KLSE (MYR): ICAP (5108)

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4,213 comment(s). Last comment by speakup 19 hours ago


405 posts

Posted by dumbMoney > 2022-01-06 16:49 | Report Abuse

@Nepo That's what the analysts and BOD's were doing for the glove companies during the runups and share buybacks. See what happened?


405 posts

Posted by dumbMoney > 2022-01-06 16:54 | Report Abuse

Value investing means looking for margin of safety, that's what John Dough has been posting here all this while. At 60x PE, what's the margin for error on the downside? Using the much used rule of thumb valuation of PER/Growth ratio of 1 as reasonable pricing, this requires a 60% future growth rate. What if there's another MCO lockdown?

Posted by observatory > 2022-01-06 23:59 | Report Abuse

I concur with @dumbMoney. Sam, KGB and Kobay are beneficiaries of fund rotation into the tech sector.

Any investor who has bought into the sub-sectors of ATE (Vitrox, Penta, Greatech, MI..), OSAT (Inari, MPI, Unisem..) or precision engineering/ semicond support (UWC, Frontken...) two years ago will also enjoy enormous capital appreciation.

The test for ICAP fund manager is how to deal with the current situation. Will he sell if he believes the current price has far exceeded intrinsic value?

If he doesn't sell, does it mean current price is still within fair value range? That will imply the stocks were sold at great discount just not very long ago. But if they were such a good bargain then, why didn't he invest more instead of holding so much cash?!!


405 posts

Posted by dumbMoney > 2022-01-07 00:53 | Report Abuse

Just to clarify, I am not suggesting that these stocks are bad, just don't think they fit the traditional 'value' label.


148 posts

Posted by JohnDough > 2022-01-09 15:40 | Report Abuse

“Margin of safety is as important in Tan Teng Boo’s new value investing as it was in Buffett’s Phase 2 or Graham’s Phase 1. The necessity to derive long-term intrinsic values remains the same too.

Understanding the long-term economics of a business has remained as important as ever, if not more so in an age where disruption, originating from technology or non-technology sources or both, is probably becoming more regular.

As Tan Teng Boo explained in his Apr 2019 talk, the important drivers of New Value Investing or Phase 3 of value investing are:

- China’s once-in-a-millennium transformation;
- Disruptions from technology sources;
- The US-led 2008 global financial crisis; and now
- The Covid-19 pandemic.

The consequences of these new value creating drivers are prolonged low inflation, benign pricing environment; prolonged easy money, very low interest rate; subdued wage growth and sustained profit margin and elevated valuation.

As we wrote above, these findings are extremely valuable and you will not be able to find them elsewhere. Understand them well and you will profit well.”

i Capital Newsletter Volume 31 Number 41 (25th Jun 2020)

Tcs Tan

12 posts

Posted by Tcs Tan > 2022-01-15 17:40 | Report Abuse

But you don’t understand, the world has evolved over the past 15 years. Every time if there is a potential hiccup, the world economics will kick in to pump unlimited amount of monies to resurrect their economies. Those fund managers with limited world insight have been failing to act or response accordingly ……


148 posts

Posted by JohnDough > 2022-01-16 14:46 | Report Abuse

“Everyone is familiar with the old saw that’s supposed to capture investing’s basic proposition: “buy low, sell high.” It’s a hackneyed caricature of the way most people view investing.

But few things that are important can be distilled into just four words; thus, “buy low, sell high” is nothing but a starting point for discussion of a very complex process.

Will Rogers, an American film star and humorist of the 1920s and ‘30s, provided what he may have thought was a more comprehensive roadmap for success in the pursuit of wealth:

“Don’t gamble, take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don’t go up, don’t buy it.”

The illogicality of his advice makes clear how simplistic this adage – like many others – really is. However, regardless of the details, people may unquestioningly accept that they should sell appreciated investments.

But how helpful is that basic concept?”

