kcchongnz blog
Insas a value trap? Kcchongnz
I read another article, “Insas Deep Value Investing: Assets value (liquid assets) and Earning play” on the asset investing on Insas by a diehard investor of the stock, our Mr SSLee. But sadly, the writer got mocked, hammered and belittled again by many forumers, big or small included. “Big” are those seemingly knowledgeable, well experienced and who seemed to have made a lot of money in the stock market. “Small” are those appears to be novice and newbies who just like to hantam others without knowing much about investing and this category forms the bulk of the critics.
Interestingly, my name was mentioned in the article with some of them my own words and I presume I was ridiculed too. But it is okay for me as in the internet space, there are many kinds of people, and many kinds of investors who have their own opinions and different investing strategies. But is their constant ridiculing on the writer in his writeup on Inss, or the asset value investing strategy justifiable?
Let us base on some facts, rather than simply hantam the writer as I opine that the writer has given his opinion based on facts, and hard facts. His article is appeared in the link below,
https://klse.i3investor.com/blogs/Sslee_blog/215437.jsp
Yes, most of the material presented is facts and true facts. No one has disputed those facts. The stock is severely undervalued. Can anyone dispute that? Put in your facts and argument if you think otherwise, instead of just shouting like the one below,
[qqq3 On Insas....Insas rubbish hunters think they find diamond....but most of the time, market is correct , rubbish hunters are wrong....just that u do not know u are wrong because u lack the skill set to analysis the thing properly.]
This character has been spewing this venom which I can say easily tens of times in i3investor. Of course, there are others who are truly knowledgeable and experienced investors commenting that Insas is a “value trap”, which I think they do have a legitimate reason for saying so. But what is a value trap?
Goggle Investopedia gives the following definition,
“A value trap is a stock that appears to be cheap because the stock has been trading at low valuation metrics such as multiples of earnings, cash flow or book value for an extended time period. Such a stock attracts investors who are looking for a bargain because they seem inexpensive relative to historical valuation multiples of the stock or relative to the prevailing overall market multiple. The trap springs when investors buy into the company at low prices and the stock continues to languish or drop further.”
The whole lot of above applies to Insas, except for the last sentence which I would like to dispute that in the case of Insas.
First consider in the future, will the stock price “continues to languish or drop further”? I sincerely don’t know as I have no crystal ball in front of me, like many seems to have. But I will argue that it is unlikely. But that would be another part of the story which I wish to talk about it in my later articles on Insas if there is any interest on it.
The only thing critics can say about Insas is it has been a value trap in the past. But is it true, or is it just a perception?
To answer the question, let us look at the share price performance of Insas in the past. One should not take the share price of Insas in isolation; one has to compare with other stocks and a broad benchmark. Do you agree? I will go ahead and do it.
First compare the two stocks promoted by the critic above voraciously in the last three years, telling everyone in i3investor to sailing and margin in them. They are Jaks and Eversendai. These two stocks were also promoted heavily using the “Golden Rule” investing in i3investor in the last three years, yes, the unbeatable earnings investing strategy, the “only one” acceptable in investing.
Table 1 in the Appendix shows the comparison of returns of Insas for the short, mid and long-term as compared to the broad KLSE Index and those “Golden Rule” stocks. For the short-term of one year, Insas share price fell 8%, under-performed the broad market of -4.5%. For the past one year, most stocks dropped in price anyway. Even a blue chip like Maybank also fell about the same magnitude of 7%. However, in contrast with the “Golden Rule” stocks, Jaks fell 31%, and Sendai -49%. In the mid-term of 3 years, Insas share price has risen by 23%, compared to the flat broad market and the 9% rise of Maybank. Again, compared with the loss of 14% of Jaks, and the flat price of Sendai, Insas performed much better.
What about the long-term? As an investor, we should be more concern about the long-term return, shouldn’t we?
Insas’s share price rose 100% in ten years. Using the rule of 72, its compounded annual return, CAGR is 7.2%, nothing to shout about. However, its 10-year return is better than the 43% return of the broad market and the 49% return of Maybank. On the other hand, the share price of Sendai fell by a whopping 73%, and that of Jaks by 9%!
Tell me, if Insas is a “rubbish stock”, how do you consider Jaks and Sendai? Who actually “do not know u are wrong because u lack the skill set to analysis the thing properly” as criticised non-stop, again and again like a broken clock by the commentator above?
The figures 1 and below show the return comparisons of the three stocks for the 3-year and 5-year period. The green line is the share price movement of Insas, dark blue line for Sendai, and the light blue for Jaks. I could not reproduce the 10-year return from gurufocus, don’t know why.
