WHILE many businesses are about making profits at all costs, Pangolin Investment Management director James Hay stands by his principles when it comes to managing the Singapore-based fund management company he founded in 2004.
The 58-year-old British citizen, who has been living in Kuala Lumpur since 1993, does not invest in palm oil, tobacco, timber and politically connected companies.
"Tobacco kills, palm oil manufacturing leads to deforestation and timber-related businesses involve the felling of trees," he said, adding that there is a need to safeguard the environment and the endangered pangolin.
The Pangolin Asia Fund features a portfolio of 20 companies. Sixty-nine per cent of the stocks are companies in Indonesia, Malaysia (20 per cent), Singapore (10 per cent) and Thailand (one per cent).
Hay said he was not particularly fond of companies in Thailand but had picked one he said had a proper balance sheet that showed a strong cash flow and dividend yield.
"We also go for companies with net cash and a good track record as the objective of the fund is to make money over the long term of, say, at least five years."
Some may say this investment strategy is risky, especially those who prefer diversification.
But really, which is riskier?
A portfolio of 20 companies where the fund managers know each company intimately, or a portfolio of more than 100 stocks where the depth of knowledge of each stock cannot possibly be the same.
Hay and his team manage the Pangolin Asia Fund, which is designed for long-term fundamental investors in Asean, and the Pangolin Aviation Recovery Fund, a fundamental investor in the aviation industry that Hay believes is poised for an economic rebound post-Covid-19 pandemic.
Hay has 36 years investing experience in Asian stock markets. Having lost his job during the Asian financial crisis in 1998, he decided to go backpacking but not before investing his savings in a few Malaysian companies.
By 2004, his investment in the Malaysian stock market had multiplied more than tenfold and he was able to start Pangolin.
And why did he name his company Pangolin?
That was because the pangolin, a scaly-skinned mammal which had been classified from vulnerable to critically endangered depending on the species, painstakingly foraged for food on the jungle floor, which was quite similar to Pangolin's approach, he said.
Except that the latter's food comprises "hidden gems" that are picked by Hay and his team for long-term investment.
Today, the fund had grown to US$170 million from a mere US$1.5 million in 2004.
Besides Pangolin, Hay also has a small stake in Tapir Partners that seeks to invest in unlisted green companies. The other partners are Asgari Stephens and Wan Mohd Zahidi Zakwan.
In terms of the investment landscape, if he had the chance, the biggest change Hay would like to see was the review of the 25 per cent minimum free float requirement as this only deters companies from seeking a listing on the stock exchange.
"While other fund managers are providing insights on the economic and market outlook, sprinkled with political tidings and commentaries, we focus more on the long-term prospects as the fund's objective is to make money in the long run. We are not trying to beat any index or manage market volatility.
"If you were to ask me whether I like a bull market or a bear market, I would say bear market as the best time to pick up more stocks is when the market is down," he said.
The writer was a journalist with The New Straits Times before joining a Fortune Global 500 real estate company. This article is a collaboration between the New Straits Times and Tradeview, the author of 'Once Upon A Time In Bursa'.