Prudential: Well-Run Pan-Asia Insurer at Discount to Liquidation Value

Andrew Macken of Montaka Global Investments presented his in-depth investment thesis on Prudential (UK: PRU) at Asian Investing Summit 2020.

Thesis summary:

Prudential is a 170 year-old life insurance company in Asia. Prudential has a market-leading position in nine Asian markets and is well-positioned to take advantage of the multi-decade structural tailwinds associated with (i) an emerging Asian middle class; (ii) growth in financial wealth in Asia; (iii) growing insurance penetration across the region; (iv) growing demand for retirement income; and (v) growing demand for asset management, particularly in equities and bonds.

The company has consistently generated high economic returns and double-digit growth in earnings and embedded value. Yet, the shares recently traded at just 60% of estimated liquidation value, likely due to the following reasons: (i) Brexit-related uncertainty in recent years, as the business is listed in London; (ii) recent Hong Kong protests, as HK is a key market for prudential; and (iii) the COVID-19 crisis. As the perceived risks subside, Andrew expects Prudential shares to more than double over time.

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About the instructor:

Andrew Macken is the Co-Founder and CIO of Montaka Global Investments. Montaka Global Investments manages the Montaka global equity long/short strategies as well as the Montgomery Global long-only strategies, in partnership with Australian boutique fund manager, Montgomery Investment Management. After spending nearly four years as a senior member of Jim Chanos’ research team at Kynikos Associates, a global equity long/short fund based in New York, Andrew has developed particular expertise in short portfolio management. Kynikos is one of the largest short-focused hedge funds in the world and manages capital on behalf of high net worth families and institutional investors. Prior to this, Andrew worked as a management consultant at Port Jackson Partners (PJP), a leading advisor to corporates based in Australia and abroad. At PJP, Andrew focused on corporate strategy for major clients both in Australia and overseas. Andrew holds a Master of Business Administration (Dean’s List) from the Columbia Business School in New York. Previous to this, Andrew also graduated with High Distinction with a Master of Commerce, focusing on Finance; and First Class Honours with a Bachelor of Engineering under a Co-Op Scholarship from the University of New South Wales in Sydney.