But everyone knows that, and we are all looking at the same financial data. In order to outperform the market, you have to do something differently. You have to identify something about a company that you believe others have missed—and you have to be right. This is what we refer to as taking a contrarian stance; for example, a belief that the market is under-estimating the company’s future potential or that the market is being overly pessimistic.
Finding contrarian ideas as a long-only manager isn’t easy at a time when many equity markets in the US and Europe appear fully valued. But for those who are willing to look further afield, there are still above-average opportunities to be found in Asia. That is not to say that we find all Asian markets or stocks attractively priced. Far from it. Instead, a general sense of pessimism appears to have led to the market offering up decent quality companies at attractive prices – the proverbial “babies thrown out with the bathwater”.
Occasionally, however, bottom-up investing collides with geopolitical developments that cast a shadow over a region, country or industry. That has certainly been the case recently for many South Korean companies as North Korea has returned to the news headlines.
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