Recently we interviewed Victor Chng, is an investment analyst at Fifth Person Pte Ltd. He specialized in identifying high-growth, small-capitalisation companies. Currently, he manages a private equity fund of over $7 million with his team. Previously, Victor represented Singapore in the 2008 TAFISA World Games in Busan, South Korea and was the 2008 IFMA World Muay Thai Championships bronze medallist, kicking some serious ass along the way.
What were you trained for in Polytechnic?
I’m formally trained as an engineer and have a Diploma in Chemical Process Technology.
What moved you from kicking asses to investment?
I was a competitive Muay Thai fighter back in the day and represented Singapore in the 2008 Busan Games in South Korea. I broke my nose during training and had to repair it once after the competition ended (and I have a nicer nose now).
After the operation, I chose to stop fighting competitively since I didn’t want to take another blow to the nose. Because of that, I had extra time sitting around and I started to pick up and read a lot more about investing. I already had an interest during my Muay Thai days but now I really had the free time to focus on it and I started to read voraciously.
Are there similarities between martial arts and investment?
There are definitely similarities! Just like many things in life, you require discipline, hard work and lots of study to get good at it. There is no shortcut to successful investing.
You started investing at the age 23, why then and how did you feel at that time?
When I was first starting out, the learning curve was pretty steep and felt “blur” at times. But I powered on and just continued spending more time reading books and annual reports while I was doing my research on various stocks.
I started to get the hang of it after about a year of intense study. I still do this now; I continue to read books on investing and pore over every annual report I can get my hands on when I do my research!
What is your investment philosophy and how it benefits you?
My investment philosophy is to invest in quality companies with a great business model and good growth, led by a great management team, at a fair /undervalued price. I have the formula neatly summarized here.
Did you live by this philosophy through your life experience or you borrow from someone you idolized?
When I first started out, I tended to invest in companies simply because their stock price was cheap. That did not turn out too well. When I start to read more about Warren Buffett and his investment philosophy, I began to evolve my style towards investing in quality companies and stopped focusing on just price alone.
I think Warren Buffett’s quote sums it up perfectly:
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
Why do you choose to do value investing?
It just made the most sense to me; you buy a stock because the company behind it is a strong, solid business with a good track record, and lots of growth potential! I feel safe investing my money in an asset I can understand in this manner.
I had a look at trading, but the charts and all the technical indicators seemed so foreign to me and I couldn’t grasp the logic behind it. And if you can’t understand how something works, you can’t use it to make money.
Value investing never goes out of fashion. Well, why do you specifically apply this in growth companies?
I always look for growth when it comes to investing and I believe a lot of people subscribe to that concept as well. For example, you mostly invest in a piece of property because you believe it will rise in value five years later. Similarly, I want to invest in a company that is growing and will rise in value in time to come.
Even if you invest mainly for income, I believe you should invest in a high-dividend company with growth. Because if a company has no growth and starts to decline, earnings will continually fall and its share price will fall in tandem. In that scenario, your dividends may not even be able to compensate for the fall in price.
Please provide an example of a company you had invested in that use with this strategy and succeed?
Super Group Limited. We invested in Super in 2011 at $1.31 per share. Back then, their food ingredients business segment was almost doubling its revenues every quarter, but not many noticed then because it was still relatively small compared to their main business segment.
Eventually, the growth was too astounding for the market not to take notice and the stock started to move up fast. We sold Super in 2013 at $4.50 – a return of 243.5% in just over two years.
What’s your vision for The Fifth Person?
I believe that sound investment knowledge, financial literacy and intelligent money habits is vitally important for anyone who wants to achieve financial security and freedom.
Our vision is to enable that.
By sharing everything we know about investing on our site – www.FifthPerson.com, through our online courses and events, we hope to help people become better money managers and investors. With the right financial and investment knowledge, people have the tools to build a better life for themselves and their loved ones.
I mean, it’s something that I want to do for my family and loved ones as well.