Lumiere Capital Letter To Investors 2017 Full Year Review

Summary

• Includes detailed analysis of Lumiere Capital's positions in FANH, CINSF, SFUN, CAOYF, HOPE-OLD, GLBRF, TPVTF, TPVTY, TAOHY, DWNYF, TVZIF.
• The last year has been very conducive for big cap consensus views which has seen indices globally rise considerably, while the contrarian, deep value philosophy which we embrace has not worked out as well.
• However with valuations of big cap growth stocks no longer cheap, market focus could shift to under-researched and undiscovered small/mid cap stocks which are still trading at low valuations.

Comments

[Michael Han]

Despite the big run-up, FANH is still trading 2.5x revenue, 3.2x book, vs. ZhongAn, the closest comp that's trading 20x revenue, 10x book.

If they get close to 1 million agents by 2019 and gain zero efficiencies, the company will double all the matrics cutting today's valuation by half. Admittedly a simple math but the growth trajectory FANH and the industry is still straight up.