Investing For Value

This is Chapter 22 of my book Mastering Value Investing: Practical Strategies for Real-World Results . Go there for links to the other chapters. For more than two decades, my portfolio compounded at about 9% to 10% annually, compared with roughly 6% to 8% for the Malaysian market. I regarded this as evidence that disciplined value investing worked. But experience eventually forced me to confront an uncomfortable question: was I applying the right investment skills in the wrong market? Over the same period, major US indices delivered returns exceeding 10% annually. I may have been fishing skilfully, but in a pond with weaker currents. This was only one of several lessons from my investing journey. Another lesson was that a company may look cheap because earnings are temporarily high, but there is no margin of safety if its underlying economics are deteriorating. I also learned to be wary of turnarounds. Identifying what management must fix is much easier than actually fixing...

Value Investing Case Study 136-1: A fundamental analysis of Gamuda Berhad to assess whether it is an investment opportunity.     Over the past decade, Gamuda has transformed from a Malaysian construction, property and toll-road group into a regional infrastructure-development platform.  Reported revenue grew more than sevenfold, driven largely by overseas construction projects. But revenue tells only part of the story. Profit after tax in 2025 was only about 1.5 times its 2016 level. ROIC reached 4.2% in 2025, only slightly above the 3.6% achieved in 2016. Why did profit fail to keep pace? Gamuda’s business mix shifted towards high-revenue but lower-margin construction, while its higher-margin concessions were divested. Its gross profit and contribution margins consequently declined. As fixed costs represent only a small part of total costs, greater scale alone may not deliver substantial operating leverage. The peer comparison adds another warning. Gamu...

Tips E-56: 1-minute summary of my fundamental analysis of Accenture plc (NYSE: ACN)    Investment Thesis Accenture remains a high-quality compounder, but acquisition-led growth, declining capital efficiency and AI uncertainty weaken its investment appeal. Revenue and profits have grown steadily while returns remain well above the cost of capital. However, sustaining growth has required substantial reinvestment, gradually reducing returns on capital. Main Business Accenture combines consulting and managed services to help global enterprises transform technology, operations, data, AI and business processes. Revenue is geographically diversified, with the Americas contributing about half and Europe, Middle East and Africa roughly one-third. Growth Accenture has delivered steady growth, but acquisitions have been an important enabler rather than growth being predominantly organic. Revenue compounded at 8.7% from 2016 - 2025, while PAT grew 6.8%.  Profitability St...

This is Chapter 21 of my book Mastering Value Investing: Practical Strategies for Real-World Results . Go there for links to the other chapters. Most value investors spend enormous amounts of time asking one question: What stock should I buy? But finding an undervalued company is only the beginning. The harder question is what happens after you buy it. How many stocks should you own? When should you sell? And perhaps most importantly, what should you do when markets fall and your carefully selected stocks fall with them? My approach starts from a principle that differs from conventional portfolio theory. I build my portfolio stock by stock, based on business fundamentals and the gap between price and value. I am more concerned about permanent loss of capital than short-term volatility. But conviction does not mean betting everything on your best idea. I control risk through position sizing and diversification across geography, sectors, company sizes and different types of i...

Tips E-55: A 1-minute summary of my fundamental analysis of Affirm Holdings Inc. (NASDAG: AFRM)      Investment Thesis Affirm is a fast-growing BNPL company, but its credit-driven economics make sustainable long-term value creation highly challenging. Its moat appears narrow and replicable, while high reinvestment requirements and historically weak returns mean recent profitability has yet to demonstrate durable economic value creation. Main Business Affirm operates an instalment-payments network, but its revenue mix reveals a business economically driven primarily by consumer credit. Over the past three years, interest generated roughly half of revenue versus about one-third from merchants, making Affirm economically closer to a credit business than a capital-light payments network. Growth Affirm has delivered exceptional revenue growth, although competition and substantial capital requirements create structural limits to future expansion. Profitability Affirm’s ...