MALAYSIA-BASED equity investment research platform and investment training provider, Equitiestracker Holdings Bhd (ET) is looking to help investors successfully navigate the treacherous path of the stock market.
Whether its courses are on value-investing, stockpicking or even cryptocurrency, ET has them all.
While it’s commonplace in the United States to have structured and systematic investing data and training avenues, this is still pretty rare in Malaysia.
“Value and growth investing are joined at the hip. Emotional intelligence is just as important as IQ, these are some of ET chief executive officer Alvin Vong’s beliefs.
In a nutshell, ET is a pioneer in equity investment research platform and investment training. It is a pioneer in providing equity data and analytics on public-listed companies in Malaysia, Singapore and Australia.
It is also a leading investment training services provider offering bi-lingual training courses (in English and Mandarin) in Malaysia.
Based on ET’s Model Portfolio versus the FBM KLCI between June 2016 and October 2018, ET is greatly outperforming. It has delivered returns of 40.86% during that period, versus the FBM KLCI’s 7.69% and the S&P 500’s 37.61%.
Alvin says what motivates him is his ability to impact someone’s financial well-being for the better.
“By allowing more people to be more financially confident and removing the fear of not having enough money that keeps them awake at night, ” says Alvin.
His advice for those looking to start investing?
“Do not wait, start educating yourself as early as possible – time is your greatest resource, ” he says.
ET was founded in 1976 by the late Jim Vong Nyam Yew who began marketing its equity investment research platform. He is the father of the company’s current CEO Alvin, and executive director, Andrew Vong.
ET’s revenue is derived mainly from Malaysia and its customer base includes retail investors and institutional clients. The bulk of ET’s sales comes from financial institutions.
In 2017, just under 1, 700 retail investors participated in its investment training courses.
ET, which was listed on the Leap Market in March this year, having raised some RM7.14mil during the exercise, is looking to become a dominant player in the business.
The proceeds will be used to expand and enhance its digital investment research platform as well as its technology backend support systems.
Below are excerpts of an interview with Alvin Vong and his brother Andrew, who is the chief future officer.
I understand your late father was the founder of this business. What was his mission from the outset when he started the company? Now that you’re at the helm, has that mission expanded?Alvin: It was founded to help the average investor make informed investment decisions compared with uninformed and going by gut feeling.
Andrew: Towards the end of his life, he spoke a lot about wanting to help the “young people” understand how the current economic and financial system worked so that they were able to navigate it carefully (through investing) to ensure that they were able to spend more time with their loved ones instead of working even harder while inflation eroded their hard-earned savings.
What big problem can EquitiesTracker solve that others cannot? What is unique about EquitiesTracker?Alvin: I would prefer to say we facilitate by providing investors with tools to assist them in making better investment decisions through data-driven approach which is disciplined and structured in its approach.
Investing is not meant to be complicated. Our approach is to simplify the value investing methodology across different asset classes via the use of cloud-based investment tools to make sound investment decisions.
How much bigger do you envision EquitiesTracker to become?Alvin: My team and I would like to see that every Malaysian household have sound investment literacy or at least have access to investment literacy. Through investment literacy can you then gain financial confidence.
We are currently working with schools, stockbroking companies in Malaysia and the regulator to provide this opportunity.
On EquitiesTracker’s market and potential
Why do you think people keep coming back for your product?Andrew: Our ecosystem works – our software, our continuous education programmes and events, a community of like-minded investors, being agile and we have a great team at ET that continuously challenges themselves and provide the highest standards of customer experience.
Alvin: We provide our investment community with structured online and offline educational events and provide conducive environment to share investment insights.
Today’s consumers have many competitors to choose from. We are genuine about helping our members gain knowledge and grow, both personally and financially. At the end of the day, it is a very competitive environment so I guess they keep coming back because we are genuine about helping them and they feel we must still be providing value for their money.
Who do you sell to? Do you have a specific targeted market?Andrew: For starters, many trust our brand and the fact that our history goes back a long way. We strive to provide value to our customers and are genuine about helping them as it is in line with the founder’s vision.
Another point for consideration is the concept of life-long learning and upskilling. We live in an age (because of the speed of technological innovations) where, without realising it, we are constantly learning and re-learning new skills every day. For example, each time there is an update on your mobile phone for the latest apps and a small part of the interface changes, our brains have to adapt and re-learn the new positioning of the buttons.
Learning investing and continuing to sharpen your mind is a life-long process. You can’t learn to swim after reading a book on how to swim. You will not get the chiselled body of your dreams after a trial lesson at Celebrity Fitness. You cannot cook a Michelin Star-worthy meal after your first attempt at a dish from an online recipe. You need to constantly and consistently work on your skills. Investing is a skill. We provide an environment which supports the investor in his/her journey to becoming financially confident.
