Coffee With FFN and Victor Chng

Victor Chng is an investment analyst at 8 Investment Pte Ltd. He specialises in unearthing high-growth, small-capitalisation companies. Currently, he co-manages a private equity fund of over $7 million. Victor also 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.

FFN: At what age did you get started in investing? 

Victor Chng (VC):I found out about value investing when I was 20 but I only started investing when I was 23.

FFN: What/Who inspired you to get started?

VC: During my polytechnic days, my family got into financial issues. This really woke me up and I started to think what I could do to be financially free. So I started to read books on why certain people are successful and rich in life. I found three common things: They own businesses, invest in properties and equity. I started to ponder which one was most suitable for me.

I had no idea how to start a business and I didn’t have enough capital for property investment. This left me with the last choice – equity. At that time, stocks equaled trading to me, so I started to read books on technical analysis but I couldn’t understand how it worked. It was rather confusing so I gave up in the end.

It was only in 2006 when one of my friends told me more about the world’s richest investor, Warren Buffett. I went to research more Warren Buffet’s investing methodology. I discovered it was value investing and it made so much sense to me. Later I sought mentors to guide me further on value investing and I came across the Millionaire Investor Program by Ken Chee and Clive Tan.

FFN: What was your life like before investing and how is it now?

VC: My life before investing was rather aimless and I did not know what to do with my life. After discovering value investing, it really changed my life. Now I’m working in a private fund where I spend most of my time analysing stocks and reading numerous investing books. I feel blessed to have found my passion early in life. I get to meet CEOs and board members of listed companies, locally or overseas, and sometimes even visit their plants to understand more about their business.

FFN: What are some of your strategies when it comes to investing in stocks?

VC: My investment strategy is focus 50% of my portfolio on fundamentally strong businesses with low debt. 30% on distressed industries and turnaround companies and the remaining 20% is held in cash at all times in case opportunity arises.

FFN: What are some of the stocks in your portfolio currently?

VC: I invested in Super Group in 2011 at $1.31 when I noticed their ingredients sales segment doubling up almost every quarter. Now, Super Group is more than $3.

FFN: Where and how do you look for companies to invest in?

VC: I have many sources: Newspapers, stock screeners and analyst briefings.

FFN: You have co-written a book entitled “Value Investing in Growth Companies”. Please share with us some of your experiences with regards to writing a book.

VC: Writing a book is not easy. Rusmin and I really took a lot of time doing research to ensure the facts are presented correctly in the book. In writing the book, it also increased my knowledge on value investing while I was doing the research and it gave me further distinctions on how companies should be analysed and looked at.

FFN: What are some of your financial goals and how are you going to achieve them?

VC: My financial goals are to make a million at age 32 with $10,000 passive income every month. I am going to achieve it through investing in the stock market and by managing a private fund.

FFN: What are the mistakes you have done pertaining to investing and what are the lessons learnt?

VC: One mistake I made was not studying an industry’s macro factors when investing in commodity products or businesses. For instance, dry bulk shipping. I bought into a dry bulk shipper too early when macro factors pointed out a down-cycle and I lost more than 50% of my investment. Later I studied deeper about the industry and found out if I had done this earlier I would have avoided this pretty expensive mistake.

FFN: What psychology do people need to succeed in investing?

VC: I think people need to have courage and faith when it comes to investing. When the stock you invest in keeps dropping in price, you must have the faith in your research and reasoning that made you invest in that company in the first place – provided your research is diligent enough!

FFN: How has the investor in you evolved over the years?

VC: Over the years my investment style has evolved from just looking at the numbers to focusing more on a company’s business model. Good numbers are the by-product of a good business model.

FFN: What advice would you give for beginners who want to start investing?

VC: There are many different value investors out there in the world. Everyone has different ways of investing but only a few are able to generate at least 15% returns on average annually for their shareholders after netting off fees. Go look for those investors, see what they have in common and model their techniques.

FFN: What do you thing is the biggest misconception people have about money?

VC: People always think that money is scarce. To me money is abundant, everyday trillions of dollars are being transacted in the markets. The money is out there, you just need to know how to earn it.

FFN: What is the one thing, in your opinion, do people need to succeed in investing?

VC: A good investment process. People should focus on the process of finding good companies and generating good returns. If your process is right you can consistently get the same results.

FFN: What are the habits one must follow to have a sound financial life?  

VC: Be frugal and humble.

FFN: A parting shot for the readers?

VC: Time is scarce, so start investing now!