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2015 All-Asia Research Team: Small- & Midcapitalization Stocks, No. 1: John (Jake) Lynch & team
John (Jake) Lynch & teamMacquarie Capital SecuritiesFirst-place appearances: 2Total appearances: 7
Team debut: 2003
Macquarie Capital Securities makes an impressive return to this roster after a three-year absence, capturing first place — the position it most recently earned in 2004 — and ending Citi’s reign at six years. (That firm tumbles to runner-up.)John (Jake) Lynchand his five teammates, who recently relocated from Shanghai to Hong Kong, win praise from clients for their expertise and unique coverage. “Macquarie finds undiscovered and undercovered small- and midcap ideas in Asia, especially in Taiwan,” one backer declares. “Their comments provide important insights into industrial trends, and their estimates are reliable.” The group’s favorite names include EVA Precision, a Hong Kong–headquartered manufacturer of components for use in office automation and automobile industries. “EVA is only halfway through an operating releverage story as it gets its auto-parts business up to scale,” says Lynch, 46. The researchers assign the stock a price objective of HK$2.90, which implies a 15.5 percent upside to its value at the end of April. They also recommend that investors overweight South Korea’s Fila Korea, which owns the Fila global sports brand and is the majority stakeholder in American golf equipment and apparel supplier Titleist. Macquarie’s analysts detect “clear signs that Fila is gaining traction in China and coming back from obscurity in the U.S. and Europe,” explains Lynch. In addition, Fila’s U.S.-based subsidiary that owns Titleist, Acushnet Co., is expected to launch an IPO on the New York Stock Exchange next year, “which would unlock value,” he adds. Fila Korea’s shares ended April at 105,000 won, and the team forecasts a rise to 130,000 won. “With all our top picks,” Lynch notes, “we expect to generate a 100 percent return in three years.” He signed on with Macquarie in August 2006 to lead the firm’s China research efforts and now serves as head of emerging leaders, Asia. He previously spent three years as CFO of Amertron Global (now Inari Amertron), a Singapore-based high-technology manufacturing and testing company. In the 1990s Lynch worked at J.P. Morgan in Asian telecommunications finance. He holds a BA in history from the University of Colorado, Boulder.