Oaktree Capital January 2022 Memo – by Howard Marks


405 posts

Posted by dumbMoney > 2022-01-17 13:51 | Report Abuse

I have done an analysis of the share movements of the top 30 shareholders of the company from 2013 to 2021 https://www.dropbox.com/s/hssn5zn73r0ey4u/icapital%20shareholders%20list.xls?dl=0 The only big collections are by the foreign funds managed by COL, while the locals hardly came in to buy. What happened to the die hard followers? Without foreign buying, if the injunction is not lifted, good luck with the share price discount.


639 posts

Posted by fong7 > 2022-01-20 10:47 | Report Abuse

ICAP will stay "undervalued" for.....forever, perhaps. It's a classic example of value trap, and continue to be one in the future as long as TTB still ruling the fund. Believe it or not.


405 posts

Posted by dumbMoney > 2022-01-21 15:27 | Report Abuse

The shares have reached the stage where the only buyers are those attracted by the deep discount and are in no hurry to buy as a long term investment. Those looking to profit from a narrowing of the discount have long given up. There is some improvement on the discount ex dividend because the cash distribution is no longer subject to the deep discount, as shown in the table here, average of price discount for 5 weeks before and after dividend, suggesting that dividends are good for the share price when deeply discounted.
Date Price NAV P/B Aver. P/B
19/1/22 2.10 3.33 0.63
12/1/22 2.18 3.55 0.61
5/1/22 2.24 3.61 0.62
30/12/21 2.24 3.46 0.65
23/12/21 2.16 3.44 0.63 0.628
--------------Ex dividend -----------------------
16/12/21 2.23 3.64 0.61
9/12/21 2.18 3.59 0.61
2/12/21 2.17 3.58 0.61
25/11/21 2.18 3.73 0.58
18/11/21 2.16 3.76 0.57 0.596

Tcs Tan

12 posts

Posted by Tcs Tan > 2022-01-21 19:59 | Report Abuse

Buy airasia and parkson, they are not gamble but trade under deep………..discount


148 posts

Posted by JohnDough > 2022-01-23 17:09 | Report Abuse

“How do we know we are taking a different view to the crowd? A clue can be gleaned from the period that other investors typically hold the shares of the companies in the Partnership.

If Berkshire Hathaway (US), Jardine Matheson (Hong Kong) and Next Media (also Hong Kong) are excluded (these firms are in a class of their own due to either stock illiquidity or investor education) then other investors hold stocks in our portfolio for on average twenty weeks.

We expect to own shares for around two hundred and sixty weeks! So, what is going on? It seems to us that most investors look at the accounting outputs of a company (the reported financial data) as a guide to near term price movements and play the market accordingly.

As stated in the investment objective section of the Nomad prospectus our goal is to "pass custody (of your investment) over at the right price and to the right people". That's what investing is. Zak and I concentrate on a deeper reality: the inputs to future value moves.

Our peers are trading shares at the short end of the equity yield curve where the competition is the greatest, and we are investing at the long end where competition is the least. We respond to completely different stimuli.”

Nomad Investment Partnership Dec 2006 Annual Letter by Nick Sleep

Posted by klsebursamalaysia > 2022-01-24 13:28 | Report Abuse

The big stake investment in iCap is Air Asia(PN17), per share cost is 0.84, 28% lost in investment, where is the safety margin? Lol

TTB invest in Air Asia heavily whereas Warren Buffet sold out all his airline stocks.

Like what TTB said, if u lost 50%, it will require 100% return to recover the lost.

Good luck everyone!!

Posted by Philip ( buy what you understand) > 2022-01-25 20:22 | Report Abuse

If this was really true, why would he buy pn17 air Asia? This i do not understand what margin of safety is there.


JohnDough “Margin of safety is as important in Tan Teng Boo’s new value investing as it was in Buffett’s Phase 2 or Graham’s Phase 1. The necessity to derive long-term intrinsic values remains the same too.

Understanding the long-term economics of a business has remained as important as ever, if not more so in an age where disruption, originating from technology or non-technology sources or both, is probably becoming more regular.

