What Is Value Investing? Part 2

How to apply value investing in KLSE? This is a bit more complicated task. Here are some of the reasons. Some of the companies in KLSE are politically driven. These companies might not make a decision which benefits its shareholders. Also. Malaysia ranked badly in corruption list.I will leave that topic to other bloggers.

A company fundamental might look alright but …continue

4 Responses to What Is Value Investing? Part 2

  1. soufulow says:

    Irionically we are looking at the same share around the same time. I am reluctant to invest in Malaysia mainly due to its corruption problem as well as lack of transparency in both gov and company operation. Appreciate if you can share some insights on handling this issue…

  2. boyboycute says:

    Sorry for the late reply. Currently, I don’t have much time to blog.About your comment,
    I do agree with you.That is why our analysis must be very conservative.My criteria in choosing companies for long term investment depend on the criteria set by Warren Buffet with additional rules.Of course we can’t discuss much here.Or else all of us will end up with the same companies.But if our analysis do meet the same results,then we are on the right path.
    In my opinion,corruption is not the only problem in M’sia.It is also the way rules are set to let new companies for IPO and go public.Over the time,the rules are modified and less stringent.So,I won’t buy any newly listed companies.The company must prove itself before it can get my attention.I guess most the value investors have the same thought here.But speculators will buy any ‘hot’ companies.
    Second problem is the directors’ manipulation on the company.A good example is explained below:

    Let’s say Company ABC,which made a net profit of 10million has a dividend policy of declaring 30% of the net profit and retain the balance 70%.The total dividend that will be declared will be 3 million.Outstanding share in the market is assummed 20million. Dividend is 3/20 per share.Before the EX-Date,the directors proposed ESSOS to its workers and additional shares to themselves.Total outstanding shares after the resolution is 25million.ABC company sends you a circular asking you to vote whether to support or go against the resolution.The meeting is held in Johor.You are in KL but you can ask a Proxy to vote for you during the meeting. You don’t know who the proxies are. Also, you own 10 lots only. No matter what you do, the resolution will be approved. Legally, you have the right to vote, comment and take part in the meeting. But in reality, you have no control over the money. You give them money and pray that the board of directors will not do selfish and inappropriate decisions. Your dividend is 3/25 now. You are not happy but the resolution is not illegal.

    I still see a lot of decisions which are not beneficial to shareholders approved by company ABC. Can you identify them?

    PS:By looking at my portfolio every month,you will understand what criteria I set for buying a share.

  3. soufulow says:

    Thanks for the insights, will keep coming back to check on your blog updates.

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