James has 18 years' experience in Asian markets, as a broker with BZW and Kim
Eng in London and with Arab-Malaysian, TA
and Caspian in Malaysia. He has lived in
Asia since 1993.
The fund was launched on 1 December 2004.
Can you briefly explain the strategy
of the Pangolin Asia Fund and its geographical
The fund is long only driven by individual
company fundamentals. It does not focus
on any one country but will invest in
situations the manager feels comfortable
with. I am familiar with investing in
Hong Kong, Malaysia, Indonesia and Singapore
and am relearning Thailand and the Philippines.
However the fund can invest anywhere
within a wide definition of Asia and
will do so if it can find undervalued
companies. Investments are chosen largely
on the back of company visits.
The strategy is to buy and hold and
reinvest dividends. The fund will not
hedge or gear except in extreme circumstances.
There will be no management of volatility
and the intention is to make absolute
returns over the long term.
What will be the focus of the fund
in terms of sector and capitalisation,
and what is the concentration of the
There is no focus in terms of sector
or capitalisation. Investments are chosen
purely on individual merit. The whole
fund can be invested in one country
or one sector. Up to 25% of the portfolio
can be invested in the instruments of
one issuer at the time of purchase although
the portfolio is unlikely to be so concentrated.
Often perceived value is to be found
in smaller companies; therefore it is
logical to expect a large proportion
of the funds assets to be in smaller
Currently the portfolio is about 33%
invested in three positions. This does
not reflect bearishness but the inability
to buy companies at decent levels largely
caused by year-end window dressing,
Tell us about your personal track
record of investing in Malaysia.
From August 1998 till the end of October
2004, my personal portfolio of Malaysia
stocks returned about 900%, using a
focused bottom-up strategy.
In 1998 I took the view that foreign
fears of political and economic meltdown
were exaggerated. I was able to buy
good companies ridiculously cheaply
at that time. Even after the market
had recovered there were still many
pricing anomalies to be taken advantage
Will the Pangolin Asia Fund invest
in the same fashion as you did personally?
Yes, except that there is a limit on
concentration and as the fund size grows,
liquidity may be an issue. Furthermore
with Asia being back in vogue, it is
harder to find obviously mispriced assets.
In 1998 one could have bought any counter
and made money. Now one has to work
a bit harder.
The fund may close to new investors
if I cannot find anything to buy at
any particular point in time.
The fund has redemption penalties
of 7%, 5% and 3% for the first three
I wish to deter investors without a
similar mindset. Short-term redemptions
may affect the value of the fund if
illiquid positions are liquidated too
early. Investors need at least a three-year
view with this fund.
There are plenty of alternative vehicles
for investors wanting hedged or other
strategies, so the message is, if you
don't like the terms, don't invest.
How large is your team currently
and are there plans to add to your team
in the next six months?
I have recently recruited an analyst
who will start soon. Both the fund and
the management company are also supported
by a strong team of directors.
Would you consider launching another
fund or running managed accounts?
I have no plans for any other funds.
I could only run managed accounts with
the same redemption terms as the fund;
otherwise it would be unfair on the
fund's shareholders. Thus investors
might as well come into the fund, unless
the strategy is totally different.
What are your views on ringgit revaluation
will this follow the revaluation
of the renminbi? What form will it take
basket or straight revaluation?
I think that policy makers in Asia
are in love with easy money. Many businesses
in Asia are politician-owned which also
makes clear thinking that bit harder.
There have been some influential calls
for a free float in the Malaysian press
but I would be surprised if Malaysia
were to lead the way on this. If it
were, then this would be very bullish
for future policy direction.
What is your outlook on Malaysia
for the next six months (specifically
on export slowdown and if domestic demand
can pick up the slack)?
I don't really care as I am buying
individual companies, not the market.
How much assets do you currently
have and what are your marketing travel
plans? At what level are you looking
to cap the fund at?
Currently the fund is tiny at just under
US$2m, and some of that is mine. My travel
plans are more associated with uncovering
investments than finding investors. My
cost structure is low so there is not
a desperate requirement to grow the asset
size. Having said that, I will probably
do some marketing in the next couple of
The main problem is that the fund does
not appeal to the mainstream investor;
it is a rather niche product. There
is little point in blindly knocking
on 100 doors in the hope of finding
investors who like my strategy, especially
with the fund being so new. If people
really want to invest they can always
find me (via Eurekahedge's products).
There is no absolute level for capping
the fund. It will be open when I can
find things to buy and closed when I