Global investments, best stock picks in China, advice for transport companies

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  • Refinitiv Lipper recently named David Hanna’s mutual fund as one of the best equity funds in the world.
  • Hanna, of Knights of Columbus Asset Advisors, told Insider how he is investing in China today.
  • He also explained how he is betting on the only potential winners in the current supply chain crisis.

David Hanna says it’s not easy to find people who can combine traditional fundamental business analysis with advanced quantitative techniques, but it works for him.

Hanna manages the Knights of Columbus International Equity Fund, which recently won a Refinitiv Lipper Award for its performance over the past five years. It was named one of the top international core equity funds during that time, while Morningstar says its annual return of 11.1% over the past five years beats 93% of funds in its category.

In the age of hyper-specialization, Hanna says he tries to squeeze the best out of Fundamental and Quantum lore.

It begins by determining the return environment, i.e. a bull or

bear market
. Then come the diet models, which are: deep value, value, neutral growth and strong growth.

Today, said Hanna, we are in a

bull market
with a value slant.

“The basic idea is that when conditions change, investors appreciate different things. They view valuation differently in a bull market than in a bear market,” he told Insider. In other words, when conditions are right, investors are willing to pay a higher price for good growth, but in a bear market, they fear expensive stocks will crash.

“Once we have our plans, we run our quantitative stock selection models,” he said. “They include valuation, growth, profitability, etc., a number of different categories of fundamental factors.”

After that, Hanna and her team will take a look at the strengths of the products, management, and other elements of the business that cannot be accurately measured. They synthesize all this information before creating a portfolio.

This is a lot to keep in mind, especially when investing in companies in China, the world’s second largest economy, has become complicated and turbulent.

“You have to think strategically about how you fill that part of the bucket,” Hanna said. “You’re not going to see all of us in tech. We’re more diverse than that. We have commodity names, healthcare names, sort of tech names.”

This includes Alibaba’s underweighting relative to its fund’s benchmark and a cautious stance in Tencent as well. He says it’s not clear if the stock has built up more support after the government’s crackdown on big business prompted investors to flee.

“It is simply too early for the regulatory changes to be clear enough to attract the kind of global investor base they had before this all started,” he said.

He’s a little less worried about the effects of the Evergrande debt crisis. Hanna says the Evergrande woes could slow down China’s economic momentum by hurting the property market, but are unlikely to lead to a global problem as the Chinese government steps in and few of the property developer’s debt is held by corporations. not Chinese.

Hanna went on to explain her own approach to investing in China at this time. He says he’s getting some exposure through a position in Naspers, a South African company which, through one of its subsidiaries, has a significant stake in Tencent. He also owns Lenovo, which has a huge data center business in China.

Another major Chinese investment is Cosco Shipping, one of the few companies that could benefit from the global supply chain problems that plague so many businesses.

“It benefits from growing world trade but also from safeguarding container shipping in general,” he said, noting that the company controls Chinese ports and continues to enter into important international partnerships.

AP Moller Maersk is another bet on the same issue, as Hanna says global container shipping rates have quadrupled or quintupled, and that’s not going to change anytime soon.

“It’s a boon just for shippers. For everyone else, it increases the cost of goods sold,” he said. “This is too big and slow a problem to be solved very quickly.”


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