In the article below, I have explained what is value investing in the context of a value investor as below.
http://klse.i3investor.com/blogs/kcchongnz/98599.jsp
I cited what Charles Munger have said, that,
“All intelligent investing is value investing - acquiring more than you are paying for. You must value the business in order to value the stock.”
This guy below has been harping on the statement as below,
Posted by stockmanmy > Jun 19, 2016 06:21 PM | Report Abuse
classical value stock.....WTK go buy la.
NTA > $ 3
price $1......
hahahaha
While buying stock below its cash position, or its NTA may be one of the many value investing strategies, he only knows one, that value investing is buying stock less than NTA.
What a big deviation of what Munger said. Instead, this gentleman below knows much more than him what value investing is about.
Posted by odie88 > Jun 19, 2016 06:57 PM | Report Abuse
stockmanmy, buying stocks with prices a lot lesser than NTA is not all value investing is about. NTA is not equal to intrinsic value.
The same guy mutters again about growth stocks and value stocks as below:
Posted by stockmanmy > Jun 19, 2016 06:18 PM | Report Abuse
growth stocks vs value stocks.
growth stocks tend to go higher and higher, breaking new high all the time.
value stocks tend to go lower and lower and discounts getting wider and wider.....hahahahaha
I want to ask him again; on what basis you are saying so? Any statistical significant evidence? What about his experience? Can show us your success on that?
Again I cannot help to say the same guy below has much better understanding than him about investing.
Posted by odie88 > Jun 19, 2016 07:38 PM | Report Abuse
stockmanmy, not entirely true since growth is one of the aspect in value investing. I could conclude your "growth investing" part of value investing too. I am pretty sure there's a price you would pay a company nor matter how good the company prospect is. By paying not more than what you value is value investing.
I have in the previous article show numerous academic research showing the various value investing strategies have worked as compiled in the book “What has worked in investing” by Tweedy, Browne Company LLC (TBC), a well-established investment advisory group in the US managing approximately $21.4 billion for individuals, institutions, partnerships, off-shore funds and four mutual funds as of September 30, 2014. It is a collection of about 50 studies of value investment approaches used in the US and the world, including Malaysia, for many decades. Each of the studies evaluates the results of following a particular value-oriented strategy in a particular market over a particular period.
In the previous article, I have also shown the track records of each of nine disciples of the Master of Fundamental Value Investing, Benjamin Graham, who had generated annual compounded returns (CAR) of between 18% and 29% over track records lasting between 13 to 28 years.
Other super investors such as Joel Greenblatt, Seth Klarmen, Howard Marks, Mohnish Pabrai, Peter Lynch and many other fundamental value investing fund managers have all generated high return of over 20% CAR over an extended period of time of 20 years or more, purely using value investing.
Value investing is a long-term endeavour. It is not like what this fellow is talking about as below.
Posted by leno > Jun 21, 2016 09:40 AM | Report Abuse
Stock manny ... name one wat-fak-growth stock and KC CHong to name one wat-fak-value stock TODAY ... and we see the result by end of june THIS year 2016 ... meaning about 10 days to go. See who win than can tok more kok.
Value investing is not about punting on one stock and guarantees to produce results in 10 days. Value investors can, and often, under-perform in the short term. But in the mid and long term, they generally will be doing fine as what Joel Greenblatt says below.
“I just want to take advantage of prices away from value. If you do good valuation work and you are right, Mr. Market will pay you back. In the short term, one to two years, the market is inefficient. But in the long-term, the market has to get it right—it will pay you back in two to three years. Keep that in mind when you do your analysis. You don’t have to look at the next quarter, the next six months, if you do good valuation work—Mr. Market will pay you.”
So instead of naming you a stock and hope to show result in 10 days, I will show you my experience of value investing in Malaysia with the consistent extra-ordinary return and low risk in the mid-term.
Sorry, this is a repetition of what I have written before for a few times, done to prove the point.
My portfolio returns using fundamental value investing
Tan Kian Wei, one of the major contributors in i3investor has put up two official portfolios of mine in i3investor in 2013 which have reasonably long duration, one in January 2013 as “GE 13 Watch – kcchongnz”, and the other on August 1 2013 named “Stock Pick Challenge 2013 2H – kcchongnz”. They can be viewed from these links below.
http://klse.i3investor.com/servlets/pfs/13147.jsp
http://klse.i3investor.com/servlets/pfs/19386.jsp
I have provided detail analysis on the stocks chosen and their investment thesis in i3investor following the links above. by the way, there weren't these"20 accounting formula, 5 valuation methods" as always muttered by that fellow.
Return of GE13 Watch
Table 1 in the Appendix shows the performance of the stocks and the portfolio for the 3 years and 5 months’ investment period for “GE13 Watch” as at to date, a reasonably long period.
During this period, the average return of the portfolio of ten stocks is 110.6%, widely out-performed the gain of the broad market KLCI of just 0.4% and the SmallCap Index of 24.3%.
9 out of 10 stocks in the portfolio have positive total returns which varies from 0.6% for Plenitude to 328% for Prestariang. There is only one stock which loses money, Pantech of just -13.3%, showing the low risk of following this value investing strategy.
