William O'Neill left several important investment rules that he thought should be kept in mind in his book "Laughing and Proud the Stock Market":
"Forget your pride and egoism, the market will not care about what you think or what you want. Don't oppose the market, and don't try to prove that you are right, but the market is wrong."
"If you want to achieve great success in the stock market, the secret is not to make the right decision at all times, but to minimize the loss when you make mistakes. Once you make mistakes, you must know your mistakes and correct them before they happen."
This is a high fault tolerance system. Weak thinking means that the responsibility of investors is to keep pace with the market, rather than go their own way.
The market recovering after the epidemic in 2023 shows an intuition of "living in the present". On the one hand, the coordinate axis of the era finally came to the time point of "a hundred pieces of waste waiting to be developed", and on the other hand, the hot spots in the first half of the year were scattered and concentrated, focusing on a few plates with stories to tell.
On the contrary, whether it is the general market index representing the overall trend of the market or the large capital institutions investing in the traditional long-term good performance sector, many of the performance in the first half of the year has remained in a state of excitement.
The weak thinking and following the trend in the CANSLIM rule of O'Neill are valuable in such a market environment.
At the end of the first half of 2023, Lin Xiaocong followed the Cathay Pacific event driven strategy managed by CANSLIM to mix (Class A: 020023). Compared with the partial equity hybrid fund index, his performance has a very significant advantage.
Cathay Pacific events have driven Cathay Pacific to rank among the top 1/20 of its peers in the last 1 and 4 years, the top 5 in the last 7 years, and the top 1/10 of its peers in all cases over 6 years (Lin Xiaocong started working in June 2017).
Data source: Wind. The above ranking data refer to Galaxy Securities partial funds (upper and lower limits of stocks 60% - 95%) (Class A). The specific rankings in the past 1, 4, 6, 7, 8, 9, 10, and 11 years are 34/1403, 16/446, 19/348, 5/338, 14/326, 19/312, 22/295, and 6/261.
"O'Neill CANSLIM system" strictly selects growth stocks
"O'Neill CANSLIM System" is a growth stock selection system that combines fundamentals and market aspects.
Each letter of CANSLIM represents one meaning: C=current, the income of the current quarter increases significantly or accelerates; A=annual， Annual revenue growth rate; N=new， New product and new management; S=supply， Supply of capital stock; L=leader， Industry leader; I=institution， Institutional identity; M=market， Market environment.
Lin Xiaocong is a self consistent fund manager. For example, in line with the balanced allocation, she chose "bottom-up" in the investment framework to select growth stocks and look for excellent companies in a wider range.
For another example, in line with the weak thinking system, Lin Xiaocong chose the more suitable Ouneier CANSLIM rule in stock selection strategy, because this system has a higher fault tolerance rate.
The O'Neill system is a very mature and effective stock selection system for growth stocks, which has been verified in overseas mature markets for decades. There are three assessment criteria when building a portfolio: first, the current performance of most stocks in the portfolio is very good; Secondly, the selected companies will have a good industrial trend in the next few years; Third, the quality of the company itself is also relatively good.
This set of "trend surface" stock selection logic enables the fund portfolio to have better adaptability in various market environments.
According to his own practical experience, Lin Xiaocong has also made optimization on two paths based on the O'Neill system, and built the portfolio and stock pool through the dual paths of fundamentals and markets and cross validation. The purpose of this is to find out those companies with high growth performance and performance exceeding expectations. Such portfolios are also highly likely to yield "Davis Double Click" returns.
Balanced, Decentralized, Respecting the Market
In the first half of the year, the secondary market was sparsely hot, but the firepower was concentrated. If the focus was placed on AI, China Special Valuation and other sectors, the net value of the fund might also rise with the wind, but correspondingly, the risk exposure would start to concentrate.
Lin Xiaocong's position is more balanced. If we analyze Lin Xiaocong's position in the public report, since the independent management of Cathay Pacific event in 2017, the shareholding concentration of Lin Xiaocong has generally shown a trend of gradual decline.
By the end of 2022, Cathay Pacific event driven disclosure of the number of stock positions was 215, and the proportion of the top ten heavy positions in the portfolio has dropped to 33.18%. The first quarter report of 2023 disclosed that the top ten heavy positions accounted for less than 30% of the fund's net asset value.
Since Lin Xiaocong's management in June 2017, Cathay Pacific's event driven concentration has continued to decline, which has been lower than the average of the same category in the past three years.
Data source: Wind, fund periodic report
"Decentralization is not an end, but a result". In Lin Xiaocong's opinion, neither centralization nor decentralization is better. The most important thing is to match their own investment methods.
Equilibrium means reverence for the market. "The past investment research experience makes me feel that even if you think the investment logic of this industry is perfect in all aspects, many times we will encounter some black swan events, and I do not hope that the net value of this portfolio will suffer irreparable losses."
Even if Lin Xiaocong is very optimistic about one or two industries, he will not "all in" in this industry.
From the perspective of industry distribution, Cathay Pacific event drivers are involved in the fields of consumption, medicine, digital economy and security. This is also a combination of knowledge and practice in several industries that she is optimistic about in the first quarter report.
Source: Cathay Pacific Event Driven First Quarterly Report
Every quarter, Lin Xiaocong writes in the Fund's regular report as always, "Our investment framework is to consistently seek high growth and exceed expectations. On the basis of this underlying logic, we always have a reverence for the market, hoping to both adhere to ourselves and continue to evolve. I hope investors can be more patient. As a portfolio manager, I will try my best to give investors a satisfactory answer. "
Cathay Pacific event driven hybrid
A：020023，C：015592
Note: By the end of 2022, the performance of the public offering products managed by Lin Xiaocong at each stage is as follows: Cathay Pacific Rongan Multi strategy Flexible Allocation Hybrid A (establishment date: 2017/07/03, performance benchmark: 50% × Shanghai Shenzhen 300 Index+50% × China Securities Composite Bond Index, Lin Xiaocong has managed since 2020/03/25), the performance growth rate/performance benchmark of the product A share fund from 2018 to 2022 is: -8.32%/-9.62%, 89.22%/19.92%，85.82%/15.20%，12.24%/0.30%，-28.78%/-9.56%; Cathay Pacific event driven hybrid A (establishment date: August 17, 2011, performance benchmark: 80% × Shanghai Shenzhen 300 Index+20% × China Securities Composite Bond Index, Lin Xiaocong has been managing since June 19, 2017), the performance growth rate/performance benchmark of share fund A of this product from 2018 to 2022 is: -34.13%/-19.28%, 65.98%/29.52%, 97.83%/22.46%, 17.92%/-2.94%, -25.36%/-16.91%; Cathay Pacific Prosperity Preferred Hybrid A (establishment date: 2021/11/09, performance benchmark:. Data source product: regular report. In China, the fund has been operated for a short time, and the past performance does not represent the future. The performance of other funds does not constitute a guarantee for the performance of this fund. Cathay Pacific event is driven by a hybrid fund. The expected return and expected risk of the overall fund assets are higher than those of money market funds and bond funds, and lower than those of equity funds. The investment is risky. When subscribing (subscribing) the Fund, investors should carefully read the Prospectus of the Fund, the summary of fund product information and the Fund Contract.
