A malaysian, Mr. Koon Yew Yin (KYY) has made a lot of wealth from investing in stock. Personally I have read a lot about Warren Buffett, Benjamin Graham, malaysian "Cold Eye", and etc., I think it's good for us to evaluate objectively about the investing approach of KYY, probably learn something useful from him. A lot of my writings are taken from hispublic articles, comments, and other people comments.
Some background information of KYY:
KYY was a founder of IJM, Gamuda and Mudajaya. He gave Dato Lin Yun Ling, Gamuda CEO, Ng Ying Loong, former Mudajaya CEO and Dato Richard Fong, Glomac Dy Chairman their first employment. He is a Chartered Civil Engineer and he was a member of the Malaysian Board of Engineers and SIRIM for drafting the Malaysian Standards for Cement and Concrete , the highest professional achievement for any Engineer. He was the Secretary General of the Malaysian Master Builders Association for 9 years when Tan Sri Yeoh Tiong Lay was the President. Fobes selected him as one of the 4 philanthropists from Malaysia. Now he is a member of the Penang Institute, an advisory think tank for the Penang Chief Minister and also a member of the Penang Future Foundation. He has interviewed hundreds of engineers, lawyers, accountants, and etc.
His article http://klse.i3investor.com/blogs/koonyewyinblog/40359.jsp dated 5 Nov 13:
He pointed out that by looking merely at current PE and current earnings of a company is not sufficient to evaluate the profit growth potential; as a result, many people miss out to buy companies with profit growth potential. He argued that this kind of investors cannot outperform the market index because of shortsighted. He showed that in Nov 2013 all plantation companies show poor current earnings and many people are not interested to buy them, as a result the prices of plantation companies are so cheap. He further illustrated that it takes time for plantation industries to produce meaningful profits for shareholders (can take more than 7 years from the time of forest clearing).
He strongly recommended Jaya Tiasa in this article because he believed Jaya Tiasa has explosive profit growth prospect. He said because of poor current PE of Jaya Tiasa, the price (at that time) has been depressed for more than a year, he believe it's a good time to buy it.
His article http://klse.i3investor.com/blogs/koonyewyinblog/40823.jsp dated 12 Nov 13:
He said more than 80% of day traders lose money due to transaction costs and poor share selection based on hot tips. He claimed that the most frequent mistake of them is 'loss aversion', a psychological obstacle of them. He argued that in his opinion, a good stock must be 'undervalued and with good profit growth prospect'. He will not buy a stock which does not have this quality, but a stock with solid evidence of value and not on the basis of tips.
As stated by him "After you have bought some stock that you think can perform well, you will have to decide when and which stock to sell."
He said it's a mistake to sell the good stocks to lock in profit early but retain those that are not performing. He said some people regret this action and later even jump back to buy back the stock they just sold with a even higher price than the price they sold previously. And some people just watch the stock they sold go higher and higher.
He illustrated that it is wrong to hold losing investment for longer than we should. It is important to admit our own mistake of picking the wrong stock and sell as fast as possible. In the end of the article, he said the time to sell the stock is when the reasons you bought the share are no longer valid.
His article http://klse.i3investor.com/blogs/koonyewyinblog/44981.jsp dated 16 Jan 14:
Investors must look for businesses that they could understand because they have to be able to make an educated guess about the future earnings. If the business is more complex, then the more uncertain of the profit projections. Simple businesses also have an advantage, as it's harder for incompetent management to make big mistake.
Value investors want managers who act like shareholders. They focus on growing the business, thus creating long-term value. If the managers are acting like employees, they will focus on short-term goals in order to secure a bonus or other performance perk, sometimes to the long-term detriment of the company. If they're thinking like shareholders, they will pay themselves reasonable wages and depend on capital gains in their shares.
KKY argued that it is not possible to keep track with too many stocks of different type of businesses. He suggested not to own more than 5 stocks. He said value investors must not worry about the possible next market crash. Because after the market crash, we will have the opportunity to buy undervalued stocks. He said if you bought the shares like buying a business, you will want to hold onto them as long as the fundamentals are strong. A long-term investor does not buy and sell frequently. But if the reasons to buy are no longer valid, then you must sell and do not fall in love with your stocks.
