Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Thematic (Sector/Industry)

Consumer Staples allocations have fallen to their lowest levels in over a decade.  The Consumer Staples sector is now the 5th largest sector holding among active Global Emerging Market managers, well behind the heavyweights of Tech, Financials and their Discretionary peers. A 5-year decline in Consumer Staples exposure was compounded by negative fund activity over the course of 2021.  Consumer Staples stocks saw average weights decline by 0.41%, overweights decline by 0.16% and 5.4% of managers move to underweight, all aided by a net -$475m in fund outflows from the sector over the period. The most widely held stock in the 'Staples sector is <a href="https://www.smartkarma.com/entities/wal-mart-de-mexico-sab-de-cv" target="_blank" data-smartkarma-citation="entities:28373:1" rel="noopener">Wal-Mart de Mexico SAB de CV (WALMEX* MM EQUITY)</a>, held by 34.6% of the funds in our analysis at an average weight of 0.35%.  <a href="https://www.smartkarma.com/entities/lg-household-health-care" target="_blank" data-smartkarma-citation="entities:6501:1" rel="noopener">LG Household &amp; Health Care (051900 KS),</a><a href="https://www.smartkarma.com/entities/kweichow-moutai-co-ltd-a" target="_blank" data-smartkarma-citation="entities:1553:1" rel="noopener">Kweichow Moutai (600519 CH)</a> and <a href="https://www.smartkarma.com/entities/fomento-de-construcciones-y-co" target="_blank" data-smartkarma-citation="entities:21269:1" rel="noopener">Fomento De Construcciones Y Co (FCC SM)</a> make up the 2nd tier.  With all 4 held overweight on average, these stocks are clearly well liked by the active EM investor base.The size and scale of the exodus over a relatively short time-period, the sustained period of underperformance and potentially a dampening of inflation risks could prompt managers to readdress their allocations.

Consumer Staples allocations have fallen to their lowest levels in over a decade.  The Consumer Staples sector is now the 5th largest sector holding among active Global Emerging Market managers, well behind the heavyweights of Tech, Financials and their Discretionary peers. A 5-year decline in Consumer Staples exposure was compounded by negative fund activity over the course of 2021.  Consumer Staples stocks saw average weights decline by 0.41%, overweights decline by 0.16% and 5.4% of managers move to underweight, all aided by a net -$475m in fund outflows from the sector over the period. The most widely held stock in the 'Staples sector is Wal-Mart de Mexico SAB de CV (WALMEX* MM EQUITY), held by 34.6% of the funds in our analysis at an average weight of 0.35%.  LG Household &amp; Health Care (051900 KS),Kweichow Moutai (600519 CH) and Fomento De Construcciones Y Co (FCC SM) make up the 2nd tier.  With all 4 held overweight on average, these stocks are clearly well liked by the active EM investor base.The size and scale of the exodus over a relatively short time-period, the sustained period of underperformance and potentially a dampening of inflation risks could prompt managers to readdress their allocations.

Consumer Staples:  EM Managers Positioned at All-Time Lows

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/dali-foods-group-co-ltd" target="_blank" data-smartkarma-citation="entities:1082:1" rel="noopener">Dali Foods Group (3799 HK)</a>'s gross spread on the Founder’s (Mr Xu Shihui) HK$3.75 per share offer has sharply increased and stood at 5.3% at the last close.</li>
<li>The rising gross spread is due to the recent market selloff (the gross spread of all HKEx merger arbs we track increased this week) and vote risk. </li>
<li>The vote risk is due to no interim results, the high AGM minority participation rate and a modest offer. There is little evidence that these risks will derail the vote. </li>
</ul>



Dali Foods Group (3799 HK)'s gross spread on the Founder’s (Mr Xu Shihui) HK$3.75 per share offer has sharply increased and stood at 5.3% at the last close.
The rising gross spread is due to the recent market selloff (the gross spread of all HKEx merger arbs we track increased this week) and vote risk. 
The vote risk is due to no interim results, the high AGM minority participation rate and a modest offer. There is little evidence that these risks will derail the vote. 


Dali Foods (3799 HK): Widening Spread Ahead of the 23 August Vote

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>Back on the 27 June, <a href="https://www.smartkarma.com/entities/dali-foods-group-co-ltd" target="_blank" data-smartkarma-citation="entities:1082:1" rel="noopener">Dali Foods Group (3799 HK)</a>, announced a privatisation Offer by way of a Scheme from its founder/chairman/CEO Xu Shihui.</li>
<li>The cancellation price, which has been declared final, was HK$3.75/share, a decent 37.87% premium to undisturbed.</li>
<li>The Scheme Doc is now <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2023/0728/2023072801685.pdf" target="_blank" rel="noopener">out</a>. The Scheme Meeting is the 23 August. Xu and concert parties control 88.89%, therefore a blocking stake is 1.11% of shares out. </li>
</ul>


Back on the 27 June, Dali Foods Group (3799 HK), announced a privatisation Offer by way of a Scheme from its founder/chairman/CEO Xu Shihui.
The cancellation price, which has been declared final, was HK$3.75/share, a decent 37.87% premium to undisturbed.
The Scheme Doc is now out. The Scheme Meeting is the 23 August. Xu and concert parties control 88.89%, therefore a blocking stake is 1.11% of shares out. 


