Value Investing in a “Bursty” World

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Bamboo Innovators bend, not break, even in the most terrifying storm that would snap the mighty resisting oak tree. It survives, therefore it conquers.”

BAMBOO LETTER UPDATE | October 20, 2014

Bamboo Innovator Insight (Issue 55)

§  The weekly insight is a teaser into the opportunities – and pitfalls! – in the Asian capital jungles.

§  Get The Moat Report Asia – a monthly in-depth presentation report of around 30-40 pages covering the business model of the company, why it has a wide moat and why the moat may continue to widen, a special section on “Inside the Leader’s Mind” to understand their thinking process in building up the business, the context – why now (certain corporate or industry events or groundbreaking news), valuations (why it can compound 2-3x in the next 5 years), potential risks and how it is part of the systematic process in the Bamboo Innovator Index of 200+ companies out of 15,000+ in the Asia ex-Japan universe.

§  Our paid Members from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, some of the world’s biggest secretive global hedge fund giants, and savvy private individual investors who are lifelong learners in the art of value investing.

Dear All,

Value Investing in a “Bursty” World

“If we have low growth sustained over a long period, we will always be vulnerable, vulnerable to geopolitical risks … vulnerable to ‘financial Ebolas’ which are bound to happen from time to time.”

- Singapore’s Deputy Prime Minister Tharman Shanmugaratnam and Chairman of the IMF Committee at the IMFC press conference on 11 Oct.

Bursts – the short flourishes of intensive activity preceded or followed by long periods of nothingness, stagnation, low growth – appear to be the hidden order that govern phenomena from the Ebola to 4G LTE (Long-Term Evolution), yielding deep insights into how value investors, entrepreneurs and governments can respond effectively to rapid, non-linear, complex changes happening around us.

Looking through this “bursty” lens can hopefully help value investors better understand the chip battle between Qualcomm (QCOM, MV $121.4bn) and MediaTek (2454 TT, MV $21.7bn) to identify the long-term “winner” and whether the request from the Bill & Melinda Gates Foundation to CSL Ltd (CSL AU, MV $31bn) to produce a hyper-immune plasma product collected from the plasma of people who have recovered from Ebola can be an effective antidote when transfused in patients. Since the first Ebola case occurred quietly in Guinea and West Africa in Dec 2013, the rate of spreading has multiplied exponentially from a few cases to more than 9,000 confirmed cases and over 4,000 deaths and the virus has jumped to urban centers in Dallas and Madrid this month, posing unprecedented dangers. The worst-case scenario from the US Centres for Disease Control foresees 1.4m cases in West Africa by late Jan 2015. While hospitals have “surge capacity” to open more beds and call upon more doctors in a time of need, using such resources is very expensive and as crisis hits, the robust-yet-fragile healthcare system can break down. Other bursts are also pressing ominously on us: bursts in accounting frauds from Chinese companies to Tesco; bursts in capex spending that led to oversupply in energy and commodities which led to recent declines; bursts in borrowings to be repaid by Asian corporates, property developers and REITs; potential bursts in bad debt and default of credit-binged Chinese firms; bursts in regulatory actions against foreign companies in China and so on.

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A conversation with our Institutional Subscriber Mr. W over Qualcomm and Mediatek had triggered the link to a thought-provoking book that we bought in Omaha in 2012 by Albert-László Barabási titled: Bursts: The Hidden Pattern Behind Everything We Do, The “power law” that governs many networked structures and human behavior resulted in bursty patterns. We attend to our health, for instance, in bursty patterns, overlooking symptoms until a health problem suddenly becomes too serious to ignore, producing a bursts of medical visits in a short time. Most emails are replied fast while several emails could wait for a long time before being handled. “Once you understand the origins of these bursts,” Barabási says, “it can really change your perspective on how you do things, and how you expect other people to respond.” Consider this example for IoT (Internet of Things) entrepreneurs and the Apple Watch. Japanese doctors discovered that they could predict the impending onset of depression by monitoring their physical movements with motion-sensitive watches. Since depressed people often report feeling physically sluggish, when there is a change in the patients’ normally bursty physical activity, it signalled the onset of a depressive incident.

