Saturday, July 29, 2017

An Interview with the Stanley of "Value Invest Asia"

I met Stanley at an meet up organised by InvestingNote previously. Both of us arrived fashionably late and I was quite surprised when he introduced himself.

This is because, at that time, I was already following Value Invest Asia Facebook Page and reading about their regular write-ups.

Through our conservation, I find out that he is also a CFA and is very knowledgeable about valuation techniques.

I also understand that he is also writing on a book - "Value Investing in Asia : The Definitive Guide to Investing in Asia" - that will only be launched in November. You can read all about it on Book Depository and Amazon. I can't wait to get my hands on it!

Let's not also forget - He has also just conducted a seminar with InvestingNote and I can't make it due to "permission not granted". Nevertheless, it seem like those that attended the session has found it to be fruitful.

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

1. Tell us more about yourself and Value Invest Asia.

Stanley: I started out investing in 2006. I was working as an engineer during that time. But I was fascinated by the investing world and so I took the CFA course back in 2009. I then joined the finance industry in 2012. Since then, I have worked in both the buy-side (fund management) and sell-side (investment advisory) sector. My last job was with The Motley Fool Singapore as an analyst. 

Earlier this year, I officially launched ValueInvestAsia.com with my two co-founders, who are also working in the financial industry. Today, ValueInvestAsia.com has about 6 writers and analysts with us, both full and part time.

The idea we have is simple. Investment banks and brokerages want to make it sound like investing is very complicated should only be left to professionals. Plus, they always have a conflict of interests on the stocks they are recommending. 

Secondly, information about Asian stocks are too scattered and it is hard for investors to have a centralized place to find information about stocks listed around Asia. Many of the information about Value Investing is also skewed towards the US market. So we want to create a space that provides investors with independent research about companies and practical guides on how to apply value investing in Asia; to let you know that investing is not as difficult as what the "professionals" want us to think. 

We believe that our best fund manager is always ourselves. Thus, the mission of ValueInvestAsia.com is to provide all investors with the information and tools to enable them to be their best personal fund manager.

2. How did you get into investing? 

Stanley: I started working as an engineer in Malaysia after I graduate. My first job I have a salary of S$500.00 per month. I was working in a manufacturing plant. About a year into the job, I found a payslip lying on the office floor. I think my finance manager must have dropped it. So I pick it up to return to her but I also took a peek at it. It was the salary slip of my direct manager who has been with the company for 20+ years. His salary shocked me and I would not reveal it here but it confirmed my desire to change industry right there and then. That is when I started learning more about investing and the finance industry. And I grew to love the idea of investing and never stopped ever since.

3. What is your investing style? Any idols?

Stanley: I am mostly a bottom-up investor and very qualitative in my analysis. I connect mostly with Charlie Munger's ideas. I like to look at quality businesses and companies with a good moat around it. I also follow the works of great Asian investors like Dato Sri Cheah from Value Partners, Mr. Wong from APS Asset and Dr. Tan from Phiem Asset. These are great Asian investors who have proven to us that Value Investing works here in Asia as well.

4. What is your thought process when it comes to stock-picking?

Stanley: I always start with the business. Any company I look into, I will focus on what the business is, what is its growth potential and what is the moat of the company. Only when I am comfortable and positive about the business and its potential, then I look into the valuation and see if it is worth investing in. Because to me, the choices we have in the market is almost unlimited but our capital is always limited, so why should I waste my time with lousy businesses?

5. What is your best investment and worst investment since you started investing/trading?

Stanley: I guess best might not necessarily mean the one with the highest return. Maybe I see the best as the one that played out as closely to how I envisioned it. So in that case, the easiest and best decision I made is to just investing into Berkshire Hathaway back in 2011 when it was trading very close to just 1.0 times its book value. That was quite obviously a bargain and so it was a very easy decision to make. Today, it is roughly worth 3 times compared to when I invested in it.

The worst I would say it is also because of how I totally misread the company, rather than just based on how much I lost in the investment. One company was an S-Chip when I was still learning how to invest. It was Eratat Lifestyle. It just looked very cheap and so I bought into it. Of course, it turned out to be a fraud, which took me some time to see it. I didn't lose much on that as I escape before it collapsed but it taught me to always focus on the business of the company first, and not the valuation.
Companies I lost a lot of money in are companies like Hengdeli or Pacific Basin, both listed in Hong Kong. I just misread the macro-environment and that also taught me to not bet on a recovery of an industry, but rather just focus on great businesses.

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

Stanley: For me, I think at least 30 stocks is a well-diversified portfolio. I personally owned more but if I have to choose, I will keep it around 30.

7. Any thoughts about the current market situation?

Stanley: Personally, the current market feels quite high for me, I am not finding as many bargains now in the market. I am very careful on what I buy now. I am raising my cash position, just in case. 

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

Stanley: We actually published our yearly watch list as an e-book. You can download our 2017 Watch List here: http://valueinvestasia.com/free-ebook/ 

9. Finally, any advice for newbie interested to get into investing/trading?

Stanley: I would say, start by learning about businesses first, rather than learning about the market. Read business magazine like Inc, entrepreneur, Fortune, Fast Company and Harvard Business Reviews. And also listen to business podcasts. Because as Graham said "Investing is most intelligent when it is most business-like". So the key first is to train ourselves to think like a business person. The investing part we can learn later, the fundamental is understanding what makes a business great.

As stated in the past few posts, there will be changes to T.U.B Circle and Super Scorecard. Please like our Facebook page (T.U.B Investing) and follow me on InvestingNote for the latest updates!

1 comment: