ABOUT US
Merlin Fidelis Asset Management is an independent, privately owned investment management firm headquartered in Hong Kong. The firm is dedicated to Emerging Markets equities. We serve a broad range of institutional and individual investors as trusted long-term partners, with all principals maintaining significant, permanent co-investment alongside clients.
Learn moreINVESTMENT PHILOSOPHY
Public equity markets comprise of companies with vastly different prospects, priced by the fraction of shareholders buying and selling that day. Price movements can in the short term be largely random or determined by prevailing market sentiment, but the underlying values of these companies typically shift at a slower pace based upon their “fundamentals”, principally: “scarcity”, cyclicality and capital allocation.
A longer-term view, however, introduces uncertainty and a much wider range of potential prices. What could the future hold for a company’s growth, profitability and ‘quality’, its resources and their deployment by management amidst competitive, technological and regulatory forces? An investor risks a gamut of scenarios yet receives the return of the singular outcome that unfolds.
We monitor the universe of stocks and their fundamentals closely. We estimate a stock’s “payoffs” – its possible returns, including the risks and extremes – to identify the odds of mispricing. The portfolio responds to changes in payoffs through stock selection and dynamic position sizing.
Though a simple approach, a contrarian temperament and the courage to act are indispensable. It is challenging in practice given the many years to build a deep familiarity with the myriad investable stocks and their managers. Even more critically, enormous effort and experience is required to develop the organisational culture that, by necessity, must withstand short term setbacks and yet be decisive in exploiting opportunities. As with investment returns, decision quality compounds fine advantages over time.
Investment outcomes are highly accountable through a structured, systematic process of decision making and co-investment by all principals.