Podcast – Interview with Nicholas Borst
– In an interview with the CSIS ChinaPower Podcast, Nicholas Borst discusses how growing debt levels in China – concentrated among local governments, real estate developers, and state-owned enterprises – stem from an imbalanced fiscal system, and why they are a source of financial risk. Listen
MorePortfolio Briefing –
– Andrew Foster describes how misperceptions about China’s post-Covid re-opening swung markets, and how the Growth and Income Fund fared amid the swings. Paul Espinosa discusses the value he sees in a new holding in India. Andrew concludes by offering his views on what Alibaba’s restructuring announcement might mean.
MorePortfolio Briefing –
– Paul Espinosa explains that the Value Fund’s performance was led by Odontoprev in Brazil, Moneta Money Bank in the Czech Republic, and holdings such as Giordano that benefited from China’s re-opening. Brent Clayton discusses the resilience of the Fund’s bank holdings and introduces a new position, UPL, in India.
MorePrevailing Winds
Learn MoreOf Profits and Peril: Corporate China’s Push Abroad
– Chinese companies are making an unprecedented effort to expand internationally, yet they face growing restrictions in the U.S. and other global markets.
Of Profits and Peril: Corporate China’s Push AbroadChina’s Balance Sheet Challenge
– In an article for China Leadership Monitor, Nicholas Borst examines the scale of China’s debt problem and how policymakers can put the country’s balance sheet on firmer footing.
China’s Balance Sheet ChallengeChina 2023 Outlook
– Despite significant challenges facing Chinese companies, there are reasons to be optimistic that China will continue to provide attractive investment opportunities.
China 2023 OutlookNews and Commentary
Mexico City: Corporate Underinvestment
– One reason for Mexico’s slow economic growth is that companies are underinvesting, largely in response to the country’s current political environment.
MoreWhat is Control Party Analysis?
– Seafarer defines Control Party Analysis as an empirical means to assess the governance of a company, used in lieu of subjective attempts to determine “the quality of management.”
MoreCFA Society San Francisco – Interview with Nicholas Borst
– In an interview with CFA Society San Francisco, Nicholas Borst explains that amid increasing state control over China’s economy and tense U.S.-China relations, there are four underappreciated developments in Chinese companies and corporate governance. Listen
MoreValue Investor Insight – Shifting Fortunes?
– In an interview with Value Investor Insight, Paul Espinosa discusses Value Fund holdings to illustrate how the Fund identifies companies that are undervalued or poised to be more productive.
Value Investor Insight InterviewThe Transparency Problem in China’s Credit Markets
– The treatment of creditors and outcomes of corporate restructurings in China’s troubled property sector pose challenges for the country’s fixed income markets.
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