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Added 7 months ago

27-Aug-2020:'s James Marlay interviews Mary Manning, the PM of EAI

Names like George Soros, Howard Marks and Ashok Jacob are recognisable to most investors.  Mary Manning has the unique experience of working inside the investment engines of each of these renowned fundies.  Their ability to step back and think about big picture issues is one trait that has been impressed upon her.

In 2018, Mary and her team at Ellerston Capital published a research paper titled; "Tech Arms Race: Is China Already Winning?" It outlined a thesis that the geopolitical tensions taking place between China and the US were a sideshow. The real battle was over technology and, in her view, it remains the biggest issue in global markets right now.

Jack Ma, the founder of Alibaba, has just filed paperwork to commence an IPO of Ant Financial the payments business sitting within China's answer to Amazon. It's set to be the biggest listing of the year with estimates that Ant Financial will hit the boards with a valuation between US$200 bn and US$300 bn. In a world starved of growth, Mary believes that the opportunities in Asia are too compelling to ignore.

In this extended interview, Mary shares the thinking behind her thesis, outlines how she is investing right now and shares a lesson that she has taken from each of the great investors she has worked alongside.

"Ray Dalio has said it better than I ever could; if this is a two-horse race between China and the US in terms of global economic dominance and dominance in tech, why wouldn't you bet on the second horse?"

She added, "Because the US has been running around the track for a long time now - in the lead, and China has been catching up."

About 47% of EAI is invested in Asian tech companies, and if you exclude the 18% cash in the portfolio, the invested portion (the 82% of the portfolio that is NOT cash) is heavily invested in Asian tech.

At the end of July, their top 10 holdings were:

  1. Alibaba Group Holding Ltd. 10.7%
  2. Tencent Holdings Ltd. 8.8%
  3. Samsung Electronics. 8.2%
  4. TSMC. 7.9%
  5. Ping An Insurance. 6.5%
  6. Hong Kong Exchanges & Clearing Ltd. 5.3%
  7. Hindustan Unilever Limited. 2.9%
  8. China Merchants Bank Co. Ltd. 2.7%
  9. SK Hynix. 2.6%
  10. Infosys Limited. 2.4%

--- click on the link at the top to watch the extended interview ---

Estimated NTA (before tax) as at 10-Sep-2020 for Ellerston Asian Investments (EAI) was $1.1881, and the share price was $1.025, being a 13.7% discount to NTA.  That's not unusual for a globally-focussed Australian-listed LIC - most of them are currently trading at discounts, and some of those discounts are over 20%.

I don't currently hold any EAI.  I do hold PAI (Platinum Asia Investments) however, and I'm very impressed by Mary Manning's knowledge and communication style, so I'm definitely seriously considering an EAI position.  They've just gone ex-div on 04-Sep-20 for a 2.5 cps fully franked dividend, and they've dropped 7.5c, so they're looking good here to me.

Mary Manning is very impressive.  I seriously recommend you watch this video.

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