What did Munger bring to A shares? Six fund managers interpret the practice of price investment

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Securities Times reporter An Zhongwen Pei Lirui Wang Xiaoqian

During his 25 years in Public Offering of Fund, China, Munger's steady investment philosophy has been continuously and profoundly influencing fund managers and investors in China.

2023 is the 25th anniversary of China's public offering. Today's China investors are not pursuing the idea of stability. The early A-share market experienced a wild era of rampant bookmakers and declining value. With the rise of Public Offering of Fund, it gradually became the core institutional investor of A-shares, with the concept of value investment in Mang format, and with the study, exploration and application of fund managers in the capital market practice in China, it empowered the A-share market and investors to a certain extent. Munger's departure will not make this sound value investment concept disappear, but make more fund managers gain resonance and experience, and provide more experience support for the high-quality development of the A-share market. In this regard, the Securities Times reporter interviewed six fund managers, who have been practicing Munger's concept of value investment for many years, hoping to bring new thinking and inspiration to A-share investors.

Guangfa Fund Wang Yuke:

There are ways to make money.

When talking about Munger's investment philosophy, Wang Yuke, manager of Guangfa Zhaotai Hybrid Fund, believes that Munger's investment strategy does not depend on prediction, but more on adequate preparation in advance and improvisation based on his multiple abilities.

"In fact, most of us can't predict the macro-environmental changes, but in order to reduce our sense of powerlessness, we can work hard to do the immediate things, make long-term preparations, leave a safety margin for the harsh environment, and be vigilant against crowded and low-cost assets." Wang Yuke said that if the fund is prepared in advance, it will be easier to act according to circumstances at critical times. For example, the investment in "fixed income+"products should take into account both income and withdrawal, so the strategy design should have certain anti-vulnerability.

Wang Yuke believes that it is his understanding and practical application of Munger's related investment ideas that he focuses on tapping the alpha opportunities in the early winner industry and the late loser industry, that is, grasping the odds trading and winning trading stages, moderately participating in trend trading, and at the same time doing a good job in predicting industry trends and maintaining high vigilance in the crowded trading stage. "I know that my personality is that I will be more comfortable where there are few people, and I will try to avoid going to crowded places when investing, which will help the portfolio to have fault tolerance and act according to circumstances." He said.

What kind of money to earn is also a very special investment spirit of Munger. Throughout Munger's long investment career, Wang Yuke found that although Munger and his investment partner Buffett have mature ideas, strong cognition and investment ability, they never set foot in investment in bitcoin and gold, but in stock investment, they gradually opened their arms to technology stocks. Many people think that they don't speculate in "coins" because they don't understand them. In fact, they don't invest because this way of making money doesn't conform to their values. In investment, Munger believes that values are more important, and they have always only made those investments that will really bring value to the world.

In short, there are two criteria for Wang Yuke to choose stocks: the first is promising, which is in line with the direction of high-quality economic development and industrial structure transformation in China; The second is cost-effective. The same company, bought in 5 yuan and bought in 50 yuan, has completely different mentality and consequences. "As for gambling and investment, I think they are essentially different. Although there is speculation in investment, there is some basic common sense in it. The basic requirement is to remain rational." Wang Yuke said.

In investment, most investors have high expectations, for example, they hope that the long-term annualized income will reach 20% or even 30%, but very few people have achieved this income goal, including Munger and Buffett, which only reach about 20%, and even in some years, they have underperformed the broader market. Even so, it does not affect their attitude towards investment. Munger believes that one of the important links is to lower expectations. "People ask me how to be happy? I always answer that lowering your expectations means making your expectations more realistic. " This sounds like both investment advice and philosophy of life.

Wang Yuke believes that at present, China's economy is in the process of industrial structure transformation and high-quality development, and needs industrial upgrading. However, the transformation and upgrading will not happen overnight, and various difficulties will be encountered in the short term, which requires a complex policy mix to deal with. In this context, investors need to lower their expectations of solving problems with one policy, look for structural opportunities in transition, lower their expectations, and find new directions, which may surprise them.

Yu Huan of Great Wall Fund:

Don't expect too much from cheap and lousy companies.

