A RECENT flurry of in-depth financial articles that dissected some of the biggest names listed on Bursa Malaysia has been rather popular within the investment circles of late.
The articles by Neoh Jia En, with titles such as "Has Yinson found the Yellow Brick Road?", "Farm Fresh Bhd, is it really fresh?" and "Malakoff Corporation Bhd, what do the canaries say?", provided refreshing ideas.
Neoh is a post-graduate research student at Nagoya University on a scholarship from Japan's Education, Culture, Sports, Science and Technology Ministry.
"I had originally intended to explore an academic career but found that there is an oversupply of academics in the field of finance, not to mention that the process to become one is much longer and challenging than expected," he said.
After graduating with a bachelor degree in business economics and finance from University of Nottingham Malaysia in 2011, Neoh got his Master's in accounting and finance from the London School of Economics and Political Science in 2013.
Between April and September last year, he pursued a non-degree research programme in economics at the Nagoya University.
He is also a licensed financial risk manager and a chartered financial analyst.
Neoh had always been interested in investments but only came to know about the existence and roles of equity analysts after participating in a stock research competition organised by the CFA Institute during his undergraduate studies.
He had interned at the equity research department of CIMB Investment Bank. A year later, he became an equity analyst at Pacific Mutual Fund Bhd, a subsidiary of OCBC Bank.
He was with AmInvestment Bank Bhd in Kuala Lumpur for two years as a research analyst, where he received the best employee awards in 2018 and 2019.
"Access to management is a perpetual issue as we usually need more data than disclosed to build financial models," he said.
Neoh came to learn about stocks in his teens.
"Since then, I have read books on investments and finance, and took accounting as an additional subject in school."
As for his thoughts on Bursa Malaysia, Neoh said he was focused on investigating why the Malaysia stock exchange usually outperformed at year end.
"Stock selections on Bursa is limited, especially for institutional investors."
Personally, Ng prefers stocks that are not in the limelight, for which there is higher likelihood of mispricing.
"These are not necessarily small caps or value stocks. They can include blue chips and growth stocks for which news flows and trade activities have dried up for a while.
"The first few stocks I bought were absolute disasters as I went for 'value' (those with low price-to-earnings ratio or high dividend yield) without knowing about one-off earnings (for example, those from disposal gains).
"My foundation in reading company reports came from my time analysing United States stocks during the 2008 subprime mortgage crisis, as corporate disclosures in the US are much more comprehensive.
"As for earnings forecasting where I identify and model the factors driving earnings, it is a skill I acquired in my career as an equity analyst.
"I do look at charts to gauge whether other investors may have information that I had missed in my stock analyses. I will be more cautious when the investor sentiment on a stock is in the opposite direction of what my analysis would indicate, since I do not always have all company-specific information.
"This is less an issue when analysing the prospect of an industry or even an economy. Hence, I usually have higher conviction in my view on stocks that are not in the limelight, usually those that are trading sideways, where there is less risk of other investors having critical information that I do not have."
Neoh's advice for young investors would be to learn to read company reports and attend annual general meetings.
"Do not put all money in a few stocks. Start with at least 10 stocks. This is because we cannot possibly foresee all risk events that are specific to a company. Cutting loss-making positions is critical when we find that our initial information or preposition is wrong.
"This helps to prevent our capital from being eroded further and to release it for subsequent profitable ideas.
"Diversification helps to provide the determination in cutting losses — it's easier to move on when we are wrong about the 10 per cent rather than 100 per cent of our money," 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'.