My Yahoo!Scobie Ward is one of Asia's best investors. Like many stars of the fund world, he's now running his own show.
We don't normally get excited about newly launched funds that don't have much of a record, but in the case of the WF Asia Fund, we'll make an exception. Why? That's because the "W" of WF is Scobie Ward. Until November last year he was the chief investment officer of the respected Lloyd George Management fund house in Hong Kong (FORBES GLOBAL, Dec. 13, 1999).In a tricky investment landscape, the 35-year-old Ward stands out as one of Asia's savviest investors. Between June 1992 and June 2000, Ward managed Lloyd George's Smaller Companies Fund, which compounded at the rate of 21% a year, the best performance of any Asia ex-Japan equity fund over five years, according to Standard & Poor's Fund Services. (Over the same period, MSCI's ac Far East ex-Japan index compounded at 3%.)
In November 2000, Ward decided to become his own boss, so he cofounded Ward Ferry Management with Peter Ferry, the former chief marketing officer of Lloyd George. Based in Hong Kong, the company is owned 50-50 by Ward and Ferry.
Several others from their old company joined them: Lloyd George's chief representative in India, B.N. Manjunath, who has 15 years of portfolio management experience in India, and William Kerr, its former finance director. The stock-picking team includes Ward; Ferry; Manjunath; and Edgar Fok, a newly minted M.B.A. formerly at Chase.
Unlike most funds offered by Lloyd George, the WF Asia Fund--so far its only fund--is a hedge fund, registered in the Cayman Islands. Ward Ferry's fund charges a management fee of 1.5% and takes 15% of profits as a performance fee-a typical fee structure for a hedge-fund. WF Asia is a long/short hedge fund in the original sense of the term, as developed by Alfred W. Jones in the 1950s.
Currently the WF Asian fund is 43% net long, and although it hasn't been around for long, the hedge seems to be working. Ward's portfolio has risen 1.7% against the benchmark MSCI Asia Pacific Free ex-Japan index, which has fallen 13.3% since February. "This is a conservative fund that should outperform in both bull and bear markets," says Ward.
But, wait: Doesn't Ward specialize in small companies? What does he know about running a long/short hedge fund? Plenty, it turns out. While running Lloyd George's small-companies fund, Ward also managed its Asian Plus Fund, a long/short Asian equity fund, from July 1998 to June 2000. Over that period the fund returned a cumulative 135%; the benchmark MSCI Asia Pacific Free ex-Japan index gained only 73%.
Ward and Ferry have no lack of long picks in today's bombed-out markets; they even have a few shorts, now that many Asian markets allow short selling.
For long picks, the Ward Ferry team puts a lot of emphasis on such classic numbers as return on equity, free cash flow, dividend yields and price-to-book ratios. Take PetroChina, one of China's leading oil companies.
"PetroChina has three times the earnings of China Mobile, yet sells at a third the market capitalization," Ward says. But aren't growth prospects better for China Mobile? Ward argues that PetroChina will have plenty of growth as a result of China's booming economy, and with its plan to cut 50,000 of its work force of 440,000 in the next two years, it has room to boost margins.
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