Munger's different attitudes towards cheap companies and excellent companies also affect Yu Huan, manager of Great Wall Health Consumption Fund. He believes that, unlike Buffett, who is deeply influenced by his mentor Benjamin Graham and is willing to buy companies that he thinks are undervalued at a cheap price, even if they are on the verge of bankruptcy, Munger, as an important partner of Buffett, has an extremely important investment characteristic, which is to focus on excellent companies with acceptable prices. When deeply understanding Munger's investment philosophy, Yu Huan believes that Munger's philosophy emphasizes the ability of outstanding enterprises to generate cash in the future, which is enough to make up for the high price paid in the early stage. It was under Munger's unremitting efforts to persuade and promote for many years that Buffett changed the investment strategy of "picking up cigarette butts" and invested in a world-famous beverage company in 1993. In the following decades, this company created a huge wealth effect for Berkshire, and it is still a classic in the investment community.

"Munger's investment case in the consumer field proves that Berkshire's strategy of adhering to long-term investment and paying attention to value is wise and successful, and vividly shows everyone the great power of value investment. Although I came from an engineering background, I am now full of interest in investment in the consumer sector and may have been affected to some extent. " Yu Huan is deeply touched by this. In terms of investment, Yu Huan highly recognizes Munger's value investment philosophy. Based on Munger's philosophy, he has been rooted in the field of large consumption for many years and is committed to finding a dream company worthy of long-term investment. Yu Huan said that Munger once mentioned three tips for investment: first, instead of spending time and energy on buying cheap bad companies, it is better to invest in some good companies at reasonable prices; Second, if a company's growth is good enough, even if its share price is higher, it is worth buying; Third, investing in stocks depends not only on whether this company has the characteristics of good model, large space and high barriers, but also on whether the management of this company is a group of ambitious and good managers.

Yu Huan believes that value investment opportunities should be grasped from a longer-term cyclical perspective. "If we extend the cycle to 10, 20, 50 or even longer cycles, we will find that among the survivors of the capital market, consumer goods account for the vast majority, among which many good enterprises with long-term investment value have emerged, which is also an important reason for me to focus on investment in the consumer sector. After the brand premium and barriers, consumer goods have more survival advantages compared with manufacturing industry; In addition, consumer goods meet people's daily life and spiritual needs, and there is a wide space for development. Once there is a brand premium, it is particularly easy to occupy people's minds and belong to an evergreen industry. " Yu Huan said that looking back on Munger's life experience, we will find that lifelong learning has always been the main line of his life. Because of his curiosity and his ability to learn, Munger has always observed life and studied hard. For investors, learning and evolution are also unavoidable topics. The international situation, economic situation, policy environment and market conditions are always changing, and investors' mood fluctuates accordingly. How to grasp more certainty in an uncertain world is always a major issue for fund managers.

Limiting the attempt to the areas where his ability permits is another important investment enlightenment that fund manager Yu Huan learned from Munger. "As Munger said, the so-called investment is to make better predictions for the future than others. If you want to make a better prediction, you need to limit your attempts to the areas that you are capable of. If you spend your energy trying to predict everything in the future, you will try to do too many things, but you will fail because of lack of restrictions. Personally, I will focus on investing in the field of large consumption at present, because this is an area that I am familiar with and good at. After determining the field, when selecting stocks, I will focus on the four dimensions that I value most, such as business model, competitive barriers, growth space and corporate culture. I believe this will help me dig into the' treasure company' more efficiently. " Yu Huan said.

HSBC Jintrust Fund Wu Peiwen:

Investors should look beyond the investment circle.

Wu Peiwen, the manager of HSBC Jintrust Value Pioneer Fund, believes that Munger's greatest influence on investors all over the world lies in that he has spent decades summing up many basic principles of value investment, which have universal scientific significance and can be used by contemporary fund managers and investors.

"At present, we are building an investment plan for mass financial management. The nature of mass financial management requires us not to overemphasize the artistic side of investment, but to work based on the scientific principles of value investment. Therefore, we have systematically sorted out the principles of value investment and transformed them into systematic rules and processes, thus forming an investment plan and constantly polishing it in practice. We should use Munger's achievements to help us solve the practical problems we are currently facing and create an investment plan suitable for public financial management. " Wu Peiwen said.