Figure 1
Figure 2
As a record, I seldom just talk about the share price movement of a stock in isolation as it has not much value in it. This article is just to dispel some untruths and the constant ridiculing and hammering of other investors or investing strategies without facts.
As I have presented, Insas doesn’t seem to be so bad after all in the past. I believe it will do much better than the other two stocks and the overall market in the future. There are no hanky-panky of the management and major shareholders such as doing jobs for their private company without paying for years, and rewarding themselves with huge amounts of free shares and discounted private placements etc. Insas may not be a great company with good growth in earnings. However, the asset value of the company has been increasing rapidly over the years as shown in Figure 3 below and it is way undervalued.
The assets are mostly marked-to-market in cash and investments. There also has not been cash burn in any of their business segment, etc.
More importantly, there are other ways of investing out there which have been proven successful, if not more successful.
KC Chong
Appendix
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Related Stocks
| Chart | Stock Name | Last | Change | Volume |
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Discussions
6 people like this. Showing 50 of 109 comments
>>>
Posted by stockraider > Jul 10, 2019 5:01 PM | Report Abuse
So whenever u invest always ask yourself where is your margin safety anchored ??
Is it profit growth ??
Low PE ??
Strong Cashflow ?
Strong dividend ?
High NTA ?
Huge Hidden Reserve ??
High cash holdings ??
If the anchored u highly depended on for your initial investment falter, n no longer valid, u better run quickly & swift b4 too late loh....!!
U quickly lock in your profit & cut your losses fast loh...!!
If the sell not trigger, u hold & ride your gain loh....!!
>>>>
Just take a look at Hengyuan.
Then you will realise how dishonest, silly and shameless raider is.
Even he cannot trust himself!
Today Hengyuan is 5.10.
So long for his abilities, his margin of safety principles, his verbosity, and his big troll-ey.
Those who have listened and acted on raider's comments on DLady, Nestle, PBB, Petdag, Padini, Guinness, LPI, Aeon Credit, .... over the last 5 to 10 years, would have been harmed financially. All these stocks have been proven to be great investments with great returns. Also, it meant they were all great under-valued growth stocks with huge margin of safety, available at high reward to risk ratio at their given past prìces. All these companies have grown their intrinsic values over time.
(It is more fun to write praising another. I very much like to do that but can only do so on so few occasions here.)
2019-07-19 15:28
Nothing to shout about loh...if u hold margin of safety stock 20 yrs u get the same result too mah...!!
But with margin of safety stock u get additional few rounds of good return mah....!!
Those who have listened and acted on raider's comments on DLady, Nestle, PBB, Petdag, Padini, Guinness, LPI, Aeon Credit, .... over the last 5 to 10 years, would have been harmed financially. All these stocks have been proven to be great investments with great returns. Also, it meant they were all great under-valued growth stocks with huge margin of safety, available at high reward to risk ratio at their given past prìces. All these companies have grown their intrinsic values over time.
2019-07-19 17:37
He..he..he...!!
Then why u hang around in my favorite thread Insas leh ??
Posted by i3lurker > Jul 19, 2019 6:06 PM | Report Abuse
I try to keep an open mind in case there are some gems of wisdom by other investors but over the years, I had been programmed to never bother to read anything stockraider says nowadays
2019-07-19 18:24
>>>>
stockraider Nothing to shout about loh...if u hold margin of safety stock 20 yrs u get the same result too mah...!!
But with margin of safety stock u get additional few rounds of good return mah....!!
>>>>
From my observations, many value investors (raider included) are not around to reap the gains in their deeply undervalued stocks 3 or 5 years later.
Many, including raider, are momentum traders or speculators.
2019-07-19 18:58
The only true long term investors in this forum are few.
You will learn of them, since they are often the targets of unsuccessful attacks by raider and his gang.
2019-07-19 18:59
On the Contrary Raider & gang are the victim mah...!!
Take for example our Margin of safety stock insas were attacked by people who claimed long term investors like 3iii & Philip relentlessly mah....!!
This attack is done , despite the margin of safety value investor Grandmaster sifu Ben Graham, highly recommend margin of safety as the central core of investment and to avoid overvalue stock like plaque loh.....!!
Posted by 3iii > Jul 19, 2019 6:59 PM | Report Abuse
The only true long term investors in this forum are few.
You will learn of them, since they are often the targets of unsuccessful attacks by raider and his gang.
2019-07-19 19:18
patience...patience...patience loh...!
Believe margin of safety will eventually payoff mah...!!