His article http://klse.i3investor.com/blogs/koonyewyinblog/45110.jsp dated 20 Jan 14:
In this article he tried to lay out the reasons for buying a lot of shares of Jaya Tiasa. He viewed Jaya Tiasa as a businessman and think it is undervalued by using simple business logic. Jaya Tiasa has a total planted area of 62800 ha which has an open market value of more than twice of its market cap (at that time). Moreover its plywood and timber business have competitive advantage because it has a large forest reserve.
He said instead of buying TSH, KLK, UP, IOI and SOP, he chose Jaya Tiasa because nobody want them (at that time) and it is safer to buy it cheap. Later he said he and his associate bought SOP 20m shares in 2011 at below RM3, later they sold SOP above RM6 and switch to Jaya Tiasa. His friend, Alvin Tai (CFA from RHB research) said palm oil price will continue to go up for many more years.
A point could be concluded in this article, that is KYY looks at a particular industry, i.e. plantation industry in this case. He avoided high flying stocks like IOI and TSH, and concentrated on low PE one like Jaya Tiasa in this case. Same case for VS Industry, he avoided MPI and concentrated in VS (for electronic industry).
His article http://klse.i3investor.com/blogs/koonyewyinblog/45451.jsp dated 25 Jan 14:
Again, he listed the reasons to buy Jaya Tiasa. Jaya Tiasa FFB production is projected to increase rapidly in the next few years. KLK, UP, SOP, TSH etc. are no longer cheap and their FFB production rate of increase will be slower compared to Jaya Tiasa.
His article http://klse.i3investor.com/blogs/koonyewyinblog/45691.jsp dated 31 Jan 14:
It is important for those who failed in stock picking to change their old style or mind-set. They must examine their track records to realise how well they have performed.
He cited UOB Kay Hian 19 March 12 report to list out the reasons he bought Tradewinds Plantation (TWSP):
- TWSP has a planted area of over 90000 ha.
- Its FFB production is growing strongly double-digit.
- All TWSP's land is within Malaysia, and its land would be more valuable than similar land in Indonesia. Its RNAV worth RM19.58, significantly higher than share price.
- TWSP has more planted land and FFB production than Genting Plantation.
His article http://klse.i3investor.com/blogs/koonyewyinblog/45760.jsp dated 4 Feb 14:
In the long term, some wil win and some will lose in the stock market. We must be humble and willing to learn from investors who have been constantly showing successful track record.
For those who bought certain stock because of my recommendation, you must remember that I always say buy at your own risk. Bear in mind that no share will continue to go up in price for whatever reasons and no share will continue to come down for whatever reason.
(Note that it's clear KYY is not a long-term investor in the true sense, he probably bought a stock and holding for 1-2 years duration. On the other hand, people like Warren Buffett bought certain stock and ready to hold for life. How KYY earned money? By buying low and selling high.
As stated by him, "As we all know, all share prices fluctuate. It will be foolish if I do not sell some JT when the price goes up. Now I tell you openly that I will sell some to reduce our margin loan when JT price goes up by say 20% or more per cent so that we have money to buy when JT comes down or to buy some other shares.")
He said although he believes Jaya Tiasa will go up in very long term but he still want to sell it because price movement of share will not move up in a straight line and we must learn how to take advantage of this phenomenon. Hence, he said if you bought Jaya Tiasa and suffering paper lose now, you can't blame him because he didn't force you to buy.
In 1983 when Hong Kong market crashed, he took opportunity and earned a lot. After 2008 sub prime crisis, he earned a lot through Kulim warrant from RM0.5 to RM10.5 within 2 years. In 2010, he bought 20m Supermax shares from RM1 to RM6.5 within 18 months. In 2013, because of KYY's large share holding in Tradewinds Plantation, he forced the controlling shareholder to offer a higher price to privatize.
