02 June 2012
Rich and Successful People: Interview with Tan Teng Boo, founder and owner of iCapital
What is your investment philosophy?
Value investing but in an eclectic manner and with an Asian perspective. It has elements of Warren Buffett, Philip Fisher, Benjamin Graham, John Templeton and my own elements as well and these are best described and understood by comparing them to the remarkable qualities of a bamboo. Maybe my investing style can be termed “Bamboo Value Investing”.
Is there an investor you admire greatly and why?
Can I say, myself? If yes, the reason is this: Other fund managers need only focus on managing their funds. In my case, besides managing funds over RM1bil on a local and global basis, I have a number of companies and a fast growing business to manage at the same time. Yet, I have consistently beaten all the benchmark indices, whether Malaysian or globally based. Hard to find another parallel, really.
Why are there no more close end funds like yours on Bursa Malaysia?
Unless the fund manager has an excellent track record, it is very hard to promote and list a close-end fund like icapital.biz Bhd on Bursa Malaysia. It has to go through an IPO process. Most importantly, it is not so profitable for fund management companies to promote and list close-end funds because there are no entry fees or front-end loadings or commissions or bid/offer spreads. Also, investors in Malaysia are not familiar with closed-end funds.
What is your opinion of the state of equities and when will be a good time to go in?
Since April/May 2011, I have been bearish on equities globally, including that of Bursa Malaysia. My bearish views have not changed one iota. The best times are when there are screaming buys. The stocks are so undervalued that they actually scream at you to buy them. I am patiently waiting for these.
How did you get into the investment business?
Performance in this business is very easy and objective to appraise either you beat the market or you don't. No politics, no rationalising. I find the cold objective appraisal close to finding absolute truth. I am a truth seeker.
Also, there are many investors losing money in the stock market. In 1989, I started i Capital, our weekly investment publication, with investment education in mind.
What are your concerns about the Malaysian economy?
Poor productivity, efficiency and competitiveness and that there are no policies to tackle these urgent problems.
The New Economic Model would have been a great solution but self-interested Malaysians have shot it down.
You started investing in Malaysia and now have branched out globally. How do you balance between Malaysia and the rest of the world?
With some difficulties. I rely a lot on SIA and have to use Changi as my hub. If only KLIA and MAS can be really world-class and the KLIA is not the furthest airport in the world from a city. Imagine, the KLIA is even further than Narita is from Tokyo (that is why Haneda Airport is becoming more popular than Narita). With the availability of the Internet, with our operations in KL, Singapore and Sydney, these help.
Also, as a value investor, I am not an active investor and do not need to sit in front of the Bloomberg, etc. And with lots of practice and strong support from my wonderful and committed staff, being a global citizen can actually be fun, educational and very meaningful.
Tan: Performance in this business is very easy and objective to appraise – either you beat the market or you don’t.
You once said you made more money investing in Malaysian shares than Buffett did from 1998 to March 2009. Can you still make more money from Malaysian shares or is there more profit elsewhere?
Yes, my returns are higher than Warren Buffett's and also higher than John Paulson's flagship fund. There are great investing opportunities to be found on Bursa Malaysia, as there are some great companies listed there. However, based on sheer numbers, you cannot beat the investing opportunities available from the 40,000 plus listed companies globally.
Any advice to young people wanting to buy stocks or grow their savings?
At Capital Dynamics, our training focuses on developing the right attitude and character and focuses on the long-term. For example, our investment analysts do stuff that are superficially not related to investment research or analysis. Many quit. So, why such an approach? The technical skills like financial modelling are easy to acquire but the right mind set and the right character are not taught in universities.
To be successful, having the right attitude and character are the two most important qualities. Building a successful career is like successful investing. Patience, determination and discipline are three very important qualities. By tasking our investment analysts to do supposedly unrelated stuff, we are developing them to have patience, determination and discipline. Many young people lack these, do not realise it and learn about it too late.
How do you see the global problems playing out and what advice can you give people to protect their money in such turbulent times?
The problems facing the global economy are not easy to deal with. Europe and America are just so eager to blame everyone else except themselves. They work 40-hour week but want to have wages equal to 80 hours plus all the generous benefits from the government.
When work-life balance tilts so much to life instead of work, who foots the bill and how can the economies expand?
The bearish turbulence globally would still continue for some time to come but in such volatile times, there are also wonderful investing opportunities. Investing in our low risk, high return funds would be perfect.