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Wednesday, 21 April 2021

Tradeview Commentaries - Journalism & Extraordinary Individuals

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Today I am writing on a topic somewhat unrelated to stocks. It just came to me after reading a column in The Star by Datuk Seri Cheah Cheng Hye, Penang born billionaire fund manager and founder of Value Partners listed in HKEX. 

If you happen to read his column today, it tells of his rags to riches story which captured how he spent some years as journalist in The Star early days before venturing out on his own. What captivated me after reading the story was how I realise the interlink of journalism & extraordinary individuals. He is the not the first person I have come to know who started as a journalist and reached the upper echelons of society. 

Wu Yajun, the most famous woman billionaire in China who was at a time the richest self made woman in the world also had a 5 years stint as a journalist. She was formerly an editor with China Shirong News Agency. She focused her coverage on property market. Subsequently, she co-founded Longfor Properties which is a leading real estate developer in China listed in HK. She was also known to be an early investor in Uber and Evernote. Her net worth is estimated to be at US 19 billion. From humble origins working in factory in post communist China for US 16 a month, she made it to the top of the wealth list of Forbes.

Locally back in Malaysia, apart from Datuk Seri Cheah Cheng Hye, the notable investor Cold Eyes (Mr Fong Siling) was a Chief Editor of Nanyang overseeing the business, finance and economics section of the paper and happen to be a well known rags to riches story in the investment community of Malaysia. Interestingly, Cold Eyes is more widely known for his prowess as an amazing investor who built substantial of his wealth from the stock market over the years. He is also highly respected for propagating fundamental and value investing in Malaysia over the years through his column in Nanyang and multiple best selling books. 

Another amazing story would be that of Riverstone Holdings Limited founder, Mr Wong Teek Son who is also one of the glove billionaires of Malaysia. Riverstone is the world leader in Class 10 and Class 100 Nitrile Cleanroom Gloves with a market share of 60% globally. His glove quality is top class and along with Hartalega and YTY, belonged to Tier 1 nitrile gloves in the world. Mr Wong who came from hardship was also a former journalist with China Press. Albeit a short stint and earning meagre salary as a cub reporter, ultimately, Mr Wong rose through society  as his company grew. When we talk about Malaysia glove industry, Riverstone which is listed in SGX, is a household name.

Sharing these stories with all is because I had the realisation that journalism have produced exceptional individuals of the society. Growing up, I was told the journalist like nurses and teachers are the most underpaid and under appreciated profession of the society. Yet, it is amongst the most selfless, essential and important job. A good journalist is objective, factual and often write without fear or favour for the betterment of the society. I have utmost respect to journalist who possess top class ethics and independence. Coming back, as I connect the dots, I found a common denominator on why journalism produces extraordinary individuals. That would be the access to knowledge / information. Wu Yajun was a journalist covering the property sector, Datuk Seri Cheah Cheng Hye and Cold Eyes were financial / economics journalist.

If you all know any journalist, take them out for coffee and you will have the most fruitful afternoon. They are highly knowledgeable and possess great insights. I believe every industry there are talents too. However, I have noticed a high propensity of journalist scaling the heights of the political and business world. In my view, it all comes down to making full use of the access to knowledge, information and being resourceful. Hats off to all journalist.

Thursday, 8 April 2021

. Tradeview Commentaries - The Glove Surge, A Mirage or A Path To Oasis?

Readers know I am a believer in glove companies, I always have been and until now I believe that glove companies especially Hartalega & Riverstone are undervalued. My view remains consistent and transparent. There is no flip flop just because the glove sector faced a weaker sentiment in the past few months. This is because as a long term investor, I cannot decide solely based on sentiments. However, my opinion does not matter as the stock market is a collection of diverse views, opinions and investment thesis. 

I am writing this short commentary today as I received many  enquiries today from retail investors asking the following questions (more or less): 

1. Is the glove rally today a technical rebound? 

2. Should I re-enter now? 

3. I am still holding, should I sell and take profit / cut loss? 

One of the more important signal I have been waiting for was local funds flow. For 16 weeks in a row, local funds have been net sellers. From my channel checks, many local funds (except EPF) have been selling gloves since the start of the year. In a large part, the selloff in glove stocks was contributed by local funds. Of course, this triggered some panic selling from retail investors. Foreign funds is a mixture. There are a combination of bottom picking which showed they were net buyers at times, there were also cases of short covering (covering RSS). As the selling momentum outweigh the buying momentum, naturally, share price of glove stocks trend downwards. Today, from the preliminary data, local funds are strong net buyers. It remains to be seen if local funds were the buyers for glove stocks and this will need further data  to be out in a few days.

As a fundamentalist, I hold firm to the investment philosophy that for every stock, there is a company behind the stock and for every company, there is an underlying value or intrinsic value. Value investors look to buy a stock when the share price goes below the underlying value. Back to the 3 questions above, 

1. I believe if local funds are net buyers of glove, this surge in glove stocks is not a one day show due to "technical rebound". 

2. I dont believe in chasing stocks, neither do I believe in going in and out with a short term horizon. Invest in glove stocks if you believe in the fundamentals of the company. Otherwise, just stay away. 

3. One should hold for the long term if one have a long term investment horizon and the ability to hold without pressure (no margin / no leverage). One should sell on strength if one is overexposed to the glove sector without sufficient cash on hand or a balance portfolio. One should cut losses if one do not believe in the glove sector.

Lastly, in investing, it is always about buying into good companies with wonderful management and strong fundamentals. It is not about the "theme of the day" or what everyone else is doing now. With that in mind, if you are keen to invest in glove companies, please stick to the good names, avoid the dodgy ones. Back on 2nd March, I wrote a detailed article on whether investors should take off their gloves? My focus in the article is about the underlying value of the company which particularly focuses on "retained earnings" portion of the company. 

Whether investing in glove stocks is a mirage or a path to oasis, it is fully dependant on your individual belief and investment horizon.


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