{"id":364,"date":"2015-09-17T18:00:25","date_gmt":"2015-09-17T18:00:25","guid":{"rendered":"https:\/\/valueinvestorasia.com\/?p=364"},"modified":"2015-09-17T20:19:23","modified_gmt":"2015-09-17T20:19:23","slug":"september-2015","status":"publish","type":"post","link":"https:\/\/www.valueinvest.com\/hongkong\/september-2015\/","title":{"rendered":"September 2015"},"content":{"rendered":"

Welcome to the 22<\/span>nd<\/sup><\/span>\u00a0edition of\u00a0Value Investor Digest.<\/span><\/p>\n

In this edition, we feature the latest memo from Howard\u00a0Marks: “It’s Not\u00a0Easy”, a John Authers piece on the rise of indexes in recent decades, and another FT article by John Plender on the tough choices Pension Fund Trustees have with their Value Managers at present. There is also a video interview on CNBC with Jim Chanos where he comments on the situation in Chinese markets today. The final article in this issue is a detailed look at Valeant Pharmaceuticals by John\u00a0Hempton \u2013 interesting\u00a0given the number of high-profile investors\u00a0who are taking opposing views on the stock.<\/span><\/p>\n

<\/h3>\n

H<\/a>oward Marks memo: “It’s Not Easy”<\/span><\/a><\/span><\/p>\n

At the beginning of\u00a0his latest\u00a0memo,\u00a0Howard recalls a recent lunch he had with Charlie\u00a0Munger. As he was\u00a0about to leave,\u00a0Charlie said to him\u00a0\u201cIt\u2019s not supposed to be easy. Anyone who finds it easy is stupid.\u201d Howard\u00a0goes on to say that anyone who thinks it’s easy is underestimating\u00a0substantial nuance and complexity involved in valuing businesses and understanding markets – and is probably guilty of “first level thinking”.\u00a0Those of\u00a0you who have read Howard’s\u00a0book\u00a0The Most Important Thing<\/i><\/span><\/a>\u00a0will be familiar with his\u00a0concept of\u00a0“second level thinking” which he goes on to describe in this memo along with some other ways he thinks about businesses and the market.\u00a0This is another very good memo which will remind Value Investors why Warren Buffett famously remarked\u00a0\u201cWhen I see memos from Howard Marks in my mail, they\u2019re the first thing I open and read. I always learn something.\u201d<\/span><\/p>\n

The Rise of the Index<\/a><\/span><\/p>\n

The problems with blindly following an index are most obvious in the debt space, where indices give a higher weight the more debt a country issues – \u00a0this has been cited as one of the reasons why many funds were led to load up on Argentine Debt before its default crisis. This John Authers\u00a0article and video gives a\u00a0commentary on the rise of the application of indices around the world and identifies many problems with them. Going back a few decades, indices were simple averages which helped to gauge the general direction of the market – Fund Managers paid little attention to the FT-30 or the Dow Jones Industrial Average which only provided a crude guide to how the market was performing. Today, S&P Dow Jones, FTSE Russell and MSCI now provide the benchmarks for 73% of US mutual funds.\u00a0Authers suggests that\u00a0this has helped to accentuate market volatility.<\/span><\/p>\n

\u00a0<\/span>The Going Gets Tough for Value Managers: to Dump or not to Dump?<\/a><\/span><\/p>\n

John Plender writes that \u201cThe next year or so will pose an interesting test of how fickle pension fund investment committees remain.\u201d <\/i>\u00a0He sees Pension Fund Trustees as facing some difficult choices with their Value Managers as conditions for these managers today are reminiscent of the dotcom bubble of the late 1990s, where they underperformed growth managers for a sustained period.<\/span><\/p>\n

\u00a0<\/span>Jim Chanos: China is Worse than you think<\/a><\/span><\/p>\n

In this video Jim Chanos says that \u201c[On China] it\u2019s worse than you think, whatever you might think, it\u2019s worse.\u201d With regards to the various mixed signals and responses coming out of different Ministries he also said \u201cPeople are beginning to realise that the Chinese Government is not omnipotent and omniscient\u2026like many of us, sometimes they don\u2019t have a clue.\u201d<\/span><\/p>\n

Valeant: A detailed look inside a story well told<\/a><\/span><\/p>\n

Given that there are many high profile value investors taking different views on Valeant \u2013 including at some point Bill Ackman (long) and Jim Chanos (short); it is interesting to read this first of three detailed blogs by John Hempton on Valeant. He analyses management reporting over time, identifies that there isn’t enough information available for him to get comfortable with the numbers and also hints at some other reference points which he thinks makes the growth numbers of their acquired companies\u00a0misleading. Through the process of his work on Valeant he\u00a0also\u00a0describes what he thinks makes a good analyst.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Welcome to the 22nd\u00a0edition of\u00a0Value Investor Digest. In this edition, we feature the latest memo from Howard\u00a0Marks: “It’s Not\u00a0Easy”, a John Authers piece on the rise of indexes in recent<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"_links":{"self":[{"href":"https:\/\/www.valueinvest.com\/hongkong\/wp-json\/wp\/v2\/posts\/364"}],"collection":[{"href":"https:\/\/www.valueinvest.com\/hongkong\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.valueinvest.com\/hongkong\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.valueinvest.com\/hongkong\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.valueinvest.com\/hongkong\/wp-json\/wp\/v2\/comments?post=364"}],"version-history":[{"count":0,"href":"https:\/\/www.valueinvest.com\/hongkong\/wp-json\/wp\/v2\/posts\/364\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.valueinvest.com\/hongkong\/wp-json\/wp\/v2\/media?parent=364"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.valueinvest.com\/hongkong\/wp-json\/wp\/v2\/categories?post=364"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.valueinvest.com\/hongkong\/wp-json\/wp\/v2\/tags?post=364"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}