Rusmin Ang - Value Investing in Growth Companies: How to Spot High Growth Businesses and Generate 40% to 400% Investment Returns

Contents

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Copyright 2013 by John Wiley & Sons Singapore Pte. Ltd.

Published by John Wiley & Sons Singapore Pte. Ltd.

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Foreword

After reading this book, you might come away with the feeling that Victor and Rusmin have seriously pounded Singapores pavements in search of value-growth companies. Not only have they traveled East Coast Parkway to Changi Village and back to the central business district (scouring for value companies) in Singapore, but they have also been out to Woodlands to check out its industrial zone. Bottom-up investing is all about discovering a companys value early, getting its stocks well before the crowds, and exiting (hopefully with a profit) as mainstream investors move in and push up the valuation. Typically, these sorts of opportunities are found within second- and third-line stocks rather than well-known blue chips. It is a long-term strategy that requires discipline and patience, on top of a robust system, to have a reasonable chance of success.

Despite their differing backgrounds, Victor and Rusmin have merged paths, and value investing has become their common identity. In my opinion, it takes guts to write a book in the first place, but talent to write about a process that has merit and can be empirically tested over time to add value.

This book provides for an entertaining read that takes you through a system that, if followed closely, should help you identify quality stocks and reject unfavorable ones. There is, of course, no guarantee that following this system is a sure recipe for instant riches. However, it certainly provides a comprehensive check that would help you avoid investing in dud stocks and steer you toward those with solid fundamentals and decent rerating potential over time.

After reading this book, it will serve as a ready-to-use reference. The techniques outlined herein are timeless and can be referred to over and over again as you make progress in your investment journey. This is an enlightening read, and thoroughly enjoyable for those interested in learning about value-growth investing and starting their investing journey.

Digby Falkiner

Former Indonesian Research Director at Deutsche Bank

Former Regional Research Operations Head at Societe Generale Private Investor and

Lead Trainer for Millionaire Investor Program Advanced

Preface

Value investing has been one of the most consistent and proven methods of generating wealth over the last century (or more). The third-richest man in the world, Warren Buffett, who has made value investing his lifetime passion, is worth $46 billion. You dont have to be like Buffett, managing billions in the spotlight; a lot of ordinary people with ordinary jobs are perfectly happy quietly making millions through value investing. They are your quintessential millionaires next door.

It makes sense. Spend less than you earn, save diligently, and, when the opportunity comes around, invest cheaply in great companies that will grow in value many, many times over the long run. Its a safe, logical formula to long-term financial security and success. You dont have to be a superstar athlete, movie actor, or tech guru to be financially free. Anyone with a normal job and the diligent application of value investing can retire with millions.

While value investing is traditionally associated with investing in well-established companies, in this book, well show you how you can further increase your investment returns by value investing in smaller growth companies. Investing in growth companies does give us some lucrative compounding rates, but it also requires us to possess the appropriate knowledge to invest in these companies, as these investments can be risky. This book is meant to help you achieve the same success that we have had with growth companies. In doing so, we would like to impart a step-by-step process as to how to value these companies with little risk and still be able to generate 15 percent compounded returns annually.

We know you picked up this book because you want to learn more about investing in growth companies. Whether you are a seasoned investor or a newbie who wants to learn about value investing in growth companies, this book is for you.

With a growing global population, increased life expectancy, rising standards of living, and affluence, more and more will be spent on consuming new products and services, therein fueling the worlds economy every year. However, the economy is subject to fluctuationsthe booms and busts of economic cycles are inevitablebut new millionaires are created virtually every cycle. There is no better time than right now to get yourself on the road to riches by buying something that is going to be worth more money 10 years from now.

Let us share with you a brutal factif you place your money in a bank, you will be earning interest that is lower than the average inflation rate in most countries, be it in Indonesia, Malaysia, Singapore, China, or Thailand, where you will effectively lose value on your money. Instead of doing that, an alternative is to invest your money and allow it to compound over the long haul.

All investors have a common aspiration to enjoy a good return on their investment. But how do we identify investment strategies that can consistently beat the market? One of the greatest things about investing is that there are numerous strategies that investors can deploy, ranging from technical charting to fundamentals analysis. Different techniques produce different sets of results, each with different risk levels. When there are profits to be made, there are risks involved. It is highly dependent on the investor to choose the right strategies that yield the most consistent returns with the lowest risks and yet be able to outperform the market in the long run.