"The Private Equity Witch" Li Bei's latest report reveals that she has used options to allocate long positions

So far this year, Li Bei, also known as the "Private Equity Witch," has mostly remained silent.

What exactly is on the mind of this macro hedge fund manager?

Recently, a operating report from Banxia Investment, led by Li Bei, was exposed, allowing the public to see the specific portfolio allocation strategy for the first eight months of this year.

Equity Net Position Less Than Fifty Percent

A year ago, Li Bei kept bullish on equity assets, but this move caused significant disruption to her operations.

The latest report shows that since the beginning of 2024, the net long position of Banxia Investment's macro strategy products in equities has been below fifty percent, a significant decrease compared to 2023.

Macro Judgement

In this report, Li Bei made the following macro judgments:

Firstly, in the past two months, the issuance requirements for special bonds have been relaxed, and the issuance pace has significantly accelerated. This will lead to an improvement in funding along the construction chain, and construction progress will also improve accordingly.

Secondly, 300 billion yuan from special national bonds has been allocated to home appliances, automobiles, and equipment upgrades, with funds starting to flow in large quantities from August, and policies gradually being implemented in various regions from August. From current feedback, the boost to both home appliances, automobiles, and equipment is evident.

She believes that from downstream to upstream, from automobiles to home appliances, from engineering machinery to processing equipment, we have seen improvements in current production levels or subsequent production scheduling. However, the midstream and upstream sectors are still destocking.

Regarding overseas factors, Li Bei believes that different countries are diverging, with the United States continuing destocking, PMI continuing to decline, and the labor market slowing down. Economic momentum in Europe has stabilized and rebounded at the bottom, with the Economic Surprise Index showing an uptick. Major emerging market countries, such as India, are maintaining relatively healthy growth.

Where is the Improvement Space

Li Bei's judgment is that looking at the next one to two quarters, demand and orders at the downstream end have already started to improve. It is highly likely that we will see a rebound in production-side indicators 1-2 months later, and this improvement is expected to continue for at least 1-2 quarters. Once real estate policies are in place, a new economic cycle may begin.

Based on this, she believes that certain categories have been significantly undervalued, presenting significant opportunities in the future.

Revealing Positioning Plans

This report reveals the future allocation ideas of this private equity firm.

For example, maintaining a core position in high-dividend Hong Kong stocks. Continuously adjusting positions, reducing exposure to industries facing downside risks at high business cycles, while increasing exposure to industries with low business cycles and upward drivers.

Furthermore, maintaining previous bond holdings and allocating a portion to overseas 5-year bond futures.

Also, allocating a portion to gold in the commodities category.

Banxia Investment also revealed that the team has gradually positioned long positions using options tools and will look for opportunities to further increase positions in the future