An Important Investment lesson - Koon Yew Yin

Koon Yew Yin

Publish date: Thu, 28 May 2015, 06:13 PM

Practically all my wealth is from share investment and I have been trying to teach people how to invest by giving investment talks and publishing articles. My method of selecting shares is based on my entrepreneurship and not purely on accounting principles as I am not an accountant. That is how I bought so much of VS Industry and Latitude Tree. As a result, I become a substantial shareholder of these two companies.

The price chart shows that Latitude has gone up from Rm 1.00 to above Rm 6.00 in less than 24 months and VS has gone up from Rm 2.50 in January 2015 to the current price level of Rm 4.20 in less than 6 months. Basing on my business instinct, I believe the prices of these two stocks should go higher when the next quarter results are announced.

What is the most important lesson?

You must frequently look at company announcements and when you see any company showing a sudden jump in profit, find out more about the company. Look at their website and its profit growth prospect. That is how I discovered Latitude and VS. I also bought Lii Hen and Poh Huat when I saw their sudden jump in profit.

Similarly I bought into Supermax a few years ago. When I saw there was a sudden jump in profit for Supermax in February 2009, I started my buying. When I saw X ray detectors installed at the airport to prevent the spread of the deadly HINI virus, I bought more aggressively.

The chart below shows the price of Supermax shooting up from Rm 1.00 to above Rm 6.00 within a period of 15 months. People were then fearful of the deadly HINI virus. The demand of gloves far exceeded the supply. As a result, all glove manufacturers were reporting increasing profit every quarter.

Supermax annual report as announced on 8th April 2010 showed that my wife and I together with my nephew and my sister in law held a total of 19, 550, 000 shares. We bought Supermax instead of Top Glove because it was trading at a lower P/E ratio. Similarly VS is now trading at a lower P/E ratio than MPI and Globetronics.

How did I make a kill?

We bought so much Supermax shares within such a short period that its Executive Chairman and CEO, Dato Seri Stanley Thai invited me to visit their factory in Sg Bulou, Selangor to reassure me of my investment. He also wanted to know how and why I bought so mush of Supermax shares within such a short time.

I told him that as soon as I saw the annual report as announced in February 2009 that there was a sudden jump in profit, I started my buying and when I saw X ray detectors at the airport, I bought even more aggressively.

In July 2010 when the HINI fever was under control, I sold just as aggressively. That is how I made such a huge profit.

When to sell?

Statistics show that almost all short term traders lose money. I have told you how and when to buy and now I will tell you when to sell to make profit.

After you have bought, you must hold and sell only when you see the company reporting reduced profit over 2 consecutive quarters.

You must also sell when the criteria for you to buy is no longer valid. For example, although Coastal Contracts and Favco are still showing good quarterly profit, the demand for offshore vessels and cranes is severely affected due to the slump in the oil prices as shown on the oil price chart below.

I sold all my Favco shares a few months ago when I saw oil prices started falling.

I hope this lesson is useful to all investors. Now what you need is some luck and wait patiently to see your profit grow.

I trust this article is an important and useful lesson to all the readers.

Discussions

11 people like this. Showing 23 of 23 comments

calvintaneng

Haha!

You should have seen even further back in time. I warned you about selling Mudajaya and switch to Mulpha. I also warn about oil palm counter like Jtiasa being hit by shale oil soon. Only I didn't expect the total carnage later. All who took my warnings on both oil and oil palm counters escaped big losses subsequently.

Anyway, I appreciate your postings. You have lots of valuable experience that newbies can learn from. So just continue.

One thing I need to caution you. At the moment both Vs and Latitude are still at all time high. You should try to sell and take profit while prices are still good. Rotate into other undervalue stocks. You can then protect your winnings and do more charity work especially for deserving Chinese who are disadvantaged in the Malaysian Education System.

2015-05-28 18:33

matakuda

Oh, Uncle is a speculator...haha

2015-05-28 18:43

Tom

80% of your articles are nothing but full of sh*t
good luck to you, 双面人

2015-05-28 18:48

timetokoon

Ah Koon treat you like dirt...want you to listen to his ego maniac....command you to buy vs and latitud

2015-05-28 18:52

timetokoon

Supermax? 5 years ago lah ah koon....still telling grandpa story ah

2015-05-28 18:54

murali

Pls,pls buy vs n latitude fm my wife n i...we owned 15m shares....we bought cheap cheap....pls buy high high fm us

2015-05-28 19:47

murali

How many more threads u wanna open to promote vs n latitude?10?100??dear admin,can u do something??

