Asian fund managers (1)

In my opinion, there are three good ways to invest in equities:

[1] Do it yourself: you need to spend lots of time on it, but it can be pretty rewarding while learning a lot in the process. I have invested in Asian shares for about 20 years (for 16 years mostly Malaysian shares), booked returns of 15+% per year which is very typical for decent value investors. My hunting ground for investable companies has the following characteristics:

• Small and medium size, not yet discovered by large fund managers
• Focused, they tend to be better than conglomerates, but also more easy to analyse
• Good corporate governance, where the managers are prepared to share the profits with the minority shareholders
• Decent dividend yield, although a company growing fast might want to keep cash in the company, in general companies paying some dividend tend to perform better is my experience
• Good to decent balance sheet, needed to withstand a rainy day
• High ROE (Return On Equity) of at least 15%, may be the most important criteria of all; there are similar concepts which are also excellent like ROCE etc. I hope to revisit this subject in the future.
• Good and consistent track record (correlated with the previous)
• Cheap price relative to their good quality track record
• Be aware of cyclical companies near their cyclical high (they look cheap, but aren't)

Pretty common sense all of the above, but amazingly, these kind of companies are often found to be boring by other investors, are thus neglected and offer good value for patient investors.

However, not everyone has the time to devote to this, or don't have the right attitude for it. Even the best investors will sometimes have disappointing results in the short or even medium term, one need to have the stamina to deal with that.

[2] ETFs (Exchange Traded Funds): funds that are passively invested and thus have (very) low management fees. Good for "macro calls", I for instance am quite interested to invest in companies in Africa, for which I use an ETF which invest in larger companies spread out all over the continent, to reduce country risk. There are a huge amount of ETFs, each with a different focus, again, one should do his homework before investing in them, but they can serve their purpose quite well.

[3] Managed, good quality funds: these funds are actively managed by fund managers with a long and distinguished track record. There are quite a few good or excellent fund managers focused on Asian shares. Although management fees are much higher than for ETF's, excellent fund managers are indeed worth it.


The last category is the subject of this posting, and I will revisit it several times in the future.

In the past I did write several times about some Asian fund managers, for instance:

Value Investing with Cheah Cheng Hye
Claire Barnes and the Apollo Asia Fund
Top holdings of good Asian funds


Just to be clear:

• I do not receive one cent commission by writing about these fund managers
• I might or might not have money invested with them
• I might or might not know them
• I think they are good, that they select the right kind of stocks, that they have good track records, but I could be wrong, and even if I am right, past results are no guarantee for good results in the future
• As usual, readers should do their homework, either when they want to invest in these funds, or when they want to follow some of the top holdings of these fund managers

The first fund manager I like to present is Yeoman Capital Management. I had encountered them a few times in HK small caps in which I was interested.

A good article about the fund can be found here.

Valuebuddies had a nice posting about the manager, drawing my attention, including some links to interesting video's:








Sun Hing Vision is a company in which I have owned shares myself, also because David Webb invested in it.

Some posters at Valuebuddies have better eyes than me and guessed which books are shown behind Yeo Seng Chong:

On the top deck :
- Competitive Strategy: Techniques for Analyzing Industries and Competitors
- You Can Be a Stock Market Genius
- Common Stocks and Uncommon Profit
- The Essays of Warren Buffet
- Value Investing : From Graham to Buffett and Beyond
- Competing on Analytics
- Beating the Street
- One Up On Wall Street
- The Value Imperative

On the bottom deck :
- The Wealth of Nations
- 2x Intelligent Investor
- 2x Security Analysis