Serjio74
As a value investor, I'm always searching for attractively priced stocks well off the beaten path. It led me to invest in H-shares a couple of years ago, when the financial media was screaming "China is uninvestable".
I
EWH: Highly Concentrated In Below-Average Businesses At Above-Average Valuations
Summary
- The iShares MSCI Hong Kong ETF focuses on Hong Kong-listed stocks, avoiding many of the typical risks tied to ADRs and VIEs, which I view as a positive.
- The ETF is highly concentrated, with only 28 holdings and nearly 70% of total assets in the top-ten holdings. Not ideal for an ETF.
- EWH's holdings trade at above-average valuations, but the underlying business quality doesn't justify those premiums. Many holdings show inconsistent earnings growth over the past 5 years.
- EWH doesn't offer a good risk-reward profile for long-term investors. Better opportunities may lie in active and selective stock picking.
Philipp is a seasoned value investor with nearly 20 years of experience in the field. He takes a global approach to investment opportunities, seeking out undervalued companies that offer a significant margin of safety, leading to attractive dividend yields and returns. While he does not limit his investments to specific sectors or countries, he focuses only on companies he thoroughly understands and can reasonably assess for future growth potential. Philipp is particularly enthusiastic when he identifies a company with a solid earnings track record trading at less than 8x free cash flow, which inspired his username: 8xfreecash.
Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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