I wrote earlier in the week that I had made a personal investment in Fosun, and that I’d follow up with you to update my thoughts on the company… so that’s what we’re going to do today. It’s been a busy week in the markets, as you probably noticed, and I also had some quick personal updates to my portfolio this week for folks who are interested in that — stop losses triggered for several of my personal holdings, as I wrote about last Friday and Monday while markets were moving wildly, and I also just yesterday added to my Grenville Strategic Royalties position after they issued a reassuring portfolio update.
I’m releasing this latest article early Friday morning, instead of the usually after-the-close publication, because I’ll be on the road and I’m not sure whether the company might report results before I share my thoughts. Hopefully this will give you a moment to think about the company, if you’re interested, before their interim results come out… and hopefully they won’t report shockingly bad news and make me look silly (they shouldn’t, they’ve already pre-announced a blowout first half of earnings and revenue growth, but the market didn’t care about that announcement and there can always be other bad news).
Fosun International (656.HK FOSUY FOSUF) is many things — it’s a conglomerate built partially on top of insurance operations and an investment vehicle for a value-focused investor, and in both ways it is clearly (and avowedly) inspired by Warren Buffett’s Berkshire Hathaway… but it’s also a play on the rise of China’s middle class, an asset manager, and a fairly aggressive investor.
The rise in China’s middle class is not necessarily written in the stars and it could always retrace, particularly with economic catastrophe, but it is underway now as China’s leaders try (desperately, you might say) to engineer the transition from an infrastructure-stimulated and export-driven economy to one driven at least partially by internal consumption. That, above all else, will be what drives outsize success for Fosun (if such success is to come) — they invest around the world, and they say they use a “value investing” strategy, but their investment portfolio is very much lined up to profit from continued Chinese growth… and particularly, since their largest segments are tourism, retail, healthcare and entertainment, from growth in disposable income and what we would think of as ...