The Hedgeweek Interview: Andy Mantel, fund manager, the China Mantou Fund
Fund manager Andy Mantel of Pacific Sun Investment Management in Hong Kong outlines his approach to running the USD50m China Mantou Fund.
HW: What is the background to Pacific Sun Investment Management?
AM: The China Mantou Fund was launched in July 2003 by Pacific Sun Investment Management (HK) as investment manager. The fund, which is run by myself and assistant fund manager Adam Tam, is listed on the Irish Stock Exchange and currently has assets of around USD50m. The fund has follows a long/short strategy, with a specific concentration in the greater China region of China, Hong Kong, and Taiwan.
HW: Who are your service providers?
AM: Our accountants and auditors are Deloitte & Touche, our legal advisor is Maples & Calder, and the fund administrator and prime broker is UBS
HW: How and where do you distribute the fund?
AM: Our client base consists of global institutional investors and high net worth individuals. We currently have investors from North America, Europe and the Asia-Pacific region.
HW: What is the investment process of your fund? How do you generate ideas?
AM: Investment decisions are made by the investment management team subject to periodic review by the board of directors. Ongoing visits are made to portfolio companies and management on a weekly basis, and corporate information supplied pursuant to listing rules and/or regulatory requirements is reviewed on a continuous basis. We conduct a daily review of Chinese-language and English news in China, Hong Kong, and Taiwan, and there is regular interfacing with directors and advisors.
Our sell discipline triggers are the availability of more attractive investment opportunities, significant downward revisions in earnings expectations, high stock valuations relative to future growth expectations, a negative regulatory environment affecting the industry or stock, a negative changes in industry outlook, and negative changes in management
HW: What is your approach to managing risk?
AM: Market risk is addressed through diversification in all greater China-related stocks, which greatly reduces volatility. Liquidity risk is dealt with through our proprietary stock-screening model, which eliminates non-liquid stocks.
Operations risks are addressed through a solid operating infrastructure that frees up fund managers to focus on investment, with Deloitte as fund auditor and UBS as custodian, administrator and prime broker. Pacific Sun has strong trade execution and financial systems, while the IT, accounting and marketing functions are outsourced.
A seasoned and diverse investment team provides optimal experience and attractive incentive schemes are designed to maximise performance objectives. The fund structure provides investors with an ideal investment vehicle, while our preference for professional investors reduces trading volatility. Our high reliance on investor relations enhances information flow.
HW: What differentiates you from other managers in your sector?
AM: We screen the global universe of greater China stocks - we are looking into more than 3,000 companies - so compared with other China funds, our mandate is much more open.
HW: Do you have any plans for other product launches in the near future?
AM: Maybe a private equity fund.
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