Tuesday, 18 August 2020

Am I A True Value Investor?

Warren Buffett Singapore Footprint In 2013

The answer is NO. 

Why I say so? Just look at my past completed trades since 2013 in "History" page, will any true value investors invest in companies like Geshen, HHGroup, Jadi, Asiapac, Daya, Complete, Notion & Adventa?

I read and heard from other teachers that in fundamental investment, one should invest in well-established, industry leading type of companies with competitive edge or margin of safety.

In my previous investment portfolio, you won't see any big cap companies and blue chips.

Value investors usually won't invest in loss-making companies with no presentable track records but I still put my money in them.

In a nutshell, I invest for growth, no matter the company is big or small, profitable or loss making. If it can grow its revenue and profit in the near future, then it will be in my watch list.

Small companies have higher potential for growth so they are usually my favourites.

If a company has growth potential and is not overvalued, I will invest in it. If I think it is overvalued, I'll just watch it closely first.

If a company with little or no growth but undervalued, I might still buy it although it will not be a priority. If it is already fairly valued or overvalued, then surely I won't touch.

No one will buy a stock at RM2 and set a target price of RM2, unless you're investing for dividends only. 

For me, my initial target price must be 50% more than my purchase price.

Of course I can't be right all the time. I did make bad decision and suffered loss in my investment.

My worst investment so far is Daya which I bought in anticipation of a turnaround in fortune and it did not happen.

When I bought Daya, everyone already knew that it was an ailing loss-making company. From my study, I thought that it could turn profitable, as previous losses were mainly O&G impairment losses and it had its construction business to save it.

Daya secured construction contracts for IKEA Batu Kawan and Penang KPJ Hospital. However, it turned out that its construction segment also suffered. 

If I waited until the quarter report to show profit first before I bought, then I might be able to escape this trap.

Anyway, there are successful examples of investing very early in small little known companies such as Tambun, Geshen, Latitude & HHGroup.

When I first invested in Inari, KESM & Scientex, they were also relatively unknown.

Investing in growth stocks is nothing new or spectacular. Unless you're a short term trader, everyone wishes to invest in a company that can grow so that its share price can follow.

I'm no different from most of you. It's just that the timing of buy and sell might be different.

Some people might wait for clearer picture before going in but I can go in earlier than that and bear the risk of making the wrong decision.

Some people might sell to protect their 50% gain but I can hold longer than that and bear the risk of seeing the gain diminished. 

In stock market investment, we have fundamental analysis and technical analysis, and may be "rumour analysis". Of course I'm not in the category of technical analysis because I don't use charts and technical indicators to buy and sell, neither do I trade on rumours and buy/sell calls.

Then I must be in the fundamental analysis group. However, is fundamental analysis similar to value investing?

I think more or less so, but I only practice half of the fundamental analysis, that's why I'm not a TRUE value investor.

Anyway, I find out that one of the most famous investors in Malaysia also share similarity with my investment style.


  1. Love your sharing. I find a lot of similarities between our investment style with some minor difference. I focuses on undervalued stocks, i.e. good companies that suffered huge loss due to recent situation and will definitely rebound back (50% above) in 3 - 5 years time (giving me at least 15% return on average above per annum excluding dividend). Current holding / watchlist includes (GenM, Serbak, Armada, Sunway Reit, YTL Reit, Sunway, Padini, Gadang, Ekovest). I would also like to mention Maybank will be my next biggest holding (major upside and limited downside risk) but I will be patience and wait for a while more. I know a lot people does not look good on GenM as well, but I truely believe after the pandemic, GenM can easily exceed RM 3.50. Whoever have the patience will not lose.

    1. Hi Gem, I'm waiting for a good time to buy stocks like Genm & Maybank, they are like "little growth but undervalued" stocks I mentioned. Serbak & Armada are in my watchlist too, but at the moment I'm not that interested in REITs.

  2. I suppose fundamentalist means the person analyses the company's business model and financial reports before making the investment decision. Thus, you definitely are a fundametalist. There are many fundamental investors who show impressive track records years after years consistently but I have not seen a technical analyst who able to show consistent results for 10-20 years period. Therefore, fundamental analysis should be the only way to succeed in stock investment; there is no other ways or short-cuts.

  3. There is a term called value-growth investor, which means buying a growth stock at a price lower than its value, i.e. undervalued. I suppose what you meant in your article above is you are a value-growth investor.

    The key word and priority are still "growth", it's just the investor would like to pay for the growing company at a price lower than its fair value.

    1. Yes you're right, value-growth investor is the words. Nowadays a lot of investors are looking for growth, just that the choice of stocks and the holding duration can be very different.

  4. Im on "passive" income investor, not so on super-growth stock :).... namely REIT and stock that give dividends constantly and predictable..... e.g. MQREIT, LIIHEN, PBBANK, TAKAFUL, and one "alien" out of them.... HIBISCUS

    1. Vince, I think you're a very different investor from myself :) Anyway, everyone has different strategies that suit them the most. My aim is to grow my capital as fast as possible, so dividend stocks with limited growth potential are not my cup of tea now.