His article http://klse.i3investor.com/blogs/koonyewyinblog/45867.jsp dated 6 Feb 14:
To be a super investor, your brain has to be wired differently. His definition of super investor is someone who makes more than 20% per year (e.g. Warren Buffett, he could double his capital in 3.3 years, RM1 to RM8 in about 10 years).
MPI and Unisem went above RM40 during the Y2K crisis. Globtronics went from RM2 to above RM20 in about 18 months. CPO went above RM4000 per ton few years ago. SOP went from RM2.5 to RM6.5 within 3 years. If you did not grab the mentioned opportunities, you are only a mediocre investor.
He listed out 7 traits for successful investor:
- The ability to buy stocks while others are panicking and sell stocks.
- Wanting to win in the stock market.
- Willingness to learn from mistakes. If you ignore mistakes without fully analyzing them, you will make a similar mistake again.
- Inherent sense of risk based on common sense. You must know the risk of buying any share which has gone up a lot and when all the analysts are recommending buy. Remember your ego can skew your judgment.
- Have patience to wait to buy when it has fallen to a base and not buy when it has shot up due to some news.
- Ability to think clearly. You must know the "moat" of a business to protect its long-term profits.
- The ability to live through volatility without selling. It is foolish to panick at the bottom and selling it.
He said more than 80% of day traders lose money due to transaction costs and poor share selection based on hot tips. He claimed that the most frequent mistake of them is 'loss aversion', a psychological obstacle of them. He argued that in his opinion, a good stock must be 'undervalued and with good profit growth prospect'. He will not buy a stock which does not have this quality, but a stock with solid evidence of value and not on the basis of tips.
As stated by him "After you have bought some stock that you think can perform well, you will have to decide when and which stock to sell."
He said it's a mistake to sell the good stocks to lock in profit early but retain those that are not performing. He said some people regret this action and later even jump back to buy back the stock they just sold with a even higher price than the price they sold previously. And some people just watch the stock they sold go higher and higher.
He illustrated that it is wrong to hold losing investment for longer than we should. It is important to admit our own mistake of picking the wrong stock and sell as fast as possible. In the end of the article, he said the time to sell the stock is when the reasons you bought the share are no longer valid.
His article http://klse.i3investor.com/blogs/koonyewyinblog/44981.jsp dated 16 Jan 14:
Investors must look for businesses that they could understand because they have to be able to make an educated guess about the future earnings. If the business is more complex, then the more uncertain of the profit projections. Simple businesses also have an advantage, as it's harder for incompetent management to make big mistake.
Investors must look for businesses that they could understand because they have to be able to make an educated guess about the future earnings. If the business is more complex, then the more uncertain of the profit projections. Simple businesses also have an advantage, as it's harder for incompetent management to make big mistake.
Value investors want managers who act like shareholders. They focus on growing the business, thus creating long-term value. If the managers are acting like employees, they will focus on short-term goals in order to secure a bonus or other performance perk, sometimes to the long-term detriment of the company. If they're thinking like shareholders, they will pay themselves reasonable wages and depend on capital gains in their shares.
KKY argued that it is not possible to keep track with too many stocks of different type of businesses. He suggested not to own more than 5 stocks. He said value investors must not worry about the possible next market crash. Because after the market crash, we will have the opportunity to buy undervalued stocks. He said if you bought the shares like buying a business, you will want to hold onto them as long as the fundamentals are strong. A long-term investor does not buy and sell frequently. But if the reasons to buy are no longer valid, then you must sell and do not fall in love with your stocks.
His article http://klse.i3investor.com/blogs/koonyewyinblog/45110.jsp dated 20 Jan 14:
In this article he tried to lay out the reasons for buying a lot of shares of Jaya Tiasa. He viewed Jaya Tiasa as a businessman and think it is undervalued by using simple business logic. Jaya Tiasa has a total planted area of 62800 ha which has an open market value of more than twice of its market cap (at that time). Moreover its plywood and timber business have competitive advantage because it has a large forest reserve.
