LO KHENG HONG 4 TAHUN PERTAMA MENGALAMI KEGAGALAN (WORLD INVESTOR)
Short Summary:
This interview features Lo Kheng Hong, a prominent Indonesian investor often called the "Warren Buffett of Indonesia," discussing his investment journey and strategies over 32 years. He details his initial four years of consistent failures using an IPO-listing strategy, before shifting to a long-term value investing approach inspired by Warren Buffett. He emphasizes the importance of understanding a company's fundamentals, particularly management quality ("tata kelola"), before analyzing financial statements. He advocates for identifying undervalued companies ("Mercy sold at Avanza price"), patiently holding them, and avoiding debt. Specific examples of his investments include Gajah Tunggal, Astra Graphia, United Tractor, and several others in various sectors (media, mining, commodities). His methods involve a simple valuation approach using Price-to-Book (PBV) and Price-to-Earnings (PER) ratios, prioritizing companies with strong management and low valuations, even if they don't pay dividends. He cautions against chasing quick profits and emphasizes the importance of patience and understanding the underlying business.
Detailed Summary:
The interview is structured as a talk show, with the host asking Lo Kheng Hong (referred to as "Pak Lo") about his investment journey and strategies. The conversation can be broken down into several sections:
Section 1: Early Failures and the Shift to Value Investing: Pak Lo recounts his initial four years of investment failures (1989-1992), employing a strategy of buying IPOs and selling upon listing, which consistently resulted in losses. This experience led him to discover Warren Buffett's investment philosophy, emphasizing long-term holding of fundamentally sound companies. He highlights the transformative impact of reading Buffett's books, changing his approach from short-term trading to long-term value investing.
Section 2: Investment Criteria and Valuation Methods: Pak Lo explains his core investment criteria, emphasizing management quality as the most crucial factor ("tata kelola nomor 1"). He uses a simple valuation approach, primarily focusing on PBV and PER ratios to identify undervalued companies. He describes his approach as looking for "Mercy sold at Avanza price," meaning finding high-quality companies trading at significantly lower prices than their intrinsic value. He mentions using a simple 15x P/E ratio as a starting point for valuation, although he acknowledges that this needs adjustment for growth companies. He stresses the importance of understanding the business before looking at financial statements, using apps only as a preliminary screening tool.
Section 3: Dealing with Market Crises and Risk Management: Pak Lo discusses his experience surviving the 1998 Asian financial crisis and the 2008 global financial crisis, attributing his success to avoiding debt. He emphasizes that his strategy is to invest his own capital and not leverage, allowing him to withstand market downturns. He uses the example of United Tractor, where he held the stock despite significant short-term price fluctuations because he understood its intrinsic value. He advises against using complex money management techniques, suggesting that they are often employed by those who lack a deep understanding of the underlying businesses.
Section 4: Portfolio Management and Stock Selection: Pak Lo explains his portfolio management approach, stating that he doesn't adhere to strict allocation rules. He focuses on identifying undervalued companies with strong fundamentals, regardless of sector. He mentions his investments in various sectors, including commodities (Gajah Tunggal, Tunas Baru Lampung), media (Global Mediacom), and banking (Panin). He clarifies that he doesn't solely focus on "cigar butt" investments (companies in decline) but also invests in growing companies. He emphasizes that he doesn't pay much attention to trading volume or broker activity, focusing instead on company performance.
Section 5: Addressing Investor Concerns and Myths: Pak Lo addresses several common investor concerns, including how to deal with investor relations, the challenges of small investors, and the phenomenon of "value traps." He advises thorough research before contacting investor relations and emphasizes the importance of understanding a company's fundamentals before making investment decisions. He shares his experience with MBSS (Mitra Bahagia Sejahtera), a seemingly undervalued company, highlighting the importance of understanding the underlying business and its potential for future growth. He also discusses his views on dividend payouts, stating that he prefers companies that reinvest profits for growth over those that pay high dividends.
Section 6: Long-Term Perspective and Future Plans: Pak Lo reiterates his long-term investment horizon, emphasizing his focus on core competencies in commodities and finance. He expresses caution about overvalued companies in the technology sector, preferring to stick to his proven strategy of identifying undervalued companies in sectors he understands well. He discusses his investment philosophy, comparing it to Warren Buffett's evolution from a value investor focused on undervalued companies to one who also invests in "wonderful companies" for the long term. He concludes by stating that he plans to continue his investment strategy for the rest of his life.
Throughout the interview, Pak Lo repeatedly emphasizes the importance of understanding the underlying business, patience, avoiding debt, and focusing on undervalued companies with strong management. His straightforward approach and relatable experiences offer valuable insights for both novice and experienced investors.