Title: Investing, the Intrinsix Way; Thriving amidst Global Chaos
Date: 9th January 2020
Time: 7pm – 9pm
Venue: First Degree Global Asset Management, 71 Ayer Rajah Crescent #01-17 S139951
Event Organiser: Light Asset
Speakers: Intrinsix Capital
*light refreshments will be provided
Value Investing has come a long way since the term was coined some ninety years ago by Benjamin Graham and David Dodd back in 1928, and originally meant buying companies at below their book values.
Subsequently, the form changed in the sixties towards a high-quality-fair-valuation process when Charlie Munger and Warren Buffett focused on the quality of businesses which would allow businesses to not only be well-protected by their moat, but also grow well into the future.
Perhaps one of the most iconic shift was when in the late eighties, Peter Lynch popularised the Growth At Reasonable Price (GARP) investment process which focuses on the PEG ratio, which simply meant the P/E valuation of a growing company should be equal to its growth; i.e. P/E 15x for a company growing at 15% a year. Whether this should be the case, or whether investors might be shooting their foot, however, depends on critical qualitative factors, and that is where Intrinsix Investing comes in.
Over time, we find that the essence of investing has slowly diluted where investors may be more easily tempted by exploitable price movements and artificially created price mis-matches. For as long as data points can be created to make companies look like they are growing, or that their asset has high prices, these companies can appear sexy and undervalued, even when they are really not.
Such investment “data” can sometimes be prevalent, and unsuspecting investors may be unwittingly sucked into unsustainable wealth destruction schemes, mistakenly thinking they are investing in a sexy value or growth story, but are in fact speculating in short-term price movements with ultimate long-term value destruction. For as long as a company is growing 15% a year, it must be worth 15x P/E, isn’t it? (Pardon my sarcasm)
In Investing, The Intrinsix Way, we seek to bring investors back to the basics of investing only in high-quality businesses, QARP, if you will, as summarised by these six factors:
1) Businesses and management teams on a mission for sustainable growth, and not over zealous about growth for the sake of growth.
2) Businesses with extraordinary factors that rich billionaires cannot simply throw money in and duplicate.
3) Honest and aligned management teams. Down-to-earth, good human beings.
4) Intimate consumer relationship – customers love them.
5) Clean balance sheets, strong foundation for the business to grow upon. No drama nor time wasted on hanky-panky wealth creation schemes.
6) Discounted valuations, or undervalued for its quality growth.
To put it simply, we choose to focus on the most fundamental investing philosophy:
We are not here to just buy empty-companies at low prices today and flip them high tomorrow just because there are willing (or unwitting?) buyers. We invest in companies that do real business, are supported by real paying customers, and who believe in achieving something meaningful, other than just making money, which is the incentive for the former, if you think abut it.
In layman terms, if you founded a business which you deeply love and want to dedicate your whole life to building, would you sell your business away the following day just because someone offered to buy it for 2 times your price? Or would you work hard to grow your beloved business to enjoy the fruits of your labour and pass it on to your future generations?
Clearly, if said beloved business is, in fact, not a real business but a piece of “bounced cheque”, then an opportunistic speculator may tell you that having the money now is better than having it later; better sell it before it is exposed.
Here at Intrinsix capital, we prefer to own businesses that are beloved, that we are proud of, that has sustainable, long-term, and growing income streams.
It’s nothing superbly intelligent, it’s not rocket science. We are just looking past the temptations of making quick money (however ways) with real value creation. Period.
We will be sharing more on our investment strategy and philosophy such that you can apply and invest in extraordinary businesses and let your money work meaningfully for you.
We are excited to have you join our session, see you there!