Tuesday, January 17, 2017

An Interview with "SG TTI"

As stated in the last post of 2016, I am restarting the interview series. I will try to have an interview with an interesting investor every month in 2017.

For Jan, I will start with interviewing SG Thumbtack Investor aka SG TTI. If you have yet to read his blog, I urged you to do so soon.

I only knew about his blog after he sent me an email to exchange on a guest post. Right now, I constantly read his blog posts. They always amazed me. I will always have new enlightenment of the particular company and industry due to the details he goes into.

Without further ado, let's get straight to the interview questions and "SG TTI" answers!

1. Tell us more about yourself

SG TTI: I am a Singaporean male in my mid-30s, married with 2 young kids. I have a day job in the healthcare sector as a doctor. Concurrently, I am also the CIO for a privately held investment holding company that manages the assets of family and associates. When I'm not at my day job, I like to read about various industries and try to understand the world a bit more. I also love to travel, and make it a point to travel (for leisure) at least 3 times a year.

2. How did you get into investing?

SG TTI: I didn't get into investing, I think it got me. Initially I looked at investing as a way to get a nice passive income. Over time, my objectives have evolved and I'm no longer merely interested in passive income.

I'm interested in the feeling of going against the grain, finding something that the whole world seems to disagree with me on, and eventually and hopefully, being proven right. When a highly contrarian investment turns out to be successful, the feeling and positive energy I get from it is incredible.

This can only be achieved via a contrarian approach, and the confidence to stand your ground in the face of disagreeing opinions can only be attained by having a superior, in depth knowledge of the situation that most people don't have at that point in time.

3. Any thoughts about short term trading?

SG TTI: It's fun.

Not necessarily profitable on a ROI basis, but it sure is fun. The amount of research data that thus far proves that short term trading is unprofitable for the vast bulk of the participants over the long term, fails to recognize that it is a lot of fun and excitement. And when something's fun, people tend to pay less attention to the costs of doing it.

4. What your best investment and worst investment since you started investing?

SG TTI: My worst investment is in a HK listed company with Mainland Chinese management, Flyke International . It's the traditional Ben Graham type of company, valuations are dirt cheap. But I didn't count on the management to commit fraud and abscond with the company's money. I guess during Ben Graham's time, there weren't infamous Chinese management committing fraud to contend with. Or rather, he wouldn't be able to invest in any Chinese company in those days. I've written about this worst investment in SG TTI blog.

My best investment is always going to be the next one I'm going to make. I have to think of it this way. That's what will drive me to dig deeper and harder.

5. How many stocks do you think one should hold for diversification?

SG TTI: It depends on how confident you are in each of your ideas isn't it? If there's only 1 idea, but you've close to 100% confidence and the likely ROI will be extremely high, then the number of stocks you should hold is... 1.

That's the case for most successful entrepreneurs. They have the bulk of their net worth in the company or business they're managing.

For most other instances though, I think retail, active investors who spend a considerable amount of time managing their own money, should hold between 8-15 companies. Any more and it's a real challenge to manage your portfolio closely.

I'd also point out that the number of stocks you own is not necessarily a good barometer of diversification. I'd argue that 5 stocks across different industries and with different business cycles would be more diversified than 10 stocks of the same sector.

The other factor is of course, position sizing. You can have 100 stocks but if 50% of your portfolio is in 1 or 2 stocks, than it's hardly considered diversified.

6. What is financial independence to you?

SG TTI: Being able to live your life with a certain level of comfort that you want, without having to worry about how to fund that lifestyle. Unlike most people who focus on being frugal, saving up and investing to retire, I personally believe a balance is more important. Spending on certain luxuries (like travelling in my case) within your means, if you want them, is part of living. To me, accumulating wealth for the sake of it just makes life meaningless. I'd much rather accumulate experiences and memories.

7. Able to reveal which stocks are currently on your watchlist?

SG TTI: It is usually updated here monthly

8. Finally, any advice for newbie interested to get into investing?

SG TTI: Don't jump straight in. Invest in your knowledge database by buying books, attending courses, learning from the mistakes of others and spend the time and effort to refine your thought processes.

In short, learn more, think even more, but do less.

"SG TTI"'s Blog, SG Thumbtack Investor, is also on the my blog list at the side.

Hope you like this interview series and please do remember to like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

7 comments:

  1. Nice and sweet interview. I've always liked bro TTI's post ever since I found his blog end of 2016, it's been a pleasure to read the vast details he provided on the stock he's researching on.

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    Replies
    1. Hi Jenson,

      Thanks for commenting and dropping by.

      I agreed that the details he gets into is really huge and interesting!

      Regards,
      TUB

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  2. A question for TTI: as a doctor, do you analyze any of the healthcare / medical stocks in Singapore? Such as Biosensors, QT Vascular, Raffles Medical, TalkMed and so on. It seems logical that you would have an informational advantage given your profession, but I have never seen you post on companies in this sector. Is it because they tend to be priced more richly?

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  3. @TUB: Thanks for bringing this comment to my attention.
    @J: A lot of folks have asked me this, in my blog and in Investing Note. There are a few reasons:
    1) Yes, PEs for healthcare companies are priced very richly. If you track it closely, in recent years, say in 2015 and 2016, there's suddenly been several healthcare companies IPOs.
    Eye drs, gynae drs etc. The reason is because just a few years prior, there's a sudden influx of foreign capital into these private outfits, Healthcare in SG is an attractive theme then, because of a supposed growth region, richer populace coupled with ageing population. SG is deemed to be safe and stable relative to our neighbors. (Disclosure: I would know this very well because I too am a direct beneficiary of such foreign capital investments)
    These private outfits are hence in a position to list now, having a few years of growth.
    If you have capital, and you'd like to buy a medical or dental clinic, do you know what you'd have to pay? Perhaps as low as PE 5,6? (just an estimate because for pte clinics, acquisitions usu done based on X times of revenue, not earnings).
    Then there'd be larger clinics that do a lot of acquisitions of smaller clinics and these will pay a multiple of prob 7,8 times. What they're trying to do is to group a few of these players and list. Upon listing, look at the multiples these healthcare players get. 40 times is not unusual. many times it's much higher.

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  4. 2) There are also some healthcare companies who's management or large shareholders are people I know personally. I don't talk about healthcare companies on SG TTI for this reason. If I want to, I probably can reveal a lot of stuff that most people don't know. A lot of the analyst reports I saw are also analyzing things very superficially, I don't blame them cos it's hard for the analyst to understand the minute details without being in the industry. Even drs within the industry won't understand the industry well unless you are a business owner or management.

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  5. 3) I may be involved in a healthcare IPO in a few years myself. I am not sure what implications it would have, but I'd rather not talk about related companies now.
    The thing is, it's almost frowned upon for drs to do what I do as SG TTI. For this reason, I don't talk about the specific innings of the industry.
    4) Finally, it's just boring to keep looking at healthcare. It really is. I spend a lot of my waking hours as a clinician, I'd rather spend the remaining hours reading up on ATM manufacturers, construction players or coal producers rather than yet more healthcare.
    (I do have equity in healthcare companies, but it's not listed on SG TTI because they're private companies, not public listed ones)

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