Qu Yanli |Wen.
Liu Lili, a wealthy country, is classified by the market as a value-oriented manager.
There are two core reasons: a higher valuation position, and a left-leaning and contrarian investment style.
Lili Liu took over Wells Fargo Research Select A on February 1, 2019, and the product has a return of 108 over the past 5 years92%, and the benchmark rate of return for the same period was 1545%。Among them, the yield in 2019 was 3354%, and the benchmark rate of return for the same period was 2465%, compared to 60 in 202048%, and the benchmark rate of return for the same period was 1886%, recorded -0 in 202178%, and the benchmark rate of return for the same period was -134%, recorded -10 in 202205%, and the benchmark rate of return for the same period was -1327%, compared to 17 in the first half of 202307%, and the benchmark rate of return for the same period was 052%。(Note: Wells Fargo Research selects the performance of the past 5 years and its benchmark return data from the regular report as of 2023-06-30).
Comparing the evolution of A-shares in the above years, the derived conclusions are consistent with Liu Lili's self-evaluation
Try not to fall or fall less in a bear market, and keep up with the market in a bull market. 」
Liu Lili once made an industry statistics, and after performance attribution and retrospection, it was found that after a complete bull and bear, products with less bear market drawdown and more stable bull market have better compound returns in the long run.
For the classification of value schools, Liu Lili does not write and ink. She believes that it is not deliberate, but a matter of character.
Others' impression of her is: often looking for opportunities in unpopular sectors. 」
In high school, Liu Lili was an active member of the basketball team cheerleading team.
Everyone likes to shout in a line, but she is not. She ran to the other side, where there was often no one.
A good friend says you seem to be out of place. She said, "I'm just on the opposite side."
Stay in a quiet place and see a lot of things more clearly. I don't go to crowded places. Liu Lili said that she wants to know the objective world by herself, rather than following the crowd. She is willing to express her true thoughts and does not care about right or wrong. The truth is more important to her, and it's okay to be wrong.
Searching for the truth, always like to ask why, this is a kind of truth.
This feeling carries over to investment.
She might be looking for some consensus bugs.
For example, everyone thinks the company is bad, but it's not as bad as it seems.
Real estate is a typical example. Liu Lili's optimistic logic is clear: After the supply side of the real estate sector is cleared, the industry competition pattern has been greatly improved, and the ROE of leading companies has improved. Valuations are at an extremely low level, and there is a good chance of a cycle reversal. 」
Not everyone thinks so, and the stock price is also struggling between long and short.
In other words, the market consensus on the bottom of the pivot has not yet been discovered.
Liu Lili has a very typical idea of stock selection, buy ** first do pricing, calculate the position of the bottom and the margin of safety, that is, the downside space is relatively limited, and the upside space meets the requirements, that is, when the expected rate of return is calculated, start from this position**.
Liu Lili chose to hold and wait.
As long as it is significantly undervalued, it is value. She concluded.
Her contrarian style is often reflected in her positions.
For example, a black electric faucet, Liu Lili has been tracking it for many years. It has always been in her research horizon.
Objectively speaking, the capital market did not like it, and since 2015, its profits have fallen off a cliff.
At present, Liu Lili is optimistic about an important logic, that is, the globalization process of Chinese enterprises, so she is optimistic about the logic of going overseas and the logic of increasing global share.
And the company is a typical target for going to sea.
Liu Lili digs at the bottom position.
At the same time, Liu Lili has seen changes and improved corporate governance. The constraints of the past have been resolved.
Even, the company also has a miniLED industry trend to pull the logic of the new black electricity cycle.
A combination of factors makes her optimistic about the company.
Tracking a company for a long time can be sensitive to the point where the fundamentals have changed greatly. If you don't keep tracking, you won't feel much even when you see the announcement. She said.
There are not a few companies of this type. Liu Lili excavated a manufacturing category from the bottom up, and after its products go overseas, all the costs are added up, and there is still a 30% price difference with overseas. That's competitive advantage.
The same is true for another retail faucet configured by Liu Lili.
In 2004, Liu Lili entered the industry to cover the retail sector, which was a star sector at that time, and the research report often took **Ten Years as the title. After that, the relationship between supply and demand in the industry changed, and since 2010, the substitution of online to offline has begun vigorously, and the top of the cycle has appeared.
However, Liu Lili believes that in the past two years, online and offline have reached a balance point, and the retail sector has bottomed out. It's a cyclical reincarnation.
