We recently had the pleasure of interviewing Wong Yu Liang and Victor Khoo, co-founders and fund managers of Lumiere Capital based in Singapore. Lumiere, established in 2007, invests in undervalued equity securities in Asia, combining bottom-up analysis of individual stocks and contrarian thinking.
Wong Yu Liang is the co-founder of Lumiere Capital and has more than 10 years of investment management experience. Over this period, he has had a successful investment track record which includes achieving a compounded annual return of 41% over the 6 year period from Jan 2002 to Sep 2007. Yu Liang is a CFA charterholder. Prior to founding Lumiere Capital, he worked in the area of corporate finance with an international consulting firm, specializing in mergers and acquisitions and investment analysis in the Asian region. Yu Liang graduated with a degree in accountancy from Nanyang Technological University, Singapore, in 2001.
Victor Khoo is the co-founder of Lumiere Capital and has more than 10 years of investment management experience. Over this period, he has had a successful investment track record, which includes achieving a compounded annual return of 46% over the 6 year period from Jan 2002 to Sep 2007. He previously headed the finance department at a government agency and also specialised in financial analysis for corporate projects. Victor graduated with a degree in accountancy from Nanyang Technological University, Singapore, in 2001.
MOI Global: Please tell us about your background and how you became interested in value investing.
Wong Yu Liang and Victor Khoo: We started our value investing journey in 2001 after being inspired by the writings of Warren Buffett and Benjamin Graham. The scientific approach of assessing the intrinsic value of a company and buying at a substantial discount to intrinsic value appealed to us immediately. We have always liked hunting for bargains in all areas of our lives and value investing is a natural extension of that personality make-up.
MOI: What are some key differences between the Asian and U.S. equity markets? Which aspects do you think are generally misunderstood by U.S. investors who invest in Asia?
Our primary source of ideas is from reading corporate announcements and annual reports, especially during the earnings results season, because this will allow us to pick up ideas that may not be found using valuation screens…
Lumiere: The U.S. market is more developed, transparent and has greater extent of corporate disclosure than Asian markets. Investors are able to rely on published information on the U.S. market more in making the investment decision, as there is a greater depth of information made available. The information is also somewhat more reliable as there are more stringent reporting requirements in the U.S. Another difference is U.S.-listed companies tend to be run by a professional management team compared to Asian listed companies which have a higher proportion that are controlled by the founding families of the business. U.S. investors who invest in Asia may believe that the quality of information released by Asian companies is as transparent or as reliable as that disclosed by U.S.-listed entities, which may not be true. A lot more work needs to be done to establish the veracity of information and accuracy of facts. Another misunderstanding is that shareholder activism, which works well in the U.S. in unlocking value, does not work as well in Asia due to cultural differences and the fact that a lot of companies are family owned or controlled.
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