As Tan Teng Boo explained in his Apr 2019 talk, the important drivers of New Value Investing or Phase 3 of value investing are:


405 posts

Posted by dumbMoney > 2022-01-26 00:29 | Report Abuse

TTB once said, you don't need to go to the University of Chicago to be an analyst/fund manager. He is smarter than all the Nobel Prize winning finance professors there, what do they know about value investing when their Efficient Market Hypothesis says it is hard to out perform the market consistently, which TTB has claimed to be doing.


113 posts

Posted by cnman53 > 2022-01-26 08:35 | Report Abuse

Talking of University of Chicago, the Chicago School of Economics and the “Chicago School of Thought” spontaneously come to mind.

The Chicago School of Economics definitely should not be belittled if you value knowledge and intellectual pursuit.

In the past century (1901-1999), after the second world war, the world of economic thought was mainly divided into two views.

One is Keynesian economics which advocate government expenditure for economic growth. The other is Milton Friedman’s monetarist economics which advocates control of money in the economy.

Up to today economic policies around the world have be formulated around these two theories with modifications here and there.

Milton Friedman is one of many Nobel Laureate from the Chicago School of Economics.

By the way, TTB studied economics in UK. He had probably been thought more if not only Keynesian economics which was founded by John Maynard Keynes of UK.


113 posts

Posted by cnman53 > 2022-01-26 14:25 | Report Abuse

The last paragraph above:
"He had probably been thought more if not only Keynesian economics..." should read as:
"He had probably been taught more if not only Keynesian economics..."


405 posts

Posted by dumbMoney > 2022-01-27 00:20 | Report Abuse

From Efficient Market Hypothesis came Fama-French 3 factor and 5 factor models, with the former incorporating small cap and value as factors contributing to a portfolio's performance. A fund manager's alpha may be just due to these two factors, the basis of smart beta investing, not how hot shot he actually is.


405 posts

Posted by dumbMoney > 2022-01-27 02:43 | Report Abuse

From the above, total investor's returns is measured by (realised price - cost price) + dividends received. NAV don't figure in this equation because it is academic unless realised, and in the example of IBM vs Standard Oil, even though IBM outperformed in share price returns, when dividends are included, it lost out to slower growth Standard Oil. iCap has all this while, used NAV as the yardstick when compared against the market index, and ignored the dividend yield of the Index components. Is this a fair comparison?


148 posts

Posted by JohnDough > 2022-01-30 15:09 | Report Abuse

“Why is icapital.biz Berhad a precious investment?

icapital.biz Berhad has always been managed in such a way that its shareowners can sleep soundly at night, knowing their hard earned savings are in good hands.

Not only have we achieved this, we have also managed icapital.biz Berhad in such a way that in times of crisis or dire need, icapital.biz Berhad is there for its share owners.

The 20 sen Special Covid-19 Relief Dividend recently distributed is a case in point. We need to remember that a large majority of icapital.biz Berhad’s share owners are individual investors, many of whom may have been adversely affected by the Covid-19 pandemic.

While many Bursa listed companies have slashed or suspended dividends since the pandemic broke out, icapital.biz Berhad distributed a hefty amount of dividend amounting to RM28 million in times of dire need, especially with the 2022 Chinese New Year so close by.

At the same time, the NAV of icapital.biz Berhad is at or near record levels while the KLCI is faltering.”

icapital.biz Berhad 2Q22 report – commentary by fund manager


405 posts

Posted by dumbMoney > 2022-01-30 21:25 | Report Abuse

Sure, after the share price went ex-dividend and dropped by 20 sen, are shareholders any better off? The only gain is that they no longer have to pay management fee on this amount and get the full interest if placed in bank deposits instead of left with the manager.


28 posts

Posted by fairplay > 2022-01-30 21:48 | Report Abuse

The market price or share value is reflective of very low standung of Fund Manager of iCapital. Poor performance while CDAM looks after its own interests only.


405 posts

Posted by dumbMoney > 2022-01-31 11:13 | Report Abuse

Obviously management of iCapital has not heard of the irrelevance of dividend policy on share price as expounded in the M&M theorem, which most finance students would be familiar with.
The only impact here is because of the deep discount on cash if kept in the company instead of paid out as dividend, where it is no longer discounted, plus no longer subject to management fee.

