On March 30, the four products managed by Zhang Kun, the first brother of the fund, disclosed the 2021 annual report.
According to all the position information disclosed, Zhang Kun has a large number of positions in the fund products focusing on the A-share market, and the fund with the largest number of positions covers a total of 104 shares. On the authentic QDII fund, or due to the high complexity of the overseas market, Zhang Kun has significantly reduced the coverage of stocks in the role of QDII manager, and the total number of positions is only 21.
In his annual report, Zhang Kun focused on his personal views on enterprise valuation methods. He believes that when fund managers are used to valuing enterprises with proxy variables such as income and net profit, they also need to consider the potential unsmooth possibility in the transformation of these proxy variables to the essential variable of free cash flow. He stressed that the extent to which the products produced by the enterprise are desired by its customers, whether it has an excellent business model and whether it has a moat to maintain a good competition pattern in a long period of time are important determinants for the smooth transformation of income into net profit and then into free cash flow.
high concentration positions have not changed
According to the annual report disclosed by e fund blue chip select fund, Zhang Kun held 84 stocks in the fund portfolio by the end of 2021, but only 13 stocks with a position ratio of more than 0.5%. In other words, despite the large number of stocks with positions, Zhang Kun has not changed the high concentration style he has adopted for a long time, especially 9 of the 13 stocks have a position ratio of more than 7%, The proportion of total positions of the top ten stocks is as high as 87%.
Figure source: annual report data of e fund blue chip select fund
It is worth mentioning that among the invisible heavy position stocks held by e fund blue chip select fund, only three stocks have positions accounting for more than 0.5%, including meituan, the 11th largest heavy position stock, with positions accounting for about 4.52%, and bubble mart, the 12th largest heavy position stock, with positions accounting for 0.86%, and Focus Media Information Technology Co.Ltd(002027) , the 13th largest heavy position stock, with positions accounting for about 0.60%. For example, China stock market news, the leading agent of Internet funds, and Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) , Maotai of Yaozhong, have low positions in e fund’s blue chip selection fund. The former accounts for about 0.27% of the fund’s positions, while the latter accounts for only 0.01%.
Figure source: annual report data of e fund blue chip select fund
It is noteworthy that Zhang Kun’s fund research behavior last year also made a stock be placed in the stock pool of e fund blue chip select fund, although the proportion of positions is very low.
The Chinese reporter of the securities firm found that Zhang Kun participated in the investigation of Xi’An International Medical Investment Company Limited(000516) of A-share listed companies in the form of teleconference on March 23, 2021. On March 26, shortly after the investigation, Xi’An International Medical Investment Company Limited(000516) closed strongly at the daily limit, and the Dragon Tiger list data showed that there were two institutions buying special seats. Before Zhang Kun investigated Xi’An International Medical Investment Company Limited(000516) , another fund he managed included Jinxin reproductive, a Hong Kong listed company, in the list of top ten heavy positions of the fund. Jinxin reproduction is a well-known leading company in the field of assisted reproduction in the Hong Kong stock market, and Xi’An International Medical Investment Company Limited(000516) ‘s business has a direct competitive relationship with it.
The latest annual report shows that Zhang Kun listed Xi’An International Medical Investment Company Limited(000516) as the 24th largest stock of e fund blue chip select fund and Jinxin reproductive as the 23rd largest stock. The market values of the two stocks are almost the same. At the same time, the data disclosed in the annual report also means that Xi’An International Medical Investment Company Limited(000516) the institutional seats behind the daily limit on March 26 last year came largely from the funds managed by Zhang Kun.
In addition to e-fund blue chip select fund, e-fund high-quality enterprise three-year fund also disclosed the list of all stocks held by Zhang Kun in the annual report. The annual report shows that the fund managed by Zhang Kun held about 82 stocks by the end of last year, which is equivalent to the number of shares held by e-fund blue chip select fund. In terms of invisible heavy position stocks concerned by the market, Zhang Kun mainly holds meituan, bubble mart, Focus Media Information Technology Co.Ltd(002027) , China stock market news and Mengniu Dairy in the fund, which means that the actual operation of the fund is roughly the same as that of e fund blue chip selection fund.
Zhang Kun Hong Kong stock focused on capturing characteristic model companies
in addition to managing fund products focusing on the A-share market, Zhang Kun is also a QDII fund manager. The fund annual report disclosed by e Fund Asia select fund and e fund quality select fund under his management also exposed all his positions at the end of last year
According to the data, among e fund’s high-quality selected QDII funds, Zhang Kun held a total of 104 stocks by the end of last year. However, in this QDII, which was previously a fund product focusing on the A-share market and has just completed the transformation, the proportion of positions from overseas markets in the fund accounted for only 34.97% of the total fund positions, and the proportion of positions from the A-share market was as high as 60%. However, among e Fund Asia’s selected funds, the proportion of positions in the Hong Kong stock market is very high, accounting for 92.20%, while the proportion of positions in the US stock market is also 2.36%.
