Lou Gerken
April 22 , 2008
Dear Friends & Co-investors,
With all our investors we take the view that the GCA Funds are managed with a medium-long term investment horizon. Our investment objective is to deliver smooth and consistent monthly returns coupled with soft landings when market corrections occur. Regardless, all investment managers fall victim to short-term performance comparisons by investors, particularly during periods of market correction, as they are bombarded by an endless flow of content from the “tail wagging the dog” story chasing media.
We reiterate our view that the highly volatile and range bound markets (i.e. where stocks bounce around but ultimately go nowhere) experienced by all markets since their October 2007 highs, are in the case of the emerging markets, part of a “correction in a bull market” and not indicative of a bear market. Nevertheless, it is our goal to generate investment returns even if the stock markets remain volatile in the near term.
Moreover, we take the view that the prevailing markets avail investors with an especially opportune time to commit first time or additional capital into the emerging markets. Notwithstanding, our medium-long term bullish view, when markets are experiencing “blood on the streets”, this has in fact historically been the inflection point where the best investment returns have been achieved. The table below summarizes relevant emerging market index performance and valuation data for our Greater China and Latam Funds.
Period ending April 22, 2008
Performance and Valuation Summary Data |
Greater China Comparable Index – MSCI Golden Dragon |
Latam Comparable
Index – MSCI Latam |
Reference Comparable – S&P 500 |
Oct. ’07 High/Current Price |
-21.12% |
+3.05% |
-12.27% |
YTD Price |
-8.65% |
+8.19% |
-6.39% |
Est. P/E – Oct. ’07 High |
22.0x |
15.0x |
16.5x |
Est. P/E – Current |
15.6x |
14.0x |
14.7x |
Price/Book – Oct. ’07 High |
3.34x |
3.24x |
2.98x |
Price/Book – Current |
2.44x |
3.13x |
2.59x |
Price/EBITDA – Oct. ’07 High |
16.78x |
8.79x |
8.35x |
Price/EBITDA – Current |
12.36x |
8.53x |
6.95x |
Best,
Lou Gerken
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