Cheah Cheng Hye – dubbed “Goldfinger” and the “Asian Warren Buffett” – is the co-founder and chairman of Hong Kong-based Value Partners Group. Born in Malaysia in 1954, he wrote for the Asian Wall Street Journal before becoming head of research and a proprietary trader at Morgan Grenfell in 1989. In 1993, he co-founded Value Partners with $5m in assets under management. The company listed on the Hong Kong stock exchange in 2007.
What is his strategy?
Cheah is an old-fashioned value investor. He uses the “Graham-Dodd” approach to buying stocks, implementing religiously the principles in Benjamin Graham and David Dodd’s book Security Analysis – referred to as the “bible of value investing”. However, he stresses the importance of focusing on cash flow and corporate governance to a greater extent than Graham and Dodd, saying these considerations are crucial in emerging markets. He believes in thorough on-the-ground research: Value Partners makes over 2,500 company visits every year. The firm has grown to $14bn in assets under management and returns have averaged 15% per year. Cheah’s total personal compensation in 2016 was $35m, says Forbes.
What were his top trades?
Much of Cheah’s success has come from avoiding potential disappointment. When the world was chasing dotcom stocks, for example, Cheah bought none. However, he once invested $30m in Oasis Hong Kong Airlines, only to see the firm go bust within
When Chinese carmaker BYD Auto’s stock went into free fall, Cheah visited the firm and decided the stock had been unfairly marked down. Value Partners became the second-biggest shareholder in the company. In 2008, Warren Buffett took an interest. Overnight, the world bought in and Value Partners sold out, taking a HK$600m (£55m) profit.
What can investors learn?
Cheah advocates the “stupid- clever” approach. Ego is the investor’s biggest enemy: if you think you are stupid, you can do smart things. If you think you are clever, you will do stupid things. You must remove your sense of self from the investment equation.