In terms of e-fund high-quality selected QDII fund, although it is the same fund product managed by Zhang Kun, there are considerable differences in the positions of e-fund high-quality selected QDII, e-fund high-quality enterprise three-year fund and e-fund blue chip selected fund. Taking the invisible heavy position stocks as an example, as a QDII fund, the 11th and 12th heavy position stocks of e fund’s quality selection fund are Shanghai Bairun Investment Holding Group Co.Ltd(002568) , Sdic Power Holdings Co.Ltd(600886) , and also hold Yutong Bus Co.Ltd(600066) , Beijing Shunxin Agriculture Co.Ltd(000860) , etc.
It is worth mentioning that when Zhang Kun became a QDII fund manager in depth, his investment in the overseas market greatly reduced the coverage of stock selection and further increased the concentration of positions. Compared with e-fund’s high-quality selection QDII, which has been changed to QDII products shortly, e-fund Asia selection fund is an authentic QDII fund with a long duration, which is also reflected in that almost 100% of the current positions of the QDII fund are invested in the overseas market.
E Fund Asia select fund QDII’s stock position was basically stable in 2021, but the structure was adjusted. In terms of industry, Zhang Kun has increased the allocation of Finance and other industries and reduced the allocation of pharmaceutical and other industries in this QDII fund; In terms of individual stocks, the investment proportion of individual stocks with distinctive business model, clear long-term logic and reasonable valuation level has been increased. According to the specific disclosure of the fund’s position, Zhang Kun had only 21 stocks in total by the end of last year. In terms of hidden heavy positions, the 11th largest stock he held was Netease listed in Hong Kong, and the 15th largest stock was pinduoduo listed in us. In addition, it also includes yum China, Yonghe medical, sound international, China Shenhua Energy Company Limited(601088) , Jinxin reproductive, etc.
Insiders believe that in terms of market familiarity, the overseas market is quite complex compared with the A-share market. Therefore, when managing QDII funds, people with A-share fund manager background often also adopt a small-scale coverage and pay attention to the core stocks with high familiarity. This strategy greatly reduces the number of stocks covered by the stock pool and improves the stock concentration of fund managers.
how does Zhang Kun evaluate the enterprise
It is worth mentioning that in the latest fund annual report, Zhang Kun also analyzed his views on the current market and deeply expounded his stock selection strategy and investment logic.
“We always believe that the value of an enterprise is the discount of all free cash flows over its life cycle.” Zhang Kun said that from an annual perspective, free cash flow is often affected by factors such as the rhythm of capital expenditure and the fluctuation of working capital, and often shows large fluctuations. Therefore, investors often use net profit (and its growth rate) or income (and its growth rate), and even production capacity (and its growth rate) as approximate variables for valuation.
Zhang Kun believes that this is reasonable to a certain extent, because the transformation process of free cash flow is “income → net profit → free cash flow”. However, it cannot be ignored that since it is an approximate variable, it cannot be 100% representative. Each of the above conversion steps may not be smooth.
For example, the transformation from income to net profit may be affected by the intensification of competition, showing the situation of increasing income without increasing profit; The conversion from net profit to free cash flow may be affected by factors such as excessive capital expenditure, insufficient final utilization and increasing occupation of working capital. Therefore, Zhang Kun said frankly that when fund managers are used to valuing enterprises with proxy variables such as income and net profit, they also need to consider the potential unsmooth possibility in the transformation of these proxy variables into the essential variable of free cash flow.
“I think this may be one of the reasons why Amazon calls on its investors to pay direct attention to its free cash flow. Therefore, when we study the company, free cash flow has always been one of our most concerned financial indicators.” Zhang Kun stressed to investors that although there will be fluctuations between years, it is not difficult to distinguish whether a company can create sufficient free cash flow for shareholders in the dimension of 5-10 years. Further, from the bottom level, the extent to which the products produced by an enterprise are desired by its customers, whether it has an excellent business model and whether it has a moat to maintain a good competition pattern in a long period of time are important determinants for the smooth transformation of income into net profit and then into free cash flow.
Zhang Kun pointed out that as a fund manager, I always feel the great responsibility on my shoulders. The assets of the fund belong to each holder, who actually holds part of the equity of the listed company held by the fund. The fund manager will always stand with the holders and strive to find some high-quality listed companies, which can generate sufficient free cash flow, and the generated free cash flow can grow over time. In this way, the equity value of the company can grow over time, and then be finally reflected in the net value growth of the fund within a long enough period of time.