In addition, Wu Peiwen believes that Munger has a macro vision of investment from outside the investment circle. He does not unilaterally evaluate investment from earning or not, but at the same time values the social value created by professional investors. He believes that active investment should look for the wrong pricing in the market. If more profits are achieved only through faster and wider trading ability, it is only taking advantage of the madness of human psychology and its contribution to social development is very limited.

"At present, we also need to think like this. We should not only achieve good investment returns, but also adhere to the reasonable value orientation of investment work. Munger is far ahead of us in this respect. We must continue Munger's career, strive to enhance the effectiveness of the market through active management, evaluate the behavior of listed companies by market-oriented means, and encourage more listed companies to achieve high-quality development. " Wu Peiwen said.

When analyzing Munger's idea, he thinks that the specific investment case Munger experienced is closely related to the American market, and it is highly related to the characteristics of the American economy from 1970 to 2000. When applying it, domestic investors should pay attention to the characteristics of the China market in the new era. For example, the current industrial upgrading speed of China's economy is very fast. In the American market at that time, a good company could have a moat for a relatively long time, but in the scene of rapid industrial upgrading in China, the change of the moat will accelerate, and it is not necessary to simply stick to the so-called "good company".

"In addition, it is very important to diversify risks by adopting a multi-strategy mixed scheme. At present, the world may enter a big innovation cycle, subversive new technologies may emerge one after another, and the uncertainty of technology path and business prospects may be greater than before. Therefore, investors should also make appropriate decentralized design in their investment plans. They can't ignore the differences in the background of the times and unilaterally learn from their practice of betting on' good companies', but strive to use more low-correlation excess sources to build a portfolio. " Wu Peiwen stressed.

Cai Luping, Western Profit Fund:

There is no constant profit model and constant investment.

Cai Luping, fund manager of West Lide Growth Enterprise Market, believes that Munger has two words that benefit him the most: First, if you buy an undervalued stock, you have to wait until the price reaches the intrinsic value you calculated, which is very difficult to calculate. But if you buy a great company, you just sit there and stay. Second, it is silly to judge the risk according to the volatility of the stock. We think there are only two kinds of risks: losing all one's money and insufficient return. Some good businesses are also highly volatile. For example, See's candy usually loses money for two quarters a year, but some rotten companies have stable business performance.

In the case of Munger's investment in China, he was most impressed by BYD and Alibaba, both of which won a great victory and withdrew at a loss. Behind the transaction, Munger made two judgments: the first is the judgment on the trend of new energy industry, and the second is the judgment on the quality of the founder and his team.

More importantly, based on Munger's ideas and cases, Cai Luping also concluded that even great companies have no ever-lasting business model, and great investors have no ever-lasting investment. He said that in April 2021, Munger increased his stake in an Internet giant. But in February of the following year, Munger admitted that he had made a bad mistake in the investment of the Internet giant. He admitted that he didn't realize the essence of the Internet giant's retail business model at first. Of course, the change of the new retail model, the deterioration of the competition pattern and the change of the regulatory environment all had an impact on the industrial trend. According to the latest institutional shareholding disclosed, Munger has sold all his shares in the Internet giant.

Cai Luping believes that from Munger, investors see that there is no winning investment, but profound and outstanding ideas will last forever, and investors should constantly reflect and reflect like him.

China Europe Fund Luo Jiaming:

Fluctuation and disorder only have eternal value.

Luo Jiaming, the mixed fund manager of China Europe Fengtai Hong Kong Stock Connect, told the reporter that Munger often quoted a sentence that "the world looks like a nail to a person with a hammer in his hand". In Luo Jiaming's view, Munger has always encouraged interdisciplinary thinking, and insisted on erudition and memorization all his life. "I was born in physics, and I began to be interested in business models and investment in college. After I majored in investment and joined the price-investing school, I was learning to integrate knowledge from different disciplines in my work and daily life, and I kept changing my thinking model from simple to complicated, and then simplified it in concrete application."