Therefore, although everyone regards it as an unpopular plate, Liu Lili still took it for a long time. She looks at the reversal logic: the offline share will no longer shrink, and the remaining companies can deduce the logic of optimizing the competitive pattern, increasing the share, and the winner is king. 」
Liu Lili said that she is the kind of person who does not give up easily and is very persistent. Even if there is no opportunity at the moment, it will not be allowed to fade out of the research field, but will always follow.
Liu Lili mentioned in the 2022 annual report that she pays special attention to the impact of the evolution of the industry competition pattern on related companies in the medium and long term, and makes corresponding adjustments according to the position of the business cycle, product cycle and inventory cycle.
Cycle is one of the core words of her way of thinking.
Liu Lili repeatedly stated that in any industry, find the corresponding point of the bottom resonance of different cycles, at this point**, and then wait for Davis to double-click.
She describes this ideal point as a very comfortable position.
The same goes for the selling point. The main reason for Liu Lili's reduction of liquor positions at the high point of 2022 is that the liquor sector is at the end and inflection point of the inventory cycle since 2015, and destocking may be based on the annual dimension. At that time, the valuation was very high, and it was a time to retreat.
One of Lili's favorite investment-related books is Howard Marks' "Cycles".
The book reads: The market cycle fluctuates up and down around the basic trend line or flat**, and after the market goes to an extreme, it will always revert to the center point or mean reversion. But after the market returns to the center point, it does not stop, but continues to rush to the opposite extreme. So the market is either going to the extreme or going to the extreme. 」
Cycle theory works particularly well at both ends. Liu Lili believes that with common sense, the tops and bottoms of the cycle can actually be perceived, but people have emotions, and most people are used to linear extrapolation.
With the exception of the top and bottom of the cycle, it is mostly in the middle of the cycle. At this stage, Liu Lili's stock selection adopts the GARP strategy, which is still based on the matching degree of valuation and performance growth.
On January 2, Liu Lili's new ** Fuguo Value Discovery (Class A: 019342 Class C: 019343) was officially released.
As a value manager of contrarian investment, does the issuance of a new ** at this point in time express your attitude?」
Liu Lili replied: Yes, I think the market has bottomed out. 」
The basis for Liu Lili's judgment is the position of the inventory cycle of many sub-sectors.
In this position, many ** look at the expected yield space in the next three to five years is considerable.
The inventory cycle is at a very low position, only waiting for the marginal improvement of the demand side, once the relevant company enters a new inventory cycle, the fundamental improvement will pull the valuation from the extremely bottom to the top, which is an obvious double rise process. She said.
As mentioned earlier, Liu Lili attaches the most importance to valuation and puts it in the first place.
This is because the bottom of her thinking framework is the idea of absolute returns.
Her perception of the objective world is uncertain, the only certainty. Under such a worldview, valuation is a form of protection.
She is the typical type of manager who believes in mean reversion.
Many people have studied listed companies in depth and say that they have a high degree of confidence. However, Liu Lili believes that the so-called confidence is only the confidence in the heart, not the objective. Humans think it's 95 percent, but it's only 60 percent. Even if you try your best, there are still blind spots and invisible places in heavy positions.
Therefore, the valuation must have a sufficient discount.
Moreover, any of her ** must make all kinds of assumptions in her heart.
At the same time, Liu Lili does not value absolute valuation. She believes that valuation is just a façade.
Valuations are correspondingly to fundamentals.
You need to find the point where the inventory cycle bottoms out, and that position corresponds to the valuation of the margin of safety, not a fixed number measured by an absolute ruler. She gave examples.
Judging whether it is on the left side, the indicator that Liu Lili often refers to is the position of ROE.
When a sector is about to clear, ROE may not be at a high level, and may even be in a continuous downward channel. When ROE bottoms, the plate bottoms. When the industry is bad, you can see what is really alpha. Her way is to forsake me.
Her portfolio approach is to choose industries where the competitive landscape is relatively stable or that will improve in the future.
Compared with high growth, Liu Lili pays more attention to the competitive landscape, because the improvement of market share brings growth.
Most of the industries that are selected in this way are more traditional.
Liu Lili does not allocate sectors with high prosperity, market attention and high expectations, and when the popular sectors are abandoned by everyone, she looks for opportunities in them.
From last year to the first half of this year, Liu Lili allocated more technology-related consumer electronics and dividend operators. The reason is also clear: consumer electronics is a value stock, which fell to a margin of safety in the second quarter, and the performance was good. And the growth players abandoned it because of the prosperity.