MediaTek (2454 TT) Vs Qualcomm (QCOM) - Stock Price Performance, 2001-2014

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Back to Qualcomm on its bursts of crisis in China – and how its own bursty deep intangible knowledge in LTE helps it to stay resilient…

<Article snipped>

Having met with Qualcomm’s Dr. Irwin Jacobs when he was in SMU in Jan (Any Benjamin Franklins in Asia? Part 2), we think that the complexity of the LTE technology is underestimated by the industry given the bursty nature in how we use our smartphones and data in diverse types of environment and heterogeneous networks for seamless mobile connectivity. This deep intangible knowhow embedded in their LTE/4G baseband SoC chipset solution to have more capacity for bursty usage and connect to telecom carriers and different spectrum is unique and not easily replicable in terms of high-performance by MediaTek and is beyond the hardware and turnkey-solution wide-moat that Mediatek is good in. As Qualcomm’s SVP Bill Davidson commented, “It’s not about how many cores; it’s how you use them. We can do things more efficiently with fewer cores.” The “power law” that governs Qualcomm in building up its micro-architecture and intangible knowledge in advanced LTE should continue to help it widen its wide-moat advantage and leadership…

<Article snipped>

Thus, value investors should ask:

·        Does the business model…

<Article snipped>

Bursts, the deep structure of empirical reality, enable value investors to better understand the process that governs complex wide-moat networks and to understand the processes that cover human activity patterns, which hopefully can help value investors to have a fresh perspective on nonlinear growth and sustained value creation.

Warm regards,

KB

Managing Editor

The Moat Report Asia

www.moatreport.com

SMU: http://accountancy.smu.edu.sg/faculty/profile/108141/Kee%20Koon%20Boon

To read the exclusive article in full to find out more about the story of Qualcomm Vs MediaTek and some of questions that value investors should ask and look for in companies to navigate a “bursty” world, please visit:

·        Value Investing in a “Bursty” World, Oct 20, 2014 (Moat Report Asia, BeyondProxy)

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Morning Bamboo Insight: 14 Oct 2014

Morning Bamboo Insight: 14 Oct 2014

Macro

  1. (Macro) – U.S. regulators press banks for more on auto loan exposure to assess risks

http://www.reuters.com/article/2014/10/12/us-autos-lending-regulators-idUSKCN0I10T320141012

  1. Deutsche clampdown on bad behaviour prompts exodus of traders –FT

http://uk.reuters.com/article/2014/10/12/deutsche-bank-regulator-idUKL2N0S70X920141012

Asia Pacific

  1. (Spore) – Bears Crowd to Sembcorp Marine After Stock’s 18% Drop in Value

http://www.bloomberg.com/news/print/2014-10-12/bears-crowd-to-sembcorp-after-stock-s-18-drop-in-value.html

  1. (Isia) – Indonesia needs new growth model to boost GDP

http://news.asiaone.com/print/news/asia/indonesia-needs-new-growth-model-boost-gdp

  1. (China) – U.S. ETFs to take aim at China’s onshore bond market

http://www.reuters.com/article/2014/10/12/us-china-bond-etfs-analysis-idUSKCN0I10F320141012

  1. (India) – Modi seeks to revive India’s ‘zombie factories’, not abandon them

http://uk.reuters.com/article/2014/10/12/uk-india-industry-zombies-idUKKCN0I10X920141012

  1. (Korea) – Pardoning tycoons for economic growth; Parole’s not special treatment; Stimulus will be of no use if it fails to move companies and consumers to spend.

http://koreajoongangdaily.joins.com/news/article/article.aspx?aid=2995917&cloc=joongangdaily|home|newslist2

  1. (Taiwan) – A campaign to boycott Ting Hsin (頂新集團)food products picked up momentum yesterday as food conglomerate tycoon Wei Ying-chung (魏應充) made his first public appearance since the latest tainted oil scandal erupted to apologize to the nation

http://www.chinapost.com.tw/print/419237.htm

Life

  1. Remembering the impact Lee Kuan Yew’s speeches made

http://news.asiaone.com/print/news/singapore/remembering-impact-lee-kuan-yews-speeches-made

