Hedge Funds Bet on AI Supply Chain, Gen Z Trends at Sohn Hong Kong 2024
Key Investment Themes and Hedge Fund Strategies at Sohn Hong Kong 2024
By Summer Zhen and Jiaxing Li
HONG KONG, May 21 (Reuters) - Hedge fund managers say they are targeting investments this year in companies from AI-linked data centres and printed circuit board (PCB) makers to pet food and instant noodle brands as they try to ride the tech boom and Gen Z spending.
AI-related trade drew strong interest at the annual Sohn Investment Conference in Hong Kong this week as a semiconductor rally this year helps major Asian equity indexes outperform Western markets.
The firms did not disclose whether they had positions in the companies they highlighted at the Sohn conference, an event where hedge funds pitch their top investment ideas.
AI Supply Chain Opportunities
CoreWeave: Powering the Digital Workforce
Kenny Zhang, chief investment officer at Valliance Asset Management, favoured U.S. AI data centre CoreWeave, which provides tech companies with hardware and cloud capacity powered by Nvidia chips.
The new production model fuelled by AI will result in global enterprises exporting "knowledge labour to digital people," he said, referring to AI agents.
"If we think chips are replacing people, how do we make the digital people happy? ... You need a company like Coreweave," he said.
The Hong Kong-based hedge fund expects CoreWeave's annualised revenue to reach $55 billion by 2028, up from $1 billion in early 2024.
Semiconductor Supply Chain and PCB Makers
Compeq Manufacturing: Addressing PCB Shortages
Some hedge funds are eyeing opportunities resulting from hardware supply shortages. Among different layers of the semiconductor supply chains, PCBs are facing the most severe shortages, according to CloudAlpha Capital.
The hedge fund, also from Hong Kong, preferred Taiwan's leading PCB maker Compeq Manufacturing, with founding partner and co-CIO Chris Wang saying even tech giant TSMC could face a PCB capacity bottleneck in the next one to three years.
Wang believes Compeq could have a re-rating, as the Apple supplier is expanding capacity while trading at less than 15 times valuation.
Kandenko: Benefiting from AI Data Centre Construction
Keyrock Capital Management, meanwhile, is bullish on Japan's electrical engineering firm Kandenko, betting it will be a "structural winner" in a construction boom linked to the development of AI data centres.
Gen Z and Shifting Consumption Patterns
Pet Food and Changing Attitudes
i-Tail Corp: Riding the Pet Care Wave
Hedge funds are also looking at investments linked to changing consumption patterns.
Jun Y. Oh of Washington-based Griet Capital recommended Thai pet food maker i-Tail Corp, citing long-term structural growth as attitudes toward pets shift. "The way people think about pets is very different from our parents," Oh said.
In South Korea, more pet strollers were sold than baby strollers last year, he noted, adding that Gen Z spends more than $6,000 annually on their pets, about 2.5 times more than the older baby boomer generation.
Instant Noodles: A Gen Z Favorite
Samyang Foods: International Growth and Margins
Similarly, Hong Kong's Kaleido Capital Partners focused on foods that appeal to younger people. The firm sees further upside in South Korean instant noodle maker Samyang Foods, helped by rapid sales growth internationally, including in Europe and the U.S., as well as margin expansion.
(Reporting by Summer Zhen and Jiaxing Li; Editing by Sumeet Chatterjee and Kate Mayberry)