Have you considered any alliance/partnership?Alvin: We serve our institutional clients through partnerships to serve quality training to their clients, we are always on the lookout for valuable and long term partnerships that best reaches out to the investment community and who are aligned with our values.
What are the new products that EquitiesTracker plans to offer in the next one to three years?Alvin: We will be focused on product enhancement and value extraction from our existing products for now.
You are a believer of value investing. In your opinion, is this alone enough to consistently generate superior returns? Alvin: The formula for value = quality/price. What we believe is investing in quality and we find that good-quality companies tend to outperform the general market index over the long term.
EquitiesTracker traces its roots back to 1976 which makes us 43 years old today – we have been pioneers of value investing before it became popular, and we believe that it’s made a comeback in recent times due to the fact that its founding principles are proven time and again.
What is your style of investing? Do you combine value investing with other quantitative or qualitative methods? If yes, can you name some of the more important methods?Alvin: To be able to properly size up a company we require both quantitative and qualitative. We use quantitative data to reinforce and confirm the qualitative aspects of a business.
The best source of qualitative insights you can gain is by speaking directly to the management, sometimes this can be challenging, so if we are unable to access management directly at we access management through attending annual general meetings, of course it is important to be prepared for these sessions. We also engage management to speak directly to our members through our monthly meet ups.
Macro data is also important to us – for example the electronics sector contribute a significant percentage of total exports from Malaysia. This will give investors a clue as to the sectors in each country where value creation is happening.
Investing is not just science and maths. It is also a lot about understanding people and how they operate. How important is humility in investing?
Alvin: Today the demands on a company are not just about making money but how the company makes money. It is how the company applies, which will make it stand out. A good investor will be asking questions on the application of environment, social and governance elements in the business.
Humility and knowing when you are wrong is important and acting on it to correct your actions. Unfortunately being human we are susceptible to a range of biases. What is important is that we must be aware of this situation. Only then are we able to reduce these biases for us to make informed and objective decisions.
Investors are often prone to confirmation bias whereby we seek facts to justify a belief.
What is that one thing which can derail a person, particularly an investor’s success?Alvin: From our observation, ET’s clients who applies the value investment methodology are not usually derailed in their investment journey. In any portfolio, there is no doubt that there may be a need to re-adjust your portfolio.
Investment is an art form where being patient is something that has to be learned through experience. The best teacher is often the market
In looking out for the next big idea or stock to invest, what are some of the trends and key indicators that you look at?
Alvin: I don’t believe the next big idea on investment will come by looking at certain key indicators, but investment ideas come through your own experience and it’s about your ability to connect several facts, factors or incidences to form your idea. Reading widely helps as a catalyst in this process, you need the ability to think laterally.
Sometimes stock ideas come many years later and the beauty about stock investments is that the hard work and research is done once to understand the business the rest of the time can be spent monitoring the business (not the price). The key difference is if you are able to train yourself to differentiate between an opportunity or a threat.
Are you buying more stocks now or looking to hold cash?
Alvin: The ET methodology is to stay invested over the long term, I personally don’t believe in timing the market. The only reason you should be holding cash in your long term investment portfolio is if you have nothing of quality to hold on to or when prices are far above their values.
I find it more effective to measure my time in the market rather than to time it. The caveat here is unless interest rates are so high it makes more sense to hold cash than investments.
What are the indicators that you look at, in guiding your decisions on the market?
Alvin: Operating cash flow is more important than accounting profits to me personally, it is also important to view data through a time series rather than a specific data point. As individual data points by themselves tell you very little.Non-financial company metrics are also important as they give you an insight into the story behind financial numbers. For example when assessing an airline – load factor or revenue per seat kilometre gives you an idea if there is actual demand for the routes the airline is flying to.
Margins also give us an important insight into whether they are poor, mediocre or stellar in their industry a company with a higher margin can give us a clue that there is something special about them we just have to dig deeper to find out what makes them stand out. What are the sectors that you are putting your money into? Which sectors are you avoiding and which sectors do you see coming back?
Alvin: Our investment methodology is sector agnostic, we prefer to classify our stocks into six categories instead.
investment grade, emerging, cyclical, turnaround, sunset and start up.
The reason for this is because we find that regardless of sector, companies in a specific sector could fall into any of the above categories hence we create a balanced portfolio that includes, Investment Grade, Emerging, Cyclical and sometimes turnaround plays or start ups.
How do you spot trends ahead of their time? What do you like?
Andrew: A great deal of observation is required and lateral thinking. At ET we bullish on the long term prospects of crypto currencies and the role they will play in the financial sector. We are in the very early stages of a structural change in the role of crypto-currencies will play, the current legal framework and regulation will need a serious rethink.
Alvin: There is of course the millennial trend that will be difficult to ignore in the next 10 to 20 years, as millennials age and become more affluent, companies whose products or brands who do not speak or engage with Millenials will stagnate or find it difficult to grow.
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