Posted by deMusangking > Jul 19, 2019 7:19 PM | Report Abuse
past, present, future = 0.80!!!!!
real value trap!!!!!!
hahaha
2019-07-19 19:20
Learn from Uncle calvin Tan he is the best I3 value investor loh...!!
Posted by deMusangking > Jul 19, 2019 7:22 PM | Report Abuse
past, present, future = 0.80 = Believe margin of safety will eventually payoff mah...!! !!!!!
still in dreamland!!!!!
better sell off, otherwise u will lose all ur panttees!!!!
hahagha
2019-07-19 19:24
U will never eat Grass if u buy insas bcos got dividend mah....!!
Don be like musang, an animal that eat shit mah....!!
Posted by deMusangking > Jul 19, 2019 7:26 PM | Report Abuse
raider eats grass!! a real cow!!!!
haha
2019-07-19 19:28
U NEED TO UNDERSTAND LOH...BEN GRAHAM TRAINING ADVICE OVERVALUE STOCKS LIKE NESTLE & QL WITH PE EXCEED 50X SHOULD BE AVOIDED AT ALL COST MAH....!!
IF THESE STOCK PRICE HAD CRASHED, AND RETREATED TO AN UNDERVALUE LEVEL, THEN RAIDER WILL SUPPORT, IT GOT MARGIN OF SAFETY LOH...!!
>>>
If only I can be convinced of raider's ability in implementing his margin of safety.
I have already listed some of my stocks which have HUGE margin of safety which raider shamelessly cannot admit his past mistakes. He asked people with these stocks to sell them because there was no margin of safety. However, over the LAST 5 TO 10 YEARS, raider was proven wrong. These stocks have grown their intrinsic values over the years.
It is obvious raider knows little about margin of safety principle. If only he is humble and honest to acdmit his stupidity and mistakes. But then we know raider, he is uncouthed.
2019-07-19 19:37
MARGIN OF SAFETY NO HOLLAND...IT IS USA MAH...!!
Posted by deMusangking > Jul 19, 2019 7:41 PM | Report Abuse
raider's ability in implementing his margin of safety. >>>>>>>>>>>>>>>>>>>>>>>>> to holland!!!!
hahaha
2019-07-19 19:42
What Is Margin of Safety?
Margin of safety is a principle of investing in which an investor only purchases securities when their market price is significantly below their intrinsic value. In other words, when the market price of a security is significantly below your estimation of its intrinsic value, the difference is the margin of safety. Because investors may set a margin of safety in accordance with their own risk preferences, buying securities when this difference is present allows an investment to be made with minimal downside risk.
Example of Margin of Safety
As scholarly as Graham was, his principle was based on simple truths. He knew that a stock priced at $1 today could just as likely be valued at 50 cents or $1.50 in the future. He also recognized that the current valuation of $1 could be off, which means he would be subjecting himself to unnecessary risk. He concluded that if he could buy a stock at a discount to its intrinsic value, he would limit his losses substantially. Although there was no guarantee that the stock’s price would increase, the discount provided the margin of safety he needed to ensure that his losses would be minimal.
For example, if he were to determine that the intrinsic value of XYZ’s stock is $162, which is well below its share price of $192, he might apply a discount of 20% for a target purchase price of $130. In this example, he may feel XYZ has a fair value at $192 but he would not consider buying it above its intrinsic value of $162. In order to absolutely limit his downside risk, he sets his purchase price at $130. Using this model, he might not be able to purchase XYZ stock anytime in the foreseeable future. However, if the stock price does decline to $130 for reasons other than a collapse of XYZ’s earnings outlook, he could buy it with confidence.
INSAS IS A GOOD EXAMPLE OF MARGIN OF SAFETY INVESTMENT LOH...!!
2019-07-19 19:47
Calvin called for a buy for Gsb at 9 sen
Then Calvin called for a strong sell on Gsb after Gsb has gone up more than 100% to 22 sen
Surprise?
Sorchai musang bought Gsb at 22 sen. Now musang trapped at 22 sen
Tell you what?
Insas and TA will both go over Rm2. 00 one day.
2019-07-19 20:20
This Kay See only know how to choose a particular period for that stock to prove that it is better than others.
What if those people who bought at Rm1 at 2017, until now they lose about 20% nvr even recover yet after 2 years.
I also know how to pick a particular period to talk about share
2019-07-19 22:09
He is helping u to make monies mah....!!
If u lose monies buy at Rm 1.00, then it is time for u to buy Rm 0.795 now, to average and make more monies mah...!!
No point complain....complain & act like pondan n miss opportunity mah..!!
Posted by Connie555 > Jul 19, 2019 10:09 PM | Report Abuse
This Kay See only know how to choose a particular period for that stock to prove that it is better than others.
What if those people who bought at Rm1 at 2017, until now they lose about 20% nvr even recover yet after 2 years.
I also know how to pick a particular period to talk about share
3iii
6100 posts
Posted by 3iii > Jul 19, 2019 10:46 PM | Report Abuse
>>>
Connie555 This Kay See only know how to choose a particular period for that stock to prove that it is better than others.
>>>>
How credible was he? :-)
2019-07-19 22:53
Aiyo..halo halo..go back insas forum lah...everywhere also gaduh same thing...insas mati pucuk lah...according to Jaks promoter cik sarifah...lol...aiyoyo...kikiki
2019-07-19 22:57
Posted by Connie555 > Jul 19, 2019 10:09 PM | Report Abuse
This Kay See only know how to choose a particular period for that stock to prove that it is better than others.
What if those people who bought at Rm1 at 2017, until now they lose about 20% nvr even recover yet after 2 years.
I also know how to pick a particular period to talk about share
Well, my comparisons for short-term, mid term and long term return of investing (not speculating)in a stock in this article were by comparing the returns over a one, three and ten years period from now, not trying to choose a date to suit.
Share price of those three stocks I used have changed by more than 500% over the last few years, which one you like to use?
If you are not agreeable to my benchmarks, you may use your own periods to dispel it. Please do and show us rather than just making a random statement like that.
Or if you prefer to use the peak and trough price of each stock, I know you won't be able to get them, I will provide you wit those prices which I took time to obtain from the Bursa graphs, maximum about 6 years, for your ease of reference as below,
Company Price Peak Trough Best gain Worst loss
Insas 0.800 1.300 0.400 100% -38%
Jaks 0.795 1.800 0.400 99% -56%
Sendai 0.460 1.700 0.400 15% -73%
To help you to understand them which I am not sure you could just by looking at the table above,
If you take the peak prices of $1.30, Insas has lost 38% to-date, compared to the loss of 56% and 73% respectively for Jaks and Sendai.
If you talk about gain from the lowest price for the last 6 years, and interestingly, all stocks have the same lowest price, Insas gained 100%, the same as Jaks, but 15% for Sendai respectively.
Take your pick, or go to do some data mining to come out with your own figures.
2019-07-20 06:34
Pick stocks based on earning
assets play does not work
Ask calvintaneng how he almost went bankrupt punting assets play
2019-07-20 06:43
There is method to icon....HTpadu 60 to $ 1.20 in a few months....the key is to find what u betting on.............
so why HTpadu 60 to $ 1.20?....Insas 80 past present and future?
truth is revealed in reality....to value investors, their truth is in their imagination.
2019-07-20 09:00
There is method to icon....HTpadu 60 to $ 1.20 in a few months....the key is to find what u betting on.............
so why HTpadu 60 to $ 1.20?....Insas 80 past present and future?
truth is revealed in reality....to value investors, their truth is in their imagination and in their stubbornness.
2019-07-20 09:02
Margin of safety based on Intrinsic value is theoretically true but this intrinsic value should not based on merely net tangible assets value. It should based on the value that can create in future... earnings....
2019-07-20 11:24
correctloh...calvin tan also make alot of monies on pmcorp mah...!!
Posted by 3iii > Jul 20, 2019 2:20 PM | Report Abuse
>>>
Calvin Tan is not wrong, in fact he make very good profit on some shares based on this investment concept mah...!!
>>>>>
...on some shares.
Calvin is less modest. He made few hundred percentages on nu.erous shares.
The only problem is it is too difficult to believe.
For example, after about 10 years, his GSB rose to 22 sen and he suddenly appeared claiming he has now made a few hundred percents on GSB.
As I have mentioned already, the majority, if not most of the value investors failed to capture any gains in their undervalued stocks. Why? They have already sold these shares way before some of these shares show gains many years later. Patience is so so important. Also, many of their undervalued stocks stayed undervalued and are what we termed value traps.
Looks like calvin is one who hold onto his undervalued stocks forever. He must have hundreds of these and it is just fascinating and also unbelievable to see him declaring his hundred percentages gains each time one of his old recommendations have a temporary and non sustainable run.
Truly a fascinating and unbelievable story, to me at least. Raider is more credible in this respect, in resurrecting less number of his dead stocks to claim he made a killing after umpteen years of non activity.
2019-07-20 14:22
Recent Calvin pick on asb is another superb value strategy mah...!!
value is unlocking for this stock mah....!!
2019-07-20 14:27
>>>>
Posted by stockraider > Jul 20, 2019 2:27 PM | Report Abuse
Recent Calvin pick on asb is another superb value strategy mah...!!
value is unlocking for this stock mah....!!
>>>>
With so many recommendations in his list which is owned forever, a few shine at different occasions. Do you know within a 1 year period, it is not uncommon to see a stock price rising 50% and falling its equivalent 1/3rd.
2019-07-20 14:45
INVESTORS OF INSAS SHOULD BE HIGHLY CONFIDENT OF INSAS POTENTIAL TO MAKE GOOD MONIES LOH....!!
THE ONLY ISSUE THEY SHOULD FEAR, IS HOW LONG I NEED TO WAIT ONLY MAH...!!
THIS IS BCOS, THE HUGE MARGIN OF SAFETY THE TRUE VALUE & QUALITY ASSETS IS CONFIRMED & BEYOND ANY DOUBT LOH....!!
2019-07-20 16:33
Take care of the downside, let the upside takes care of itself.
What we are afraid of is if the value takes a long time to unlock, value may erode, such as in a business with persistence huge losses, burning cash in its operations, or management embarking on overvalued acquisitions, or squander away the cash it has, failed business ventures, or other shareholder value destroying activities. I my opinion, Insas does not belong to this category. Having different stocks with different return drivers in a diversified portfolio is also a smart strategy in investing.
Posted by stockraider > Jul 20, 2019 4:31 PM | Report Abuse X
INVESTORS OF INSAS SHOULD BE HIGHLY CONFIDENT OF INSAS POTENTIAL TO MAKE GOOD MONIES LOH....!!
THE ONLY ISSUE THEY SHOULD FEAR, IS HOW LONG I NEED TO WAIT ONLY MAH...!!
THIS IS BCOS, THE HUGE MARGIN OF SAFETY THE TRUE VALUE & QUALITY ASSETS IS BEYOND ANY DOUBT LOH....!!
2019-07-20 16:36
Investment in insas call for a very successful investment tech, that very alien to Philip & 3iii loh....!!
AS RAIDER SAYS THERE ARE MANY WAYS TO SKIN A CAT LOH...!!
INSAS IS NOT SPECULATING THE FUTURE, IT IS LOOKING AT PRESENT VALUE OF INSAS EXCEEDING RM 3.00 V SHARE PRICE RM 0.80, THERE IS HUGE MARGIN OF SAFETY AND IT IS RUN BY A COMPETENT OWNER LOH...!!
ON THE OTHERHAND IF U INVEST IN NESTLE & Ql U NEED SPECULATE THAT FUTURE GROWTH OF YOUR STOCK WILL EVENTUALLY CATCH UP WITH THE YOUR PRESENT OVERVALUE STOCK PRICE OF MORE THAN PE 50X LOH...!!
THE FALLACIES OF THIS APPROACH IS THE COMPANY CAN GROW & GROW, OVER MANY YEARS LEH, WHAT HAPPEN SALES & PROFIT FALTER ??
WHERE IS YOUR MARGIN OF SAFETY LEH ?? FOR INSAS, ON OTHER HAND, U CAN SEE IT ALREADY HUGE MARGIN OF SAFETY, WHEN U BUY THE SHARE MAH...!!
(S=QR) Philip Raider, you realize the more you as info about INSAS, the worse the company sounds right? You are trying too hard to convince and win every argument.
1. You concept here is basically saying that INSAS management care more about themselves than the shareholders of the company. This might be a valid reason why no one wants to buy INSAS shares. When shareholders can see that the company has money ( no idea why in Australia) but chooses to give poor earnings for every dollar of RETAINED earnings, they should give it back to the shareholders. Hoarding cash, investing in cash burning startups, not giving returns to shareholders via dividends and share buybacks is a quick method to destroy confidence in the company.
I totally agree.
2. If 5 years from now, INSAS is only making 60-80 million, from a net asset economic business value of 1.7 billion, on such a risky business model as lending, stockbroker, private equity, startups then I think I have better things in life to do.
Raider has no ability to understand risk versus returns.
That is why he thinks INSAS is better than Berkshire.
2019-07-23 01:39
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Lukey_Greek
Its just like Philip keeps tellilng the advantages of buying shophouses with constant rental yield & capital appreciation. But it doestn mean the ppl buying agri land with fair/ discount price is fool, especially the one with good location near to the city. Eventhough the return is uncertain, but it might be lucrative when the time comes.
The key issue here is to get the good assets.
2019-07-19 11:38