A sizzling start: How Qiao Ma delivered 62.2% returns in the first year of Munro's new strategy

LiveWire12-20

The Munro Global Growth Small & Mid Cap Fund clocked its one-year anniversary back in October, and whilst Livewire is reluctant to focus on any fund’s one-year performance, in this case, we’re making ...

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Views From the Top: \"There is just a tonne of companies in the mid and small-cap space, but sometimes even large caps are trading quite a bit below their historical averages while the earnings growth is accelerating\", said Qiao at the time.","collect":0,"end_time":0,"defaultTopTitle":"livewiremarkets.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"HUT":"Hut 8 Mining Corp","WRD":"文远知行","NVIW.SI":"NVDA 3xLongSG261006","LU1303367103.USD":"摩根大通多经理另类基金 A (acc)","QID":"纳指两倍做空ETF","BK4534":"瑞士信贷持仓","BK4585":"ETF&股票定投概念","TSYW.SI":"TESLA 3xLongSG261006","LU2098885051.SGD":"JPMorgan Funds - Multi-Manager Alternatives A (acc) SGD","BK4594":"比特币ETF概念","BK4533":"AQR资本管理(全球第二大对冲基金)","USAW.SI":"AMZN 3xLongSG261006","BK4595":"比特币概念","BK4146":"鞋类","BK4558":"双十一","BK4566":"资本集团","NKE":"耐克",".IXIC":"NASDAQ Composite","ONON":"On Holding AG","BK4588":"碎股","PSQ":"纳指反向ETF","BK4141":"半导体产品","LU2265009873.SGD":"Eastspring Investments - Global Growth Equity AS SGD-H","ALAB":"Astera Labs, Inc.","QLD":"纳指两倍做多ETF","TQQQ":"纳指三倍做多ETF","PHH":"Park Ha Biological Technology Co. 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No 'ifs'. No 'buts'. She's not investing in that company. \nRapid Fire: When asked what gives her more joy as a stockpicker, the hunt or the reward, Qiao said, “It's really a trick question because clearly, my job is to deliver the reward to the investors, but I live for the hunt”.\nViews From the Top: \"There is just a tonne of companies in the mid and small-cap space, but sometimes even large caps are trading quite a bit below their historical averages while the earnings growth is accelerating\", said Qiao at the time.\n\"We are in this really great period, as growth investors, that everywhere we go, we see lots of opportunities.\" \nWith everyone caught up, here are the highlights from our most recent conversation. \n\n\n\n\n\n\n\n\n\nMunro Partners' Qiao Ma\nLearning from successes and missteps\nWhile the Fund’s performance over the past year has been exceptional, Qiao highlighted a couple of key lessons. \nShe emphasised the importance of leaning into areas of expertise, as the Fund’s most successful investments were in sectors the team already knew well. \n“It turns out the stocks we make the most money in are squarely in the centre of our wheelhouse,” she said, reinforcing the importance of deep industry knowledge and sticking to core areas of focus. \nConversely, some of the fund’s losses came from venturing into adjacent but less familiar industries. \nQiao plans to avoid repeating this misstep, focusing instead on what she calls “small boats with big sails.” \nThese are companies that may be small now but operate in massive, high-growth markets where Munro has a deep understanding. \n“The ceiling is just sky-high for these little boats,” she noted, adding that their potential to grow quickly with strong tailwinds makes them ideal candidates for investment.\nOutlook for 2024 and beyond\nQiao is cautious yet optimistic about the Fund’s potential in the coming year. While she dismissed the idea of replicating returns of the past year, she remains confident in the Fund’s structural approach. \n“We aim to deliver a portfolio of stocks with earnings growing at 15% per year,” she explained, noting that this consistent growth is the foundation of long-term value creation.\nThe core investment thesis remains unchanged: the Fund focuses on profitable, high-growth companies in large, underappreciated markets.\n “Our portfolio companies are still cheap and lesser-known,” she said, highlighting the rich pipeline of opportunities Munro continues to explore. \nThis pipeline reflects her team’s relentless pursuit of hidden gems in areas with strong growth dynamics and limited coverage.