Beat-Up China Bonds, Other Hedge Fund Picks From Asia’s Sohnby , , , and
Oasis bearish on Cyberdyne, GeoInvesting dour on Tech Pro
Marshall Wace’s Rajpal bullish on Indian microfinance
From snapping up beaten-down Chinese developer bonds to shorting a Japanese maker of robotic limbs, some of the biggest hedge fund managers trading in Asia outlined their top investment picks on Wednesday.
The managers at the Sohn Conference Hong Kong 2016 presented by the Karen Leung Foundation spoke in an environment that’s far different from the euphoric markets that buoyed last year’s event. Since then, concerns about slowing growth, especially in China, have roiled markets and investor redemptions from hedge funds have spiked to the highest levels since the global financial crisis. Here are some highlights from the conference, which featured 12-minute presentations from each speaker, peppered with quotes ranging from Mark Twain to the movie “The Terminator.”
Oasis’s Fischer: Sell Cyberdyne short
* While Oasis Management’s Seth Fischer is a bull on Japanese equities, he picked one that he didn’t like. Cyberdyne Inc., a maker of robot exoskeletons for patients with spinal difficulties, is overvalued and poised to fall, Fischer said. The company’s market capitalization will have to fall 95 percent before Fischer said he’d be interested in buying. “We have never met this hedge fund and they probably don’t really know what our business is about,” Cyberdyne’s Chief Financial Officer Shinji Uga said later.
Marshall Wace’s Rajpal: SKS shares may triple
* Amit Rajpal, of the $26 billion hedge fund firm Marshall Wace Asset Management, said the shares of SKS Microfinance Ltd., India’s largest publicly traded micro-lender, may triple over the next three years. As “the fittest, strongest and most efficient player” whose loan growth is trumping the industry average, the firm’s market value may surge to $4 billion, from about $1.2 billion now, Rajpal said.
GeoInvesting’s David: Short Tech Pro
* Hong Kong-listed Tech Pro Technology Development Ltd. was targeted by
GeoInvesting LLC partner Dan David, who recommended shorting a firm that he said was “egregiously overvalued.” While the company’s main business is manufacturing lighting products in China, it also owns a professional football team in France. A request for comment left with the Hong Kong-based company wasn’t immediately returned.
BFAM’s Fuchs: Kaisa bonds ‘extremely cheap’
* Bonds of Kaisa Group Holdings Ltd., the first Chinese property developer to default on dollar-denominated debt, were described as “extremely cheap” by Benjamin Fuchs, founder of the $1.8 billion hedge fund firm BFAM Partners, who added that the extra spread investors are demanding will tighten. “Kaisa is really the poster child for everything that scares Western investors,” Fuchs said, pointing to issues including regulatory and accounting problems.
KKR’s Weinstein: Cengage has 75% upside
* Cengage Learning Inc., a textbook publisher that emerged from bankruptcy two years ago, is “completely misunderstood’ and the firm’s shares have 75 percent upside, KKR & Co.’s Jamie Weinstein said. An unjustified taint lingers from the bankruptcy, he said.
Fir Tree’s Stern: Kirin could gain 90%
* Japanese beer maker Kirin Holdings Co. could increase 90 percent over the next year or two, Fir Tree director Aaron Stern said. Kirin is predicting a return to profit this year as it restructures its money-losing Brazilian unit.
York’s Yamaguchi: NTT Urban could advance 40%
* NTT Urban Development Corp., a Japanese property developer, could rally at least 40 percent, York Capital partner Masahiko Yamaguchi said. The upside can be achieved by including real estate professionals among its management, delisting the company or selling a stake to another real estate developer to form an unlisted joint venture.