2015-05-28 19:49

timetokoon

No wonder yesterday ah koon promote hi self as forbes ge nerous billioinare...want to dump vs and latitud .....warren buffet dont 'koon'

2015-05-28 20:12

murali

Ytd did some advertising jobs first...today come out to do sales

2015-05-28 21:06

kingcobra

murali, can u tell us why gave all sorts of sarcastic remarks?

2015-05-28 21:25

murali

Suggest to go thru his thread dated 02 mac...under the title of my response to comments...happy reading..

2015-05-28 21:30

Christensen

All cursing comment is too repetitive until I dun pay an attention to them
however they will be outweighted by a nicely written article anytime

2015-05-28 22:34

bettersafe

Mr. Koon has a proven track record of generosity as well as successful stock picking which few in country can match. Some critics here may have lost money due to timing or other issues but that's no reason to condemn or criticize him.

2015-05-29 05:11

kiasutrader1

Before anyone criticise Mr Koon, One should consider the facts. First of all, all companies involved in the O&G industry will have their earnings impacted this year and possibly the next. FAVCO is selling O&G Cranes of Offshore Exploration & Production (ask yourself, will this business expand this year and the next?). The remainder of the order book is from the shipyard, construction and turbine industry. Purchase orders have a lead time of about 2 years, which means that income can only be generated in 2 years time after receiving an order which is normal as no one will pay any money if the product is not ready yet. Hence for FAVCO to be successful, they must continue to get new orders faster than the previous years to do better this year than last year. In this regard, FAVCO have only RM967 Million which is 13.1% lower than RM1.1B for the same period last year. So if the core component of your business is NOT generating new orders, what will happen in the near future? Common sense will tell you that if you are selling in a market that no one wants (eg NOKIA Handphones as opposed to Smart phones), your business will suffer. Bankers and Analysts always base their assessment on past achievements and results, like as though that the norm will last forever. Unfortunately, after spending more than 35 years in the finance industry, I personally have seen how this thinking is flawed. I applaud Mr Koon for writing this article as I believe that many new Investors will gain from his input of using your common sense to invest! If anyone have lost money because of what Mr Koon wrote, it is their fault because NO ONE forced you to invest and NO ONE forced you to sell to cut loss. Think about that before you write anything disparaging about any contributions from anyone here. One must learn how to AGREE to DISAGREE and that is the way to succeed in life, not shouting your mouth off without any backing of the facts of the matter.

2015-05-29 10:24

speakup

when you FEAR, it is time to BUY
- Warren Buffet

2015-05-29 10:43

AdCool

My opinion is more to stay off those counters which have already appreciated a lot. With the impending of US interest increase, the current high price may not be able to sustain once the big funds pull out from Asia markets.

2015-05-29 11:01

Tey Tian Foo

Good write up. Thanks Mr Koon

2015-05-29 11:38

babu

The older you are, the more you must ensure credibility - look at the ongoing spat between Najib and Mahathir and you will understand why credibility .......... who will believe you, what you say anymore ?

2015-05-29 16:41

longvalley

tq.
Mr Koon
Good ideas.
I ' ll aply in Malakof and nexgram

2015-05-29 19:15

cbbk

Many years ago, i read an article in thestar and i'm very respectful of this kind old man.
http://www.thestar.com.my/story/?file=%2F2010%2F2%2F23%2Fnation%2F5726234

Today, i google up to confirm the vague memory of this generous old man with Mr Koon.

You might be very famous around, but sincerely i'm new here and this is my first time reading about your stock investment article.

Thank you Mr Koon for what you have done to the society and your stock investment advice. I admire your generosity.
May you have the very best in health to continue your benevolent act.

2015-05-29 20:42

allhafiez87

How cheap is cheap? The PE Ratio range?

2015-06-02 17:05

leecheecheang

mr khoon is a fantastic teacher. the power to foresee.

2015-06-03 13:29

360Capitalist

BintaI : A good case study for 2 school of thoughts in Winning Stock Selection Criterias
( Koon Yew Yin Vs KCCHongNZ )
Koon Yew Yin : http://klse.i3investor.com/blogs/koonyewyinblog/77571.jsp Vs
KCChongNZ : http://klse.i3investor.com/blogs/kcchongnz/77884.jsp

2015-06-07 23:50

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