Dali Foods (3799 HK): 23 August Scheme Meeting. IFA Says Fair

<ul>
<li>
<a href="https://www.smartkarma.com/entities/dali-foods-group-co-ltd" target="_blank" data-smartkarma-citation="entities:1082:1" rel="noopener">Dali Foods Group (3799 HK)</a>'s scheme document is out with the court meeting scheduled for 23 August. The IFA considers the HK$3.75 per share offer to be fair and reasonable. </li>
<li>Key condition is approval by at least 75% of disinterested shareholders (&lt;10% of all disinterested shareholders rejection). No independent shareholder holds a blocking stake. </li>
<li>Sector sentiment has modestly weakened. This looks done. At the last close and for the 8 September payment, the gross and annualised spread is 3.6% and 34.8%, respectively.</li>
</ul>



Dali Foods Group (3799 HK)'s scheme document is out with the court meeting scheduled for 23 August. The IFA considers the HK$3.75 per share offer to be fair and reasonable. 
Key condition is approval by at least 75% of disinterested shareholders (&lt;10% of all disinterested shareholders rejection). No independent shareholder holds a blocking stake. 
Sector sentiment has modestly weakened. This looks done. At the last close and for the 8 September payment, the gross and annualised spread is 3.6% and 34.8%, respectively.


Dali Foods (3799 HK): Scheme Vote on 23 August

<ul>
<li>We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.</li>
<li>Highest spreads - <a href="https://www.smartkarma.com/entities/111-inc" target="_blank" data-smartkarma-citation="entities:27412:1" rel="noopener">111 Inc (YI US)</a>, <a href="https://www.smartkarma.com/entities/united-malt-group-ltd" target="_blank" data-smartkarma-citation="entities:29116:1" rel="noopener">United Malt Group Ltd (UMG AU)</a>, <a href="https://www.smartkarma.com/entities/chindata-group-holdings-adr" target="_blank" data-smartkarma-citation="entities:29274:1" rel="noopener">Chindata Group (CD US)</a>, <a href="https://www.smartkarma.com/entities/enm-holdings-ltd" target="_blank" data-smartkarma-citation="entities:16267:1" rel="noopener">ENM Holdings (128 HK)</a>, <a href="https://www.smartkarma.com/entities/tesserent-ltd" target="_blank" data-smartkarma-citation="entities:30716:1" rel="noopener">Tesserent Ltd (TNT AU)</a>, Poly Culture. </li>
<li>Lowest spreads - <a href="https://www.smartkarma.com/entities/healius-ltd-6d4d947d-ad32-4aea-b2d8-265f5768b55e" target="_blank" data-smartkarma-citation="entities:14208:1" rel="noopener">Healius (HLS AU)</a>, <a href="https://www.smartkarma.com/entities/liontown-resources-ltd" target="_blank" data-smartkarma-citation="entities:20488:1" rel="noopener">Liontown Resources (LTR AU)</a>, <a href="https://www.smartkarma.com/entities/toyo-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:1176:1" rel="noopener">Toyo Construction (1890 JP)</a>, <a href="https://www.smartkarma.com/entities/musgrave-minerals-ltd" target="_blank" data-smartkarma-citation="entities:2564:1" rel="noopener">Musgrave Minerals (MGV AU)</a>, <a href="https://www.smartkarma.com/entities/metro-pacific-investments-co" target="_blank" data-smartkarma-citation="entities:1054:1" rel="noopener">Metro Pacific Investments Co (MPI PM)</a>, <a href="https://www.smartkarma.com/entities/kenedix-residential-investment" target="_blank" data-smartkarma-citation="entities:17149:1" rel="noopener">Kenedix Residential Investment (3278 JP)</a>.</li>
</ul>


We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads - 111 Inc (YI US), United Malt Group Ltd (UMG AU), Chindata Group (CD US), ENM Holdings (128 HK), Tesserent Ltd (TNT AU), Poly Culture. 
Lowest spreads - Healius (HLS AU), Liontown Resources (LTR AU), Toyo Construction (1890 JP), Musgrave Minerals (MGV AU), Metro Pacific Investments Co (MPI PM), Kenedix Residential Investment (3278 JP).


Merger Arb Mondays (03 Jul) - Dali Foods, Poly Culture, NWS, Yitai, JSR, DDH1, Silk Laser

China

Dali Foods Group Company Ltd. is a snack food and beverage company. The Company is actively expanding its products offering and distributes its products through retailers.

Dali Foods Group (3799 HK)

Consumer Staples: EM Managers Positioned at All-Time Lows

Consumer Staples allocations have fallen to their lowest levels in over a decade. A 5-year decline in Consumer Staples exposure was compounded by...

Steven Holden

Dali Foods (3799 HK): Widening Spread Ahead of the 23 August Vote

The scheme passed the vote. Minority turnout was high at 76.1%. The scheme was approved by 89.88% of disinterested shareholders. NO votes from...

Arun George

Dali Foods (3799 HK): 23 August Scheme Meeting. IFA Says Fair

This deal has a whiff of expediting the transaction so as to not release the interims which may flag the Offer's cheapness. IF you think this Offer...

David Blennerhassett

Dali Foods (3799 HK): Scheme Vote on 23 August

Sector sentiment has modestly weakened, helping the YES vote. At the last close and for the 8 September payment, the annualised spread is 34.8%....

Arun George

Merger Arb Mondays (03 Jul) - Dali Foods, Poly Culture, NWS, Yitai, JSR, DDH1, Silk Laser

This week, the highest gross spreads are 111 (48.8%), United Malt (13.6%), Chindata (11.7%), ENM (11.5%), Tesserent (8.3%), Poly Culture (8.2%),...

Arun George