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Great example of significant price rise 1pencil, the reverse is also equally the case of course
End of Oct 22
HCM 144p
3 months later 22nd Jan 23
HCM 334p
Indeed, and it probably depends on your investment horizon,, personally I had an exit plan here by 2025 but not wanting to be a distressed/forced seller that may have to be extended as I was expecting a $20bn mcap by that point - it would be a miracle and the second coming of the mesiah for that to happen now....
Certainly would 'not' recommend this as a strategy.
Comments by Ray Dalio below;
"which have more than doubled over the past year to surpass 20 billion yuan as of January 10, 2023"
Its basically the same thing, averaging down BUT agree its not for everyone and certainly would recommend this as a strategy.
For the most part hedge funds have below market returns even the Quantum Ai funds struggle to beat the S & P, that's not one but ALL of them..
Thanks for your insights 1pencil, always useful and informative. I have averaged down so many times on Hutchmed but the strategy hasn't worked very well so far. Every time there is a significant drop I have bought, starting with the botched CKHH placing back in Dec 2021, and at various times since, always thinking it cannot go any lower, and then it always does.
The trade for hedge funds has been to short growth equities with a long position on interest rates be it a swaps (most likely) or other financial instrument.
As mentioned, I think we will see this unwind over the next few months which should help valuations across the board, that's my hope anyway as just doubled up on HCM last few weeks.
There's been lots and lots of positives for China and Hutchmed for the last few years and still here we are at the same valuation as 7 years - what happened? ;0-/
He's a big cheese when it come to all things China and hedge funds, last year he trimmed quite a few positions including BeiGene,so this look like a reversal.
https://www.barrons.com/articles/bridgewater-alibaba-didi-china-stock-price-51660598269
He knows China better than anyone, well worth following imo.
No idea if they have a holding in HCM but view this along with other indicators as a positive sign.
that's interesting 1pencil, and when i made a large purchased in hutchmed i considered beigene at the time but thought hutchmed's prospects much better.....another investment ****up.
does bridgewater or dalio have any relationship to hutchmed or are you implying generally that funds may be increasing their exposure to china biotech?
Ray Dalio
"Bridgewater Associates has significantly increased its fund assets in China, which have more than doubled over the past year to surpass 20 billion yuan as of January 10, 2023. This achievement makes Ray Dalio's fund the largest foreign hedge fund in Beijing. "
"BeiGene, Ltd. (NASDAQ:BGNE) is a Chinese biotechnology company focused on the development and commercialization of cancer medicines worldwide. The company was founded in 2010 in Beijing, China. Securities filings for Q1 2023 revealed that Ray Dalio held 132,117 shares of BeiGene, Ltd. (NASDAQ:BGNE) worth $28.4 million. It is one of Dalio’s top China stocks. "
https://finance.yahoo.com/news/ray-dalio-china-stocks-135848581.html
As DBAVFN mention on advfn the capital markets are effectively closed to this Company. No institutions are going to invest in a further round of funding given what's happened previously (eg. botched CKHH placing) and other forms of self harm. If they ruin out of cash before they become cashflow positive what will they do to secure other forms of finance? What has happened to the disposal on non-core assets (jv)? That was touted as a key strategy a couple of years ago but we have heard nothing since. Also, the new facility was supposed to be ready by now, again no word. And now we have a NED from Carlyle - another sign institutional investors want a bigger say in strategic development, something the company has been terrible at, possibly as CKHH view this as a bit of a vanity project.
Fingers in the ears time, HK short positions close to record highs
https://www.sfc.hk/en/Regulatory-functions/Market/Short-position-reporting/Aggregated-reportable-short-positions-of-specified-shares
Indeed, and the NMS has changed over time but I do get that - i had an interesting discussion with Mark Slater about that very subject just after his disposal
Here's a good example from live NASDAQ quote, currently just 200 shares to buy at 13.65
https://www.nasdaq.com/market-activity/stocks/hcm
Its all about volumes, market makers are only obligated to sell 2000 (NMS) for the price you see on the screen, from there its by negotiation.
For example you couldn't buy $200m at 200p without an existing holder selling, buying that quantity in the market would spike the price like crazy.
Good session in HK, NASDAQ futures well up, those shorts will try to keep price steady to counter positive news.
Carlyle Asia Investment Advisors Limited acquired an unknown minority stake in HUTCHMED Limited for approximately $210 million in June 2021, so would have paid around $30 USD a share. No wonder they wanted someone on the Board with vision and corp dev experience. They are another institutional investor who has lost two thirds of the value of their investment and have probably taken the view that the company cannot be left alone to run itself given it's almost treated as a vanity project by CKHH after their botched placing.
Carlyle’s Global Private Equity Healthcare
"Carlyle excels in driving performance through multiple levers of value creation, including international expansion, new product development, M&A, and strategic positioning strategies. Our investment strategy is underpinned by key themes that influence the global healthcare industry,"
https://www.carlyle.com/our-firm/global-private-equity/healthcare
Happy to have Carlyle Gp on the BoD
"The Board of Directors of HUTCHMED (the "Board") is of the view that the appointment of Ms Yang would provide significant benefits to HUTCHMED taking into consideration her experience in biotechnology company management, business strategy, capital markets and mergers and acquisitions. Ms Yang had been the managing director of Carlyle and co-head of Carlyle Asia Healthcare since November 2021, in charge of advising in healthcare investment and portfolio activities of Carlyle in China. Carlyle owns approximately 4.7% of the ordinary shares of HUTCHMED, through its affiliate CA Fern Parent."
https://www.londonstockexchange.com/news-article/HCM/changes-to-board-and-technical-committee/16039923
Always good to see a new investigational drugs start its journey….
They have moved 453 into ph2 so that should get a name soon…..and 415 will mean they have 6 in phase 1.
For their 3rd/4th wave of products….to keep innovation going through to 2030.
That doesn't make sense Jatw, they are increasing their investment in China.
Interesting video insight into what is going on all things biotech, upbeat on HK prospects - I'll check back, but I think one of those investment companies mentioned has a position in Hutchmed.
Presumably this is the other side of the AZ conjecture a few weeks ago that they may spin off their China business…..
It seems global businesses are looking to protect their owners from a China / West split resulting from a war in Taiwan……caught out by Putin they dont want to lose a valuable part of the group for nothing.
Chinese pharma tech giant Wuxi Biologics plans to spin off international business in Hong Kong IPO
> Capital raised from the IPO of Wuxi XDC will go towards new manufacturing facilities in Singapore, expanding production capacity in China
> The announcement comes as a string of biotech companies file to list their shares in Hong Kong, partly thanks to listing reforms
https://www.scmp.com/business/banking-finance/article/3227127/chinese-pharma-tech-giant-wuxi-biologics-plans-spin-international-business-hong-kong-ipo
It's always intrigued me that when a Company's stock has been substantially shorted there is potential upside for investors to buy shares in that Company at substantial discounts from their true value, but that was in my mind when this went down to $20, but here we are at sub NASDAQ IPO price. The question is how long do investors need to wait to this to be valued at a fair value, eg. something such as a DCF valuation, years, decades....
To my mind I think and hope we will attract a sensible valuation one we start generating free cashflow but until then it seems to be a gamble.