The total return is equivalent to a compounded annual growth rate (CAGR) of 24.1%. RM100000 invested less than three years ago has grown to RM210600, more than double that of invested in the broad market.
Four out of the ten stocks have triple digits return; Prestariang at 328%, SKP Resources at 300%, Pintaras at 192%, and NTPM 108.3%. This is the result of a very basic principle of value investing, that is,
“Take care of the downside, the upside will take care of itself”
Return of Stock Pick Challenge 2013 2H
Table 2 in the Appendix shows the performance of the stocks and the portfolio for the 2 years and 11 months’ investment period for “Stock Pick Challenge 2013 2H”.
During this period, the broad market dropped about 8%. However, all eleven stocks out-performed the broad market with ten of the stocks, or 91% of the stocks in the portfolio have positive total returns. The average return of the portfolio is 96%, beating the broad market by 114%.
Two stocks have triple digits return; Datasonic at 461%, and Homeritz at 342.5%.
Again it has demonstrated that value investing has yielded superb return, and more importantly, with very low risk as again evidenced from the minimal losses of just one stock.
Return of Dividend Investing Strategy
Recently at the end of last year, I have switched to another value investing strategy, a divided yield strategy as described in the link below.
http://klse.i3investor.com/blogs/kcchongnz/92727.jsp
Since the beginning of this year, the broad KLCI has dropped by 3.5% from 1698 to 1638. However, many smaller capitalized stocks, especially the hot export stocks have dropped by more than 20%, some even more than 30%.
As on 20th June 2016 today, the portfolio of 5 stocks return an average of 29% as shown in Table 3 in the Appendix. There is not a single loser in the five-stocks portfolio. That means not only the portfolio way out-performed the broad market, every single stock does so.
Those stocks were chosen again with the very first basic principle of value investing with safety first in mind with the motto of:
"Take care of the downside, and the upside will take care of itself."
Conclusions
It has shown all three portfolios of stocks in Bursa selected using various value investing strategies outperformed the broad market by a very wide margin, in the mid-term as well as in the short-term. The consistency in the superb performances implies they are unlikely as a result of luck. This is also in consistent with the good performances and proven records of the fundamental value super investors as described in my previous article.
Hence following the principles and methodologies of value investing does appear to have a higher probability of building long-term wealth in the stock market. The key word is traceability, plausibility, consistency, stress free, low risks, and etc.
I do agree there are other methods which can also provide extra-ordinary return from investing in the stock market. For me, I always believe value investing is a better way to do, no qualm about it. And I would like to propagate this value investing to the younger generation and the public to build wealth slowly but surely in the long term.
If you are interested to learn about this value investing for a small fee, please contact me at
ckc14invest@gmail.com
K C Chong
Appendix
| Column | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
| Date | 21/1/2013 | 21/6/2016 | ||||||||
| Stock Name | Code | Ref Price | Adj. Price | Price now | Gain | % gain | CY=FCF/MC | ROIC | EV/EBIT | EY |
| Kfima | 6491 | 2.02 | 1.67 | 1.85 | 0.180 | 10.8% | 14.0% | 25.7% | 3.6 | 27.9% |
| Pintaras | 9598 | 3.12 | 1.18 | 3.45 | 2.270 | 192% | 6.7% | 29.3% | 2.4 | 42.0% |
| ECS | 5162 | 1.06 | 0.89 | 1.51 | 0.620 | 69.7% | 17.8% | 25.1% | 3.6 | 28.0% |
| Plenitude | 5075 | 1.85 | 1.68 | 1.69 | 0.010 | 0.6% | 16.0% | 12.9% | 2.4 | 41.8% |
| Jobstreest | *0058 | 2.4 | 1.06 | 1.80 | 0.740 | 70% | 6.4% | High | OK | OK |
| Pantech | 5125 | 0.78 | 0.64 | 0.56 | -0.085 | -13.3% | - | 9.1% | 8.3 | 12.1% |
| SKPRes | 7155 | 0.34 | 0.31 | 1.240 | 0.930 | 300.0% | 8.5% | 33.0% | 2.9 | 33.9% |
| NTPM | 5066 | 0.47 | 0.42 | 0.875 | 0.455 | 108.3% | 4.5% | 12.4% | 10.2 | 9.8% |
| Kimlun | 5171 | 1.50 | 1.29 | 1.80 | 0.515 | 40.1% | - | 22.8% | 7.2 | 14.0% |
| Prestariang | 5204 | 1.21 | 0.47 | 2.01 | 1.540 | 328% | 8.6% | 150.0% | 5.6 | 17.9% |
| Average | xxx | xxx | xxx | xxx | xxx | 110.6% | 118.8 | xxx | xxx | xxx |
| Median | xxx | xxx | xxx | xxx | xxx | 69.7% | xxx | xxx | xxx | |
| KLSE | KLCI | 1631 | 1631 | 1638 | 7 | 0.4% | xxx | xxx | xxx | |
| FTSE Bursa | Small cap | 12126 | 12126 | 15072 | 2946 | 24.3% | xxx | xxx | xxx |
http://klse.i3investor.com/blogs/kcchongnz/98798.jsp
