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Beginner’s Guide To Investing

Class 4

HISTORY OF GREAT INVESTORS

So Are There Successful Investors In Asia?

Although most of the great value investors we hear about are predominately based in the US. Warren Buffett being the most famous of all, has returned more than 20.8% a year for investors since 1965 to 2017. If you have invested $10,000 in his company, Berkshire Hathaway Inc (NYSE:BRK-A) in 1965, it would be worth more than $197 million by the beginning of 2017. Over the past few decades, Buffett has focused on buying great companies that can grow for a long time.

Other famous value investors include Seth Klarman, founder of Baupost Group, an investment company. Since 1983, his fund has returned about 19% a year till 2010. Another example is Walter Schloss. He is a colleague of Warren Buffett when they are both working for Benjamin Graham. He has returned about 15% per annum for his clients over his 50 years of managing funds. Both Seth Klarman and Walter Schloss are what we called deep value investors, where they looked for companies that are extremely undervalued, mostly based on their asset value.

This shows that you can achieved great investment returns regardless of what your style of investment might be.

Similarly in Asia, there are many example of great investors. Here are some of them.

Hong Kong – Value Partners Limited

Dato’ Seri Cheah Cheng Hye is the co-founder of Value Partners Group Limited (HK: 0806), the largest local fund management firm in Hong Kong. Dato’ Seri Cheah has a classic rags-to-riches story. He was born in Penang, Malaysia in 1954. When he was young, he started out working as just a newspaper folder in Malaysia. Later on, he went on to have a journalism career.

He changed his career to the financial industry in 1989 when he joined UK-based brokerage Morgan, Grenfell & Co as the head of research. In 1993, he setup Value Partners Group with Mr. Yeh V-Nee. Today, Value Partners managed more than US$14.0 billion. More impressively, his flagship fund has returned an annualised 14.9% for the past 24 years for its investors.

Dato’ Seri Cheng has made a name for himself as the China expert investors, breaking through new grounds with investing in mid and small-caps Hong Kong Stocks, the A-Shares and B-Shares in China.

Here is one of the speeches he gave during the London Value Investor Conference in 2015.

Malaysia – Pheim Asset Management

Dr. Tan Chong Koay is the founder of Pheim Asset Management. He is one of the pioneers in building us the fund management industry in Malaysia. Since founding the company in 1994, he has created multiple record-breaking funds and won a great number of investment awards in his industry.

Dr. Tan adopted a strong investment philosophy of seeking out stocks that are trading below its intrinsic value. He looked for companies with good management, high margins, and strong growth. With his strategy, Phiem Asset management has pushed many of its funds to the best performing funds within the industry. In recent years, his firm has won the best ASEAN Emerging Companies Fund, for the 15-year and 20-year periods in 2016 by MorningStar. The fund, Pheim SICAV-SIF has returned more than 352% for the 20-year period compared to the 1.62% of the benchmark.

At his peak, Dr. Tan managed close to US$2.0 billion in asset under management. Although he has faced some setback due to a lost civil action against the Monetary Authority of Singapore, his long-term track record is undeniable. This put him at the top among the greatest Asian investors of our time.

Singapore- Target Asset Management

Outside of the financial industry, not many people would have heard of Target Asset Management. However, this boutique investment firm in Singapore has produced one of the best track records in the past two decades. Its founder, Mr. Teng Ngiek Lian, started the business in 1996. Since then, it focuses on equity investment in the Asian Markets.

Mr. Teng was previously a managing director for Morgan Grenfell Investment and UBS Asset Management before setting up Target Asset Management. From his company presentation, it showed us that the firm has a clear investment philosophy and strategy in investing in Asia. He believed each company would have an intrinsic value to its business. Therefore, the firm would invest in companies trading cheaply against its intrinsic value. Moreover, the firm follows a bottom-up approach in selecting companies. It sets its sight on:

  • Companies in early growth industries
  • Fallen angels or out-of-favour industries

From those sectors, Mr. Teng would look for companies with 5 rights:

  • Right business
  • Finding the Right management
  • Right financial & valuation
  • Getting the Right risk vs. reward ratio
  • Right stock liquidity

From its inception to his first retirement in 2010, Mr. Teng has generated more than 17% in annualised returns during the 14-year period. This made Mr. Teng one of the greatest investors in Asia.

Singapore- APS Asset Management

Mr. Wong Kok Hoi is the founder of APS Asset Management. He founded the investment firm back in 1995 as a small boutique fund house. Today, APS Asset Management is managing more than US$2.6 billion in asset under management (AUM).
Over the years, Mr. Wong has created huge value for his clients. His flagship fund, APS Asia Pacific Long Short Fund has returned about 20% a year from 2008 to 2015.
Mr. Wong has a unique approach of researching for investments. He called it the “Four Alpha” approach. Basically, in every investment, he would need to identify the type of alpha (outsize return) that he can generate from the investment.
The four types of alpha can be:

  • Structural Alpha: Stocks that are operating in a growing industry
  • Dynamic Alpha: Stocks that are turning around in a cyclical industry
  • Economic Alpha: Stocks that are trading way below its intrinsic value
  • Opportunistic Alpha: Event-driven special situation

Summary

We are able to find great value investors from anywhere around the globe. Thus, this makes the philosophy of value investing truly global. As we seen here, these three investors from Hong Kong, Singapore and Malaysia, are some of the greatest investors in Asia.

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Now Available On Book Depository

Our Course is created based on some of the materials discussed within the book. Our book will take you through a more detailed study into how to apply value investing concepts in Asia.

And Amazon.com

“The book is a great contribution to the investing society. Stanley and Mun Hong have been able to put together the valuable experiences and wisdom of many Asian outstanding fund managers!”
Dr. Tan Chong Koay

Executive Chairman, Phiem Asset Management

“This is not just a book about value investing. Instead, it is a manual for value investing with an Asian twist that investors with an eye on the fastest-growing region in the world will reach for whenever they have questions that need answers.”
Dr. David Kuo

CEO, The Motley Fool Singapore

“Stanley Lim and Mun Hong have skillfully weaved three things together in this book for the Asian investor: the key principles of value investing, where to identify the investment opportunities and the mine fields to side step in Asia. With these skills, the investor can start investing in Asia.”
Mr. Wong Kok Hoi

Founder & CIO, APS Asset Management

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