Liu Lili often said that the same ** is different targets at different stages of development, some stages are value stocks, some stages are growth stocks, and some stages become value stocks, fluctuating with the cycle. 」
She is also studying semiconductors, artificial intelligence, robotics.
However, according to her standards, the valuation cost performance is highly matched, and at present, there are relatively few targets that can be selected. 」
Lili Liu took over the leadership of Wells Fargo Research Selection in February 2019.
I have to say that the bear market in the past three years has caused great challenges to many ** managers. Liu Lili's record is relatively good, which is closely related to her value-oriented style and pursuit of stability. Let's go back:
She experienced a lot in 2021, self-denial, breaking the original cognition, and starting her own iteration.
At that time, she judged that the macro environment or inflation was allocating, so she allocated many consumption segments. She is a consumer researcher by training, so she stays in her comfort zone.
Unexpectedly, in the end, inflation occurred upstream.
Many of her reflections, ultimately attributed to the lack of linkage between the various sectors.
That year, Liu Lili spent a lot of time and energy researching the upstream and midstream investment frameworks.
She also set a principle for herself: Even if you are optimistic about the subdivision, the allocation ratio cannot exceed 20 points, and it must be moderately balanced and not too deviant. Liu Lili realized that even if the consumption performance was good back then, as a broad base, this choice was not correct. Behind the sharp deviation is the risk.
This also laid the foundation for her portfolio management method: balanced and decentralized industry allocation.
Since then, portfolio management has become important to her, and it is becoming more and more important. 」
In 2022, Wells Fargo Research Select has a smaller drawdown compared to the performance benchmark and the CSI 300. This is in line with her style, with fewer bear market retracements.
Liu Lili said that she worked very hard, very hard, and wanted to catch it back in the fourth quarter. The process was difficult, and it came close to correcting several times, and then fell back again.
As of September 30, 2023, Wells Fargo Research Select has a yield of 18 over the past 1 year11%, and the benchmark yield for the same period was -058%。(Data**: Periodic report, as of 2023-09-30).
According to Morningstar** data, Wells Fargo Research Select A ranks 3,255 in its category this year (top 1%). Data**: Morningstar**, as of 2023-11-17, the same kind refers to China's open**-active allocation-**balance).
This year, Liu Lili thought more about how to make money on **, rather than based on configuration. The expected rate of return space has become an important consideration.
That is, the absolute return thinking is strengthened, while the allocation thinking is diluted.
She once again established the direction: to make money as much as possible in areas that she can understand and be good at, and not to lose money in areas that she is not good at and cannot understand. 」
In her spare time, Liu Lili's hobbies are reading, reading non-stop, and reading all kinds of books.
This is also a means of relieving her work when she encounters pressure.
Mr. Yang Jiang wrote in his essay "Walking to the Edge of Life" written at the age of 96: Your problem is that you don't read much. 」
Liu Lili's feelings are the same. Many of the confusions in reality, the incomprehensions faced in the career, and the points that cannot be figured out have actually been encountered by the previous masters. She often finds the answer in books: he also encounters such things and can't agree to more. 」
The first investing-related book she read was Seth Karaman's The Margin of Safety.
Seth Karaman is always in the market for cheap investments. In every transaction, he wants the gap between what he pays ** and what he agrees to be worth is large enough, and the reason for this is that the investor has enough room to deal with unexpected events or mistakes.
Liu Lili has watched it many times and often revisited it, and there are different harvests in different periods.
Her investment philosophy is deeply influenced by it.
Reading helps me to avoid detours. Liu Lili thinks.
Risk Warning: This information is only promotional material, if there is any change, please refer to the latest announcement of the company. **There are risks and caution should be exercised. Please read the "Contract", "Prospectus" and "Product Key Facts Statement" and other legal documents and risk disclosures in detail. This product is issued and managed by Wells Fargo **Management***, and the agency does not bear the investment, redemption and risk management fees of the product. Wells Fargo Research Select A was established on December 12, 2014, and from 2018 to 2022 and the first half of 2023, the performance and comparison benchmark (CSI 300 Index yield * 65% + China Bond Composite Index yield * 35%) return rate are: 2018 year year 1707%（0.52%）；Changes in the manager in the past 5 years: Li Xiaoming served as the manager from February 2015 to April 2019, Wang Menghai served as the manager from December 2017 to January 2021, and Liu Lili served as the manager from February 2019 to the present. The above data descriptions of the Selected Research of Wells Fargo Research are all Selected of the Research of Wells Fargo. **Past performance is not indicative of the future. The market is risky, and investors need to be cautious.