He said instead of buying TSH, KLK, UP, IOI and SOP, he chose Jaya Tiasa because nobody want them (at that time) and it is safer to buy it cheap. Later he said he and his associate bought SOP 20m shares in 2011 at below RM3, later they sold SOP above RM6 and switch to Jaya Tiasa. His friend, Alvin Tai (CFA from RHB research) said palm oil price will continue to go up for many more years.
A point could be concluded in this article, that is KYY looks at a particular industry, i.e. plantation industry in this case. He avoided high flying stocks like IOI and TSH, and concentrated on low PE one like Jaya Tiasa in this case. Same case for VS Industry, he avoided MPI and concentrated in VS (for electronic industry).
His article http://klse.i3investor.com/blogs/koonyewyinblog/45451.jsp dated 25 Jan 14:
Again, he listed the reasons to buy Jaya Tiasa. Jaya Tiasa FFB production is projected to increase rapidly in the next few years. KLK, UP, SOP, TSH etc. are no longer cheap and their FFB production rate of increase will be slower compared to Jaya Tiasa.
His article http://klse.i3investor.com/blogs/koonyewyinblog/45691.jsp dated 31 Jan 14:
It is important for those who failed in stock picking to change their old style or mind-set. They must examine their track records to realise how well they have performed.
In the long term, some wil win and some will lose in the stock market. We must be humble and willing to learn from investors who have been constantly showing successful track record.
For those who bought certain stock because of my recommendation, you must remember that I always say buy at your own risk. Bear in mind that no share will continue to go up in price for whatever reasons and no share will continue to come down for whatever reason.
(Note that it's clear KYY is not a long-term investor in the true sense, he probably bought a stock and holding for 1-2 years duration. On the other hand, people like Warren Buffett bought certain stock and ready to hold for life. How KYY earned money? By buying low and selling high.
As stated by him, "As we all know, all share prices fluctuate. It will be foolish if I do not sell some JT when the price goes up. Now I tell you openly that I will sell some to reduce our margin loan when JT price goes up by say 20% or more per cent so that we have money to buy when JT comes down or to buy some other shares.")
It is important for those who failed in stock picking to change their old style or mind-set. They must examine their track records to realise how well they have performed.
He cited UOB Kay Hian 19 March 12 report to list out the reasons he bought Tradewinds Plantation (TWSP):
- TWSP has a planted area of over 90000 ha.
- Its FFB production is growing strongly double-digit.
- All TWSP's land is within Malaysia, and its land would be more valuable than similar land in Indonesia. Its RNAV worth RM19.58, significantly higher than share price.
- TWSP has more planted land and FFB production than Genting Plantation.
In the long term, some wil win and some will lose in the stock market. We must be humble and willing to learn from investors who have been constantly showing successful track record.
For those who bought certain stock because of my recommendation, you must remember that I always say buy at your own risk. Bear in mind that no share will continue to go up in price for whatever reasons and no share will continue to come down for whatever reason.
(Note that it's clear KYY is not a long-term investor in the true sense, he probably bought a stock and holding for 1-2 years duration. On the other hand, people like Warren Buffett bought certain stock and ready to hold for life. How KYY earned money? By buying low and selling high.
As stated by him, "As we all know, all share prices fluctuate. It will be foolish if I do not sell some JT when the price goes up. Now I tell you openly that I will sell some to reduce our margin loan when JT price goes up by say 20% or more per cent so that we have money to buy when JT comes down or to buy some other shares.")
He said although he believes Jaya Tiasa will go up in very long term but he still want to sell it because price movement of share will not move up in a straight line and we must learn how to take advantage of this phenomenon. Hence, he said if you bought Jaya Tiasa and suffering paper lose now, you can't blame him because he didn't force you to buy.
