theasiareport

I have a question for those who are buying Greek stocks. Why not simply buy the GREK etf? http://etfs.morningstar.com/quote?t=GREK Financials make up 25% of the ETF, but they have been re-capitalized and even a return to normalized operating conditions will provide a huge upside. You're also partnering up with investors with a strong track record in investing in distressed banks like Einhorn, Watsa and Wilbur Ross. The non-financial stocks are reasonably well run-businesses, for example Coca-Cola HBC AG. I ran through each constituent company and what struck me was that most of these businesses have pared down debt significantly. They are also producing significant amounts of free cash flow. Regards, theasiareport.com

One thing which really stood out to me was that in his younger days, Buffett was an entrepreneur himself. He had a lot of experience delivering newspapers, selling golf balls, repairing pinball machines and selling them and so on. Malcom Gladwell talks about the 10,000 hour rule, and I think to get to the top of your game, it really requires an in-ordinate amount of effort. Buffett's edge is that he started so young and enjoyed it so much that he never had to think of it as "work". There's his ability to make friends, and get them to do stuff for him too... (even in his younger days). So... maybe there's more to developing the business eye than just reading.

Thanks for the feedback. Will be adding Hong Kong and maybe Malaysia soon!

This is the revised version of an old spreadsheet which I did manually for Singaporean companies, which now includes 254 listed companies. The data is pulled from Thomas Reuters. The simple criteria used is that they have a 5 year dividend track record. If you discount the china based companies, corporate governance in Singapore is relatively benign, with a strong common law system left behind by the British. Many of the S-Chips (i.e. China companies never made it pass this simple critera) Some interesting points: Relative lack of S-Chips Only about 1/3 of the 700+ SGX companies meet this first test http://theasiareport.com/which-254-sgx-companies-have-paid-dividends-consecutively-for-the-last-5-years/ Regards, theasiareport.com

Hi Guys, I am moving on to set-up an offshore hedge fund in the Cayman Islands early next year. If anyone has experience in this area, please point me the right way. Initial start-up funds will be around be about 1 mil, but I am in this for the long haul. Cost effectiveness is definitely a priority at this stage. So far, my research has pointed me to this http://www.apexfundservices.com/fund-services/emis ... but if anyone has any helpful advice or firms they recommend, please let me know.

Thanks for the many great responses. I've had my own learning experiences and revelations. Reminds me of what Bruce Lee said, "You first have to learn the rules before you can break them". I remember a couple of years back, S-Chips (China listed companies listed in Singapore) were trading at insanely cheap valuations. There were plenty of articles discussing future growth prospects, why they were deeply undervalued an so on. Turns on the vast majority of people didn't ask the first question: Is the business legitimate? (as opposed to asking Do I understand the business). I think that's something borne out of experience. Graham couldn't teach you that simply because its a different socio-political setting. My own take away is that active investors are compared to most of the world, virtually sloth like in behavior. But what seems to pay off very well is being very active in knowledge acquisition, reading a lot, learning a lot, travelling a lot. That seems to be Buffett "activeness" for me. Its from all this active and frenetic learning that a few timeless principles are distilled, and that's where I get the ah-ha moment. A deeper understanding of a simple principle which I learned early on when I read the Intelligent Investor, but never really "understood".

From His Interview: In selecting the common stock portfolio, do you advise careful study of and selectivity among different issues? In general, no. I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities. This was a rewarding activity, say, 40 years ago, when our textbook "Graham and Dodd" was first published; but the situation has changed a great deal since then. In the old days any well-trained security analyst could do a good professional job of selecting undervalued issues through detailed studies; but in the light of the enormous amount of research now being carried on, I doubt whether in most cases such extensive efforts will generate sufficiently superior selections to justify their cost. To that very limited extent I'm on the side of the "efficient market" school of thought now generally accepted by the professors. PS: As someone pointed out to me, what he was trying to stress was not that there was no money to be made from investing. Just that he favored a simple group approach (low P/E, low P/B, combined with a quality factor like < 0.50 debt), and that his research over 50 years should that they yielded a "satisfactory" result.

