Value Recap – Invest In What You Know!

This article was first published on Jul 22, 2014

Investing in What You Know

 

You have already read several investing books and are excited to put in some of that savings into good use. With more than 700 listed companies found in the Singapore’s stock market, how do we then start to choose which shares to buy?

 

Legendary fund manager, Peter Lynch of the Magellan Fund popularized the economic term of “local knowledge” which is investing in what you know. It is a good starting point for retail investors where investment ideas can be spotted in our daily lives. These investments need not be found through pouring endless annual reports but can be observed while we are out eating or shopping. Read on to see some of these companies which we have already come across with!

 

Food & Beverages

Singapore is never short of food and one can definitely find a myriad of F&B outlets here. Companies including Breadtalk (SGX: 5DA), Soup Restaurant (SGX: 5KI), and Japan Foods Holdings (SGX: 5OI) are probably some of the names we might be familiar with. Old Chang Kee, a home-grown company founded in 1956 sells not only its specialty curry puffs and snacks but have since branched out into more premium cafeterias. Since the company’s listing in Jan 2008, Old Chang Kee has grown its share price from S$0.20/share to S$0.94/share as at end-Jun 2014, reaching a market capitalization of approximately S$114 million.

 

Shopping Malls

With so many shopping malls in Singapore, it is no wonder the city state is coined a shopping haven! These luxury and departmental stores are usually located in shopping malls either within Orchard Road or the “heartland” malls located in towns across the city. Several of these shopping malls are usually owned by listed entities such as CapitaMall Trust (SGX: C38U), Frasers Centrepoint Trust (SGX: J69U) and Suntec REIT (SGX: T82U). A quick on-the-ground check is to observe the malls’ foot traffic, their location and the types of tenants in these malls.

 

Value in Action

Sourcing for investment ideas need not be done in front of a computer looking through annual reports. It can be done while spending time with your loved ones outside. The fun thing is that it doesn’t make on-the-ground research a chore to deal with. Happy investing 🙂

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All views and opinions articulated in the article were expressed in Willie’s personal capacity and do not in any way represent those of his employer and other related entities. Willie does not own any shares in the companies mentioned above.

2 thoughts on “Value Recap – Invest In What You Know!

  • March 7, 2015 at 6:29 pm
    Permalink

    Excellent article Willie, couldn’t agree more.

    Retailers in particular are ideal companies that investors can accumulate useful knowledge about brand strength, customer service, competitive positioning etc.

    Here in Australia, a listed travel retailer is Flight Centre (ASX:FLT). From the moment I walked into their stores I could see that the company was extremely well branded and resourced. The company had a clear strategy and the staff were professional and knowledgeable. It gave me information that I could use to assess the appeal of the company from a consumers’ perspective.

    Needless to say that this company continues be a formidable and thriving travel retailer. Flight Centre continues to expand successfully to many countries throughout the world, even in the face of strong competition, due to a strong brand and progressive culture.

    Thank you.

    Paul

    Reply
    • March 14, 2015 at 10:54 am
      Permalink

      Hi Paul,

      Yup, sometimes it’s good to do a little scuttlebutting on companies one is looking at. Never hurt to walk the ground, good reason to enjoy their products/services too 😉 anyway, thanks for reading. Glad you enjoyed it.

      Thanks
      Willie

      Reply

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