\nDespite the process-driven approach, Qiao acknowledged that macroeconomic conditions could influence market outcomes, particularly valuations. \nShe identified interest rates as the single most important factor to watch. \n“As long as interest rates don’t go back up, we don’t really care. But if they do rise, market multiples could come under pressure,” she warned. \nHowever, the Fund’s focus on companies with strong cash flows and no leverage provides some insulation from broader economic swings.\nUnearthing hidden opportunities\nQiao pointed to several areas where she believes the market is undervaluing potential. Semiconductors, for instance, have suffered due to geopolitical concerns, particularly around Taiwan and China. Yet Qiao sees significant upside if relations thaw. \n“A whole sector of companies has been sold down to extremely low valuations. With pragmatic leadership, this could become a very attractive space,” she suggested.\nShe also highlighted opportunities in the climate and decarbonisation sectors. Slow government approval processes have stymied growth in these areas, but Qiao believes clearing these bottlenecks could unlock substantial value. \n“None of these smaller companies really need government help, but if they get it, the impact could be significant,” she explained.\nThe biggest contributor to the Fund since inception - AppLovin: A 10-bagger success\n\n\n\n\n\n\n\n\n\n\nAppLovin (NASDAQ: APP) 1-year price chart. Source: Google Finance\n\nOne of the Fund’s standout investments has been AppLovin (NASDAQ: APP), which Qiao described as “a classic example of an lesser-known, high-quality company hiding in plain sight.”\nWhen Munro began investing, AppLovin was trading at just $30 a share, with limited coverage and a name that deterred serious investors. The company’s core business—a software algorithm helping mobile app developers place ads—offered high margins and structural growth potential.\n“We realised this company was going to generate about $3 of earnings in 2024, yet it was trading at just 10 times earnings,” Qiao recalled. \nOver time, AppLovin’s algorithm proved so effective that it expanded into e-commerce, unlocking a massive new market. Earnings tripled, and the stock price skyrocketed to $320. \n“This was a classic example of a small-cap gem growing far beyond our wildest expectations,” she said.\nThe story of AppLovin underscores Munro’s broader strategy of focusing on small companies in high-growth markets. \n“For small companies like AppLovin, the room for imagination is huge,” Qiao explained, adding that the Fund’s disciplined focus on core areas allows it to identify companies with vast potential. Munro still holds AppLovin today and, for what it's worth, Qiao still sees further upside from here. \nThe biggest detractor since inception: The JD Sports experience\nNot every investment is a winner and Qiao reflected on JD Sports (LON: JD) as the worst investment made since the Fund’s inception. The initial investment was premised on the strength of Nike, which comprised 70% of JD Sports’ business, and the growth potential of the broader sportswear market. \nAt the same time, Munro held On Holding (ONON), a direct competitor to Nike. \n“I thought sportswear as a market was expanding and that On’s growth wouldn’t significantly hurt Nike,” she admitted.\nHowever, the reality was more nuanced. Nike faced pronounced brand challenges, worsened by competitors like On and Hoka eating into its market share. These issues rippled through to JD Sports. \n“It turns out the brand damage to Nike was bigger than we expected. Even with the best inventory, consumers just weren’t interested,” Qiao explained. \nMunro exited JD Sports by early 2024, avoiding further losses as the stock dropped another 20% after their sale. \nFor Qiao, the experience underscored the interconnected nature of competitive dynamics in a given sector and the importance of anticipating market shifts.\nSegments and stocks of interest\n\n\n\n\n\n\n\n\n\n\nHut 8 (NASDAQ: HUT) 1-year price chart. Source: Google Finance\n\nQiao highlighted Bitcoin miners as an area of interest right now. One standout in Munro’s portfolio is Hut 8 (NASDAQ: HUT), a company that mines Bitcoin and holds significant infrastructure assets.\nThe investment thesis for Hut 8 is rooted in its dual potential to win. First, the company holds substantial Bitcoin reserves and has a market cap of USD$1.5 billion, with USD$900 million in Bitcoin on its balance sheet. \nSecond, it owns power permits and land acquired during the cryptocurrency boom of 2020-2021. These assets have become highly valuable as hyperscalers—large-scale cloud providers—scramble to build data centres.\n“These power permits and land assets were secured during the Bitcoin craze, but now they’re incredibly sought-after by hyperscalers looking to develop data centres,” Qiao noted. \nMunro’s calculations suggest that the value of Hut 8’s data centre operations alone could exceed $2 billion, making it an undervalued asset even before factoring in Bitcoin’s rising prices.\nWith Bitcoin surging 50% since the Fund’s investment, the thesis is playing out on both fronts: the cryptocurrency’s growth is boosting Hut 8’s profitability, while demand for data centres adds another layer of value. \n“It’s a win-win situation,” Qiao explained, emphasising her confidence in the company’s long-term prospects.\nAI connectivity: Astera Labs’ growth story\n\n\n\n\n\n\n\n\n\n\nAstera Labs (NASDAQ: ALAB) 1-year price chart. Source: Google Finance\n\nAnother investment Qiao highlighted was Astera Labs (NASDAQ: ALAB), a pure-play AI connectivity company. Founded in 2015 by veterans from Texas Instruments, Astera Labs specialises in high-performance connectivity solutions for AI data centres. \nUnlike competitors such as Nvidia, which offers proprietary solutions, Astera focuses on providing open, scalable technologies for connecting GPUs in AI clusters.\n“This is a fascinating company that’s growing at an incredible pace,” Qiao said. \nSince its IPO in early 2023, Astera Labs has consistently posted sequential revenue growth of 20% per quarter. Its growth trajectory is fuelled by the booming demand for AI infrastructure, particularly in data centres.\nQiao believes the company’s profitability and scalability set it apart. \n“Astera Labs is already profitable, and with its revenue growth, it’s set to reach a significant earnings level in the next two years,” she noted. \nDespite its strong performance, Astera remains relatively under the radar, making it an attractive opportunity for Munro's strategy of investing in lesser-known, high-growth companies.\nCelebrating a successful first year\nWhilst we caught up a bit past the October 1-year anniversary of the Fund (Qiao was too busy to talk to me because she was still chasing down opportunities), she expressed pride in two achievements: one professional and one personal. \nFrom a professional standpoint, Qiao highlighted the unique team structure at Munro where every Portfolio Manager has a stake in the portfolios. \n“Since day one, every single investor has their initial next to one or more portfolio name,” she said, adding that this approach fosters a collaborative environment and makes pursuing overlooked opportunities deeply engaging. \nOn a personal note, Qiao took pride in balancing the demands of launching a fund with her role as a mother. She acknowledged that “getting a new fund off the ground is one of the most challenging periods in a fund manager’s career,” and maintaining a balanced and happy family life made the accomplishment even more meaningful.\nGetting to know Qiao a little bit over the handful of times that I have spoken with her, whilst she would be proud of the results to date, she’s not likely to rest. As noted above, she lives for the hunt and her commitment to delivering consistent growth, regardless of macroeconomic conditions, remains steadfast. \n“We’re still hunting opportunities,” she said, “and the pipeline has never been richer.” \n\n\n\nManaged Fund\nMunro Global Growth Small & Mid Cap Fund\nGlobal Shares\n\n\nView\n\n\n\n\n\n\n\nNever miss an update\n\n    Enjoy this wire? Hit the ‘like’ button to let us know. \n    Stay up to date with my current content by \n    following me below and you’ll be notified every time I post a wire","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.4","shortVersion":"4.29.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2492448832"}