Posted by observatory > 2022-01-31 12:28 | Report Abuse

Cash kept in the company is not only subject to management fee, but the interest is also subject to government tax.

Current FD rate is around 2%.

0.75% of "fund management fee" is paid to CDAM. Another 0.75% "investment advisory fees" is paid to CDSB.

After further deducting the government tax on the FD interest, fund holders are left with practically zero.

Assuming inflation rate is 3%, the real return on the cash portion is actually negative 3%!

And for many years close to half of the fund asset is parked in fixed deposit, waiting for a stock market crash!


5,245 posts

Posted by ahbah > 2022-01-31 12:31 | Report Abuse

Got sapu kuat kuat during the last mkt crash caused by c 19 ?


405 posts

Posted by dumbMoney > 2022-02-01 23:32 | Report Abuse

For those who understand the implications of the M&M theory of dividend policy, there is no difference between a shareholder receiving a 20 sen dividend and having the share price adjust downward by the same amount, or selling 20 sen worth of his shareholdings for cash. Similarly, for the company, there is no difference cash wise between paying the dividend or buying back the same amount of shares in the market, except for one crucial difference, the share price discount on NAV. With the share buy back, the NAV backing per share is improved, i.e. after spending the same amount of cash, shareholders wealth is better with the share buyback. One of the author of the theorem got his Nobel Prize in economics for this important insight. How can management not know this? For iCapital, a share buyback is not to support the share price, but to improve the NAV per share, which is the main objective of the company all this while, and from that, to indirectly reduce the share price discount.


20 posts

Posted by kisord > 2022-02-04 09:54 | Report Abuse

with such a big discount to NAV, why no shareholders or groups of shareholders ask to wind up the company and distribute the proceeds of NAV back to them ?.It just required a shareholders meeting to do so. Why are they still holding on for so many years and still sitting around doing nothing hoping for what ?. Ignorance ?. Or just plain indifference ?. If they are really interested to get the full NAV instead of the much lower market price now, they can't wait for others to do the work for them ?


405 posts

Posted by dumbMoney > 2022-02-04 15:18 | Report Abuse

@kisord There are a bunch of large local shareholders who are content to just sit on their shareholdings for the past 8 years without doing any thing, and getting no returns except for a 2 sen share price appreciation on paper. They are the core long term shareowners that the company welcomes, and not some foreign funds who want to increase their shareholdings to take advantage of the discount with a view to its liquidation. These two blocks are about even in numbers, so the fate of the company is in the hands of the retail investors, the majority of whom are die hard believers in TTB as the Malaysian WB wannabe.


405 posts

Posted by dumbMoney > 2022-02-04 16:02 | Report Abuse

@kisord To get the fund liquidated, the first step is to change the board of directors, as TTB has previously threatened to resign if someone else gets elected without his approval. If he no longer gets the support of the board, his days are numbered. New directors can be appointed two ways. One is for COL with their block of shares, to call for an EGM to vote on board changes. This can be done any time as they have more than the required 10% shareholdings. The other way is for any shareholder to nominate candidates for election before the AGM. There is no shareholding requirement for this, other than sufficient notice given to the company before the AGM date. You want to bell the cat?


405 posts

Posted by dumbMoney > 2022-02-05 14:09 | Report Abuse

@kiscord Also, you asked why no shareholders ask to wind up the company. TTB's answer to that is the discount is due to shareholders actions, so it is their problem, not management's. If they want to sell the shares at a discount, it is entirely up to them. But fund manager's job is to increase shareholders wealth, isn't it? So proactive fund managers should try to reduce the discount instead of washing their hands completely and leave it to the shareholders to sort it out.


405 posts

Posted by dumbMoney > 2022-02-05 16:42 | Report Abuse

@kisord Look at your i3 Messenger for PM.


148 posts

Posted by JohnDough > 2022-02-06 13:00 | Report Abuse

“The point of equity is that it is the only permanent capital in the balance sheet. It is there to weather storms, such as the current economic backdrop, and provide a stable base, and of course to earn the rewards of enterprise.