"Life is like investing. You will always meet attractive stocks that you really want to buy. At that time, you should remind yourself to do reverse thinking." In Luo Jiaming's view, Munger thinks that there are two kinds of learning: one is to know what is possible and the other is to know what is not possible. The study of "impossible" is a very complicated process, which requires the accumulation of wrong experience, but strong study can prevent people from making mistakes that can't be turned over. "The study of humanities such as philosophy and history can add such a layer of golden bell and iron cloth shirt for you." It is based on the study and summary of Munger's concept that Luo Jiaming emphasizes finding a good company with compound interest, waiting for a good price with a safe margin, and fully considering risks. In practice, Luo Jiaming prefers to get information face to face, go to the enterprise for personal investigation, observe the real situation of the company through the most grounded due diligence, and actively get to know the outstanding entrepreneurs in listed companies, so as to understand the company's unique core competitiveness and study a long-term "good business" worth investing in. And what company will be better? Luo Jiaming thinks there are three points:

First, "people who must rely on the spectrum", that is, the management is honest, the corporate culture is good, and the employees are United. Because companies in the Hong Kong stock market, if "people are unreliable", the stock price may fall by 90% a day, or even never go back; Second, a good business model, an easy-to-understand business model, and the ability to continuously earn free cash flow; Third, "special", that is, enterprises with a unique moat, especially because the market has less money and more stocks, will soon be forgotten by everyone if they are not "special" and will not be easily discovered by value.

Luo Jiaming believes that the market is unknown and the policy is unpredictable. Luo Jiaming once wrote in the quarterly report: "Mr. Market" is a moody guy, and the difference between "Britney Spears" and "Mrs. Niu" seems to be the difference of one mind. However, no matter whether the stock market is excited or depressed, most of the company's business operations have nothing to do with the stock price. Luo Jiaming believes that the emotional change of "Mr. Market" is more of a "quotation" role. Be extra careful when the mood is high, and gradually be positive when the mood is low. The core is to insist on holding the most outstanding company for a long time under the condition of reasonable valuation.

Lubomai Fund Li Tao:

Focus on sustainable competitive advantage

"Munger's death is undoubtedly a huge loss for the global investment community. His value investment concept is one of his core views as an investor and financial expert." Li Tao, the proposed fund manager of Lubomai Fund, said.

Li Tao is a fund practitioner whose major is life science, and Munger's influence on him is also reflected in his daily investment and research work. "The industry I study every day is related to medical health. Many people will regard this industry as growth, but I think it is more appropriate to analyze the medical and health industry in the dimension of value investment. Value investment not only considers low valuation, but evaluates intrinsic value through in-depth research and establishing a company growth model. " In Li Tao's view, Munger's value investment concept emphasizes in-depth research and rational decision-making. He believes that investors should look for undervalued enterprises, have an economic moat and a good management team, and get returns through long-term holding. These ideas emphasize the long-term nature of value investment and the importance of fundamental analysis, which is the basis for Munger and Buffett's successful investment.

Li Tao believes that Munger's classic value investment theory mainly includes the following key points:

The first is to look for undervalued companies. Look for undervalued enterprises, that is, enterprises whose value is underestimated or ignored by the market. He believes that there are investment opportunities in the market, that is, those undervalued enterprises may achieve higher growth and returns in the future.

The second is to invest in the "economic moat". Invest in enterprises with economic moat (also known as sustainable competitive advantage). These enterprises have some special competitive advantages, such as brand value, patented technology, highly complex business model or market share, which can help enterprises maintain profitability in the highly competitive market.

The third is to prefer a good management team. The management team is an important factor in a successful investment. Pay attention to whether the management of the enterprise has integrity, ability and concern for the interests of shareholders. A management team that can take a long-term view in business decisions, rather than pursuing short-term profits.

The fourth is rational valuation. Rational valuation of enterprises means evaluating the intrinsic value of enterprises. Pay attention to the fundamentals of the enterprise, such as income, profit and cash flow, as well as changes in the industry and competitive environment. By accurately estimating the enterprise value, investors can find undervalued opportunities.


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