In today’s briefing:
- Black Bear Value Fund Q3 2022 Letter
- GEM Weekly (14 Oct 2022): South Korean Repo, Chinese CPI; TSMC, Samsung Electronics, SK Hynix, Wipro
- Palm Valley Capital Fund Q3 2022 Commentary
- China Healthcare Weekly (Oct.14) – State Finance Discount for Medical Device; IVD VBP; VBP Changes
Black Bear Value Fund Q3 2022 Letter
- Black Bear Value Fund returned -2.4% in September and +0.7% YTD.
- This is the kind of environment where the ability to play offense and invest for the future is advantageous to our partnership.
- Valuations between what we own and the “market” are still very wide.
GEM Weekly (14 Oct 2022): South Korean Repo, Chinese CPI; TSMC, Samsung Electronics, SK Hynix, Wipro
- The Global Emerging Markets weekly provides a summary of the key news and related developments impacting the largest countries and constituents of the Global Emerging Markets equity indices.
- Macro data points: South Korean exports and interest rates, Chinese inflation
- Companies mentioned:Taiwan Semiconductor (TSMC) (2330 TT), Samsung Electronics (005930 KS), SK Hynix (000660 KS), Wipro Ltd (WPRO IN)
Palm Valley Capital Fund Q3 2022 Commentary
- The Palm Valley Capital Fund invests in small cap stocks. While our Fund is new, its underlying absolute return-based investment strategy is not. We have practiced the same strategy throughout our careers in investment management.
- The combination of falling stock prices and attractive small cap multiples appears to present a powerful case for buying aggressively. We do not share this view.
- Non-cash share-based compensation accounts for roughly one-third of the collective free cash flow of small caps in the S&P 600 Index.
- The current 33x median price-to-free cash flow multiple for better quality small caps (S&P 600) is the highest this cycle.
- Market volatility is important to Palm Valley’s absolute return strategy.
China Healthcare Weekly (Oct.14) – State Finance Discount for Medical Device; IVD VBP; VBP Changes
- The State Council decided to support renovation of medical equipment with special refinancing/financial interest subsidy, which has promoting effect in short-term. Investors are advised to look at it dialectically.
- The draft for comments on the centralized procurement of liver function biochemical reagents led by Jiangxi was released. The rules are better than the market expected.
- We saw some new changes in VBP. For investors, since VBP is inevitable, it is better to accept it – There are still good opportunities in some cases.
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