This basic building block of society is broken when those with their hands on the permanent capital change their minds with their underwear. It is no coincidence perhaps that pass-the-parcel and musical chairs are children’s games.

Charlie Munger described an alternative model at this year’s Wesco Financial annual general meeting.

According to Munger the English establishment was so outraged by the speculation of the South Sea bubble and subsequent share price collapses, that in the early eighteenth century Parliament passed the Bubble Act, which outlawed the issuance of shares!

That ban remained in place for over a century (1720 to 1825) and, it could be argued, during that century Britain set the stage for the Industrial Revolution, the greatest step forward in modern society. It is not clear we need to trade shares to be successful.

But trade shares we do.”

Nomad Investment Partnership Jun 2008 Interim Letter by Nick Sleep


20 posts

Posted by kisord > 2022-02-06 14:27 | Report Abuse

Why on one propose a resolution at every agm to have the company wind up and distribute the proceeds so that the full value of the NAV is fully realized?. Any legal obstacles to propose such a shareholder resolution at agm ?


405 posts

Posted by dumbMoney > 2022-02-06 23:09 | Report Abuse

@kisord To propose a resolution at an AGM requires shareholders with 1) at least 2.5% of the issued share capital or 2) at least 50 members holding not less than $500 each, as per Section 323 of the Companies Act. To propose the resolution at an EGM, other than AGM would require 10% shareholdings, which at this moment, only COL can do so.


20 posts

Posted by kisord > 2022-02-07 10:15 | Report Abuse

thanks for the explanation.


405 posts

Posted by dumbMoney > 2022-02-08 01:28 | Report Abuse

So now you know why the company is so against COL as a shareholder, because this is the only one who can call for an EGM any time to pass a resolution to change management, and there is nothing the company can do to stop it. That's why it went to court, but the limit is 20%, so no help there even if they succeed in stopping further purchases.


148 posts

Posted by JohnDough > 2022-02-13 15:37 | Report Abuse

“For the individual or institution really out to make a fortune in the stock market it can be argued that every sale is a confession of error.

I write this fully realizing that to err is human. I do not mean to criticize anyone for making a few errors of the kind I have been making for forty-five years.

But a problem well-defined is half solved. The shorter the time a stock has been held before it is sold, the more palpable the error in buying it.”

100 to 1 in the Stock Market by Thomas William Phelps

Posted by RealValueInvestor > 2022-02-15 19:02 | Report Abuse

Mr Dough nobody buys stocks in order to hold them forever, so it seems to me that Phelps is, at least in part, talking nonsense!

Not sure just quoting from other investors including TTB really gets the debate anywhere, especially as he (TTB) at least is frequently inaccurate, either through commission or omission in what he writes!

Posted by Dimitri_Ivanov > 2022-02-17 11:10 | Report Abuse

ttb says investing in closed end fund (CEF) takes time. He quoted an example of a CEF that took about 1 century to appreciate. Maybe he's immortal and won't die. But we will all get old and die. We have given him enough time. We can't wait forever. I used to be on his side, but now I'm with COL, Just dissolve the fund and return the NAV value to shareholders. This is the only way.


405 posts

Posted by dumbMoney > 2022-02-19 22:56 | Report Abuse

@Dimiri Ivanov COL is not an activist investor. They may vote on resolutions such as election of directors, but they will not be the prime mover for such actions like proposals to remove directors or liquidate the fund. Someone else has to do that.


148 posts

Posted by JohnDough > 2022-02-20 16:21 | Report Abuse

“Given the emphasis we place on mitigating risk in our investing approach, we should elaborate on what we mean by "risk." To us, it's the probability of losing money and the potential magnitude of any such loss.

Many would define risk as volatility, the expected price sensitivity of what you own compared to the market's volatility. We don't see this as a risk (unless you're poorly positioned or leveraged and can't hang on amidst downdrafts).