About two years back, I read an interview entitled "An Hour With Benjamin Graham". What struck me was how the author of Security Analysis felt that after a successful career in investment management, he had come to the conclusion that elaborate techniques of security analysis was a waste of time. This was contrary to all my instincts. I was leaning far more towards Warren Buffett (focused understanding of the business) than Benjamin Graham (statistical approach). Two years later, I have come full circle back to Benjamin Graham. The book Quantitative Value and countless studies have shown that simple models out-performs experts (even value investors). And unless your investing institutionally (i.e. > 100 million AUM), it seems that there are plenty of spots in which you virtually have no competent competition (micro-caps, foreign markets where no one even speaks English etc). In a strange reversal, I had the exact opposite revelation of plenty of people on the board. I started buying good businesses at cheap prices (started in 2010), went to good businesses at reasonable prices, and ended up buying sub-par businesses at dirt cheap prices. Looking at the type of analysis that we tend to do these days, with the amount of information available (spreadsheets, DCFs, poring over small percentage changes in margins etc), and what Graham or Buffett did with simple financial statements, buying stocks by going door to door etc... The question which always come to my mind (inspired from a speech I found here a long time ago) is... are we simply trying too hard? It seems to me that much of what we do simply exists just because its so easy to access information, to perform complex calculations with Excel. But are our actions actually valuable? Or are we spending too much time focusing on the 20% of work that actually yields low level results. Just some thoughts that's been on my mind of late.

There were a couple of active threads on buying Korean stocks and preferred shares, and the difficulty of buying shares. Despite being based in Singapore, I've had problem accessing the market through an online brokerage. I've just opened, tested and bought Korean shares using Boom Securities (not affiliated to them in anyway). They are based in Hong Kong, and are owned by the Monex Group in Japan. I actually took the trip down to their office in Hong Kong to open the account (you don't need to). Trading costs are reasonable, although they don't offer market depth for South Korea, so you have to use a separate website to look at the order book. Transferring money was pretty easy (wire in), and from what I know, they accept US citizens too. Most other people shouldn't have a problem opening an account. Here's the link: https://www.boom.com/en/

I actually live in Singapore, and its pretty for me to invest in Hong Kong, Malaysia, Thailand etc. I would say that other than Japan, its not that hard seeing that the following countries have English financial statements: Singapore, Thailand, Malaysia, Hong Kong That's a couple of thousand companies for you to look at. Each exchange has its own quirks that are unique to it. I would also say that you can often find local data providers which are much more timely and accurate in providing information about developments in companies that a standard financial database cannot. That being said, you are miles ahead just by applying the teachings of Graham and Dodd to the emerging markets. I recommend flying to each of these countries before you invest. I am currently in Japan right now checking it out. Regards, theasiareport

Good stuff. Thanks for sharing!

Hi there, nice to meet someone who's actually based in Thailand! Agreed that valuations look quite expensive despite the coup, especially compared to the rest of the Asian countries. Is there any particular reason for that. Also, are there sites to pull the 10 year financials like Morningstar or Valueline (free or paid)? Thanks!

I don't think this has popped up but David Abrams wrote one of the forewords in the 6th edition of Security Analysis which I thought was brilliant. Cheers,

Hi Chai, Thanks for that incredibly informative post! Some names are new to me. Just to add to the list, Fosun International is trying to emulate itself with Berkshire as a role model but the jury is still out on whether the are succeeding. Relative to the universe of stocks that are available, we seem to a disproportionately smaller number of known value investors... but I am not sure whether its attributable to a lack of publicity or the fact that our financial markets are relatively new compared to our western counterparts. Cheers!

