Published by Fund Selector Asia – 6th Mar 2019
Macquarie alumni are behind Hong Kong-based Stonehorn Global Partners, which plans its first mutual fund this year.
Stonehorn’s first fund, expected in the first half of the year, will try to identify listed “new economy” companies that the investment team believes are on a sustainable growth trajectory, according to the firm.
“The fund will adopt a buy-and-hold strategy with a high conviction portfolio of around 30 stocks. The objective is to achieve 11%-to-13% annual compounded growth over five-to-10 years,” Sam Lecornu, co-founder and CIO, told FSA.
Stonehorn was set up in December 2018 by Lecornu and two former Macquarie colleagues, Duke Lo and John Lam. It has a Type 9 asset management license from Hong Kong’s Securities and Futures Commission. Lecornu expects its first fund to gain Dublin authorisation in April or May.
Stonehorn has been seeded by Alan and Carol Schwartz’s Trawalla Group, which will also be a large investor in the fund. Other initial investors are likely to include sovereign wealth funds, endowments, pension funds and family offices who, Lecornu hopes, “will share in a long-term partnership”.
He aims for $1bn in AUM for the fund, which will concentrate on Hong Kong, China and Asean countries, and have a bias towards so-called new economy sectors that are servicing a growing regional middle class as well as penetrating global export markets.
These are basically “capital light industries” and include consumer discretionary businesses, tourism, new technologies such as internet services and fintech, artificial intelligence and battery manufacturers.
“There will be a growth tilt to our investment style,” said Lecornu.
Lecornu was co-head of Macquarie’s Asia listed equities business until mid-2018 where he managed the firm’s flagship Asia New Stars strategy, as well as its Asian All Stars and China New Stars funds.
His two partners at Stonehorn are also from Macquarie, where they worked together for a decade. Lo was co-head of China research in the same team and Lam was a senior analyst.
Lecornu said he has a bottom-up stock picking approach and is flexible about market cap, although the Stonehorn fund’s benchmark will be the large-cap MSCI Asia ex-Japan index.
“In practice we will be benchmark agnostic.
“The potential investible universe is vast, amounting to approximately 3,000 stocks across 10 Asian countries. But we cannot cover everything, so we intend to play to our strengths.
“Corporate governance is an issue, especially in China, and that is why Asian stocks tend to trade at a discount to their North American and European equivalents,” he added.
In his previous role at Macquarie, Lecornu said he accumulated a decade of experience visiting management at Asia-based companies. “Unfortunately too many are insensitive to the minority shareholders’ rights,” he added.
In fact, ESG principles will be a major determinant or restraint for stock selection, not least because many of the fund’s targeted investors, such as Scandinavian pension funds, insist on their application.
“We’re looking for the highest-quality companies with growth potential, but dig deep to ensure we understand any corporate governance risks,” said Lecornu.