Instead, we see unwarranted downside fluctuations as a buying opportunity (and excessive upside spikes as a selling opportunity). Because it is a driver of opportunity creation, volatility should more properly be considered a value investor's best friend.”

Baupost Limited Partnerships 2021 Year End Letter by Seth A. Klarman

Posted by RealValueInvestor > 2022-02-20 20:24 | Report Abuse

Actually @Dimiri Ivanov If you're talking about Scottish Mortgage TTB quotes an example of a fund where the discount closes but not due to any magic but because the board of that fund, in stark contrast to the board of ICAP took action and bought back a material amount of shares. Have a look here: https://www.investegate.co.uk/scot.mort-inv-tst--smt-/rns/transaction-in-own-shares/202201181732148715Y/

Posted by RealValueInvestor > 2022-02-20 20:25 | Report Abuse

That said whether dissolution or another solution some means needs to be found to deal with the ongoing issue of ICAP's discount to NAV.....


148 posts

Posted by JohnDough > 2022-02-27 17:28 | Report Abuse

“There are, broadly, two ways to behave as an investor. First, buy something cheap in anticipation of a rise in price, sell at a profit, and repeat. Almost everybody does this to some extent.

And for some fund managers it requires, depending upon the number of shares in a portfolio and the time they are held, perhaps many hundred decisions a year. Alternatively, the second way to invest is to buy shares in a great business at a reasonable price and let the business grow.

This appears to require just one decision (to buy the shares) but, in reality, it requires daily decisions not to sell the shares as well!

Almost no one does this, in part because it requires patience - and the locker room set does not do patience - but also because inactivity is the enemy of high fees. Regardless of how it may appear, Zak and I are drifting toward inactivity, at least as judged by our industry.

As we have set out in earlier letters, in part this is because we realise through vicarious, and not so vicarious (!), experience that we do not know that much. We certainly do not have an opinion on many hundred shares, at least, not an opinion in which we would invest money.

Second, we have learned or, rather, come to appreciate, that the character of a firm - call it the ability to resist locker room temptation - is far more important than first we realised.

This is an important insight. In the long run it may be all that matters.”

Nomad Investment Partnership Dec 2009 Annual Letter by Nick Sleep


405 posts

Posted by dumbMoney > 2022-02-27 20:32 | Report Abuse

Nowadays, the only reason why an investor would pay someone a management fee, plus perhaps a performance fee on top, is for superior returns. If the manager is unable to do that, may as well just invest in a low cost index fund and save all the trouble. Superior returns are measured on total dividends and or realisable gains, not on paper, as otherwise plenty of deep discount stocks listed on Bursa can also claim to have outperformed the market as measured by NAV. Performance track records can always be massaged, by choosing the most favorable period for comparisons, so there is no assurance that a hot fund manager can remain hot forever, or worse, fudge by comparing against a price benchmark index and not the total returns index that includes dividend returns...


148 posts

Posted by JohnDough > 2022-03-06 20:01 | Report Abuse

If you start to think about it, my way in life was not predicting little short-term differences between the Russell index and the Standard and Poor's index. I don't have any opinion about which index is better at a given time. I never even think about it.

I'm always just looking for something that's good enough to put Munger money in, or Berkshire money in, or Daily Journal money in. I figure that I want to swim as well as I can against the tides. I'm not trying to predict the tides.

If you're going to invest in stocks for the long term, or real estate, of course there are going to be periods when there's a lot of agony and other periods when there's a boom. I think you just have to learn to live through them.

Kipling said: treat those two impostors just the same. You have to deal with daylight and night. Does that bother you very much? No. Sometimes it's night and sometimes it's daylight. Sometimes there's a boom and sometimes there's a bust.

I believe in doing as well as you can and keep going as long as they let you.

Daily Journal AGM 2022 Charlie Munger


405 posts

Posted by dumbMoney > 2022-03-07 06:33 | Report Abuse

He was born in 1954, which means he was only 19 years old in 1973, during the first oil crisis. So how can he claim to have experienced it while still in school or university as a student. Was he already a fund manager or serious investor then? Otherwise anyone born before 1973 can also make such a claim on experience.

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