I invest mostly in Asia so getting hold of a lot of the qualitative information that Gio talks about is much harder. Rather, I've devoted a huge amount of time not in finding whether management is great, but whether they can be trusted. Lots of time spent at looking at the books and the footnotes to find suspicious transactions to see if they are looting the company. Cheers!

I love Howard Marks, but his memos are a much better read in the context of the time they are written. Admittedly his book feels like a philosophical discussion of value investing, and its quite hard to read it on his own.

Reminds me of a old Ben Graham quote... The risk of paying too high a price for good quality stocks – while a real one – is not the chief hazard confronting the average buyer of securities. Observation over many years has taught us that the chief losses to investors come from the purchase of low quality securities at times of favourable business conditions.

watsa_is_a_randian_hero: I don't actually post there though I frequent it quite it a lot. Triyards has had a really short listing history, with quite a significant debt load especially factoring in the off balance sheet leases (especially in comparison to the average Singapore company). Don't really have much to comment on it as I skipped it. UE E&C's much more interesting in my opinion. They have done quite a few high profile projects. One example is a recent award from one of the three universities in Singapore to the tune of $243.5 Million. Their engineering arm has also done quite a bit of top tier construction work with ION Orchard and the Marina Bay Sands Intergrated Resorts... the equivalent of the top tier retail shopping centres and buildings. I can't find any fault with the board, and there aren't any significant red flags in terms of off balance sheet liabilites and related party transactions too. Company has insignificant borrowings which is a huge plus. No nasty surprises in the cash flow statements either. Unfortunately the company has only 4 years of operating history (paid dividends for 3 out of those 4 years), so you can't really see how it performed during the GFC. That's more a personal preference that I have though. Finally, I think you will see that construction and engineering companies will do pretty well over the next few years with the government projected to ramp up spending on infrastructure. Retail property is a totally different ballgame however. Cheers!

Glad to meet another Singaporean in London. Did you graduate and decide to settle here?

I read Feynman when I was really young and he had a profound impact on my life. One of the most profound things I took away from him, Buffett and Graham was their attitude towards learning, their attitude towards life and how humble they were despite being giants in their respective fields.

Not really a book but I can safely say that the Steve Jobs commencement speech at Stanford had a big impact on my student life.

Hi everyone, this is my first post here. I've actually been lurking in the background for quite a few years now, and I've profited a great deal from the collective wisdom of everyone on the board, and some great investment ideas like Bank of America and AIG. Just a bit of background info to set up the post. I was actually raised in Asia in Singapore, but I am currently based in London. I started out investing in the US markets before slowly shifting my focus to the "Emerging Markets"in Singapore & Hong Kong. One of the things that I've noticed is that most people regard the emerging markets as a rather homogeneous investment class. But that's really not the case. Its as different as investing in Greece and Germany. While value investing does work in Asia, I think that most people soon realise that applying it without some modification will lead to sub-par results. The corporate governance in China & Hong Kong is startlingly bad, with some unscrupulous owners using their companies as trust funds or piggy banks. Joe Studwell has a brilliant book - Asian Godfathers, that I think anyone considering investments in Asia should really read. I think one of the biggest problems of running pure quantitative screens is that you are going to turn up a lot of companies that simply have questionable accounting numbers. 25% of all China companies listed in Singapore have been delisted or suspended (not taking into account companies are still listed but struggling), which is a pretty startling number if you think about it. I recall how plenty of retail investors were burnt investing in net cash S-Chips (China companies listed in Singapore). That being said, I do think its possible to generate a significant edge in Asia just because competition is so sparse. The markets are dominated by retail investors outside the large cap stocks who love to trade. One thing which most people miss out is that financial statements are available in English in Thailand, Hong Kong, Singapore and Malaysia. That's a universe of under 5,000 companies to look at which lends itself to some incredible investments with little or no coverage on! I've seen some scattered threads here and there on the forum, and I would love to see hear the experiences that people have investing in these countries. Cheers!