In 1983 when Hong Kong market crashed, he took opportunity and earned a lot. After 2008 sub prime crisis, he earned a lot through Kulim warrant from RM0.5 to RM10.5 within 2 years. In 2010, he bought 20m Supermax shares from RM1 to RM6.5 within 18 months. In 2013, because of KYY's large share holding in Tradewinds Plantation, he forced the controlling shareholder to offer a higher price to privatize.
His article http://klse.i3investor.com/blogs/koonyewyinblog/45867.jsp dated 6 Feb 14:
To be a super investor, your brain has to be wired differently. His definition of super investor is someone who makes more than 20% per year (e.g. Warren Buffett, he could double his capital in 3.3 years, RM1 to RM8 in about 10 years).
MPI and Unisem went above RM40 during the Y2K crisis. Globtronics went from RM2 to above RM20 in about 18 months. CPO went above RM4000 per ton few years ago. SOP went from RM2.5 to RM6.5 within 3 years. If you did not grab the mentioned opportunities, you are only a mediocre investor.
He listed out 7 traits for successful investor:
- The ability to buy stocks while others are panicking and sell stocks.
- Wanting to win in the stock market.
- Willingness to learn from mistakes. If you ignore mistakes without fully analyzing them, you will make a similar mistake again.
- Inherent sense of risk based on common sense. You must know the risk of buying any share which has gone up a lot and when all the analysts are recommending buy. Remember your ego can skew your judgment.
- Have patience to wait to buy when it has fallen to a base and not buy when it has shot up due to some news.
- Ability to think clearly. You must know the "moat" of a business to protect its long-term profits.
- The ability to live through volatility without selling. It is foolish to panick at the bottom and selling it.
Author: fast | Publish date: Tue, 23 Feb 2016, 06:19 PM
His article http://klse.i3investor.com/blogs/koonyewyinblog/45984.jsp dated 9 Feb 14:
It is very hard to become a super investor. The biggest one is fear. There will be so many people disagree with you and some will try their best to discourage you. He said even though many people do not agree with his selection of Jaya Tiasa, but he dared to buy more than 40m shares. As stated by him,
It is very hard to become a super investor. The biggest one is fear. There will be so many people disagree with you and some will try their best to discourage you. He said even though many people do not agree with his selection of Jaya Tiasa, but he dared to buy more than 40m shares. As stated by him,
"Am I a fool? Where can I hide my face if Jaya Tiasa could not perform?"
He recalled that in 1984 during the Hong Kong market crashed, all his friends said that he was mad to buy HK shares. He thinks most people are confused and cannot think clearly. As a result they cannot select good shares that can perform.
"They even doubt my sincerity. My intention is noble and altruistic."
Most investors do not think like a businessman. Businessman has the power to smell profit.
His article http://klse.i3investor.com/blogs/koonyewyinblog/46124.jsp dated 11 Feb 14:
He quoted Bible verse John 8:32 "and you will know the truth, and the truth will set you free."
He said sometimes it's good if the company has a lot of debts but provided the debts are used to expand its business. Excessive large amount of cash is a sign of incompetence.
Hexza and Symphony Life are 2 examples of so-so company. They are low P/E and high dividend yield for many years because they do not have profit growth.
His article http://klse.i3investor.com/blogs/koonyewyinblog/46374.jsp dated 14 Feb 14:
In this article he discussed about Xingquan. Many shareholders of Xingquan doubted if the cash was really there. The chairman explained in Mandarin and one of the directors translated into English. He and his family owned about 30m shares. This was his worst investment in his life.
He proposed for free warrants. Later during lunch the chairman explained to him why no dividends:
- Xingquan could not borrow money from banks.
- Xingquan is embarking on a new sale strategy by opening their own shops. This also uplift their brand image. They plan to open up about 5 shops per months.
- The chairman is protecting the interest of shareholders by using the cash pile to remain competitive in China.
CIMB were the underwriters at RM1.85 for the IPO and many fund mangers have bought the shares. It has high NAV and cash pile. One of the founder of the Auditors is his cousin who is a Chartered Accountant. His son is now the senior partner. As stated by him,
"Would you buy it at the current price of about Rm 1.00?"
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