  1. The Science of Conquering Your Greatest Fears; It may be the oldest emotion. Before happiness, before sorrow, before exhilaration, and way, way before the urge to climb mountains and bomb down steeps, there was fear

http://www.outsideonline.com/outdoor-adventure/science/The-Science-of-Conquering-Your-Greatest-Fears.html

  1. A Dozen Things I’ve Learned From Jeffrey Gundlach About Investing

http://25iq.com/2014/10/04/a-dozen-things-ive-learned-from-jeffrey-gundlach-about-investing/

  1. ‘Grit’ might be more important than IQ. Now schools need to learn to teach it.

http://www.vox.com/2014/10/9/6835197/grit-kipp-noncognitive-skills-duckworth-teaching

  1. One Great Idea From Jean Tirole, the Nobel Economist

http://www.businessweek.com/printer/articles/230302-one-great-idea-from-jean-tirole-the-nobel-economist

  1. Startup God Paul Graham Reveals The Single Most Important Quality To Look For In Company: Authenticity

http://www.businessinsider.sg/paul-graham-startups-bloomberg-2014-10/#.VDwEj_mSyCk

TMT

  1. How Hewlett-Packard lost its way

http://fortune.com/2012/05/08/how-hewlett-packard-lost-its-way/

  1. Why Programmatic Is Killing Creativity In Advertising

http://www.businessinsider.sg/programmatic-advertising-and-creativity-2014-10/#.VDwDV_mSyCk

  1. (Korea/Tech) – Maker of Korean Chat App to Ignore Legal Demands for Users’ Messages; Daum Kakao Has Stopped Honoring Warrants From Government Prosecutors in Bid to Keep KakaoTalk Users

http://online.wsj.com/articles/maker-of-korean-chat-app-to-ignore-legal-demands-for-users-messages-1413202926

  1. Competitive Pressures Loom over TSMC; As Mobile Devices Become Smaller, Race is On to Pack More Computing Capability into Each Chip.

http://online.wsj.com/articles/competitive-pressures-loom-over-tsmc-1413191871

  1. (Korea/Tech) – Tax-evading blog shopping malls mushrooming

http://news.mk.co.kr/english/newsRead.php?sc=30800003&cm=Economy&year=2014&no=1307749&selFlag=sc&relatedcode=&wonNo=&sID=308

Investing Process

  1. Vltava Fund’s Q3 2014 Letter to Investors

http://www.valuewalk.com/2014/10/vltava-funds-letter-investors

  1. How to Read an Annual Report

http://janav.wordpress.com/2014/10/03/how-to-read-an-annual-report/

  1. The Family Business Map: Framework, Selective Survey, and Evidence from Chinese Family Firm Succession

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2501364

  1. The New Lyrics of the Old Folks: The Role of Family Ownership in Corporate Innovation

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2487083

 

Buffett’s Van Tuyl Auto Dealership: Starfish Vs Spider and Any Wide-Moat Asian Starfish?

image001

“Bamboo Innovators bend, not break, even in the most terrifying storm that would snap the mighty resisting oak tree. It survives, therefore it conquers.”

BAMBOO LETTER UPDATE | October 6, 2014
Bamboo Innovator Insight (Issue 53)

  • The weekly insight is a teaser into the opportunities – and pitfalls! – in the Asian capital jungles.
  • Get The Moat Report Asia- a monthly in-depth presentation report of around 30-40 pages covering the business model of the company, why it has a wide moat and why the moat may continue to widen, a special section on “Inside the Leader’s Mind” to understand their thinking process in building up the business, the context – why now (certain corporate or industry events or groundbreaking news), valuations (why it can compound 2-3x in the next 5 years), potential risks and how it is part of the systematic process in the Bamboo Innovator Index of 200+ companies out of 15,000+ in the Asia ex-Japan universe.
  • Our paid Members from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, some of the world’s biggest secretive global hedge fund giants, and savvy private individual investors who are lifelong learners in the art of value investing.
 

Buffett’s Van Tuyl Auto Dealership: Starfish Vs Spider and Any Wide-Moat Asian Starfish?

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“Well, Larry Van Tuyl talked to me six or seven years ago. I understand the business and I think that it is a decent business overall and I think the way Larry runs it is extraordinary. He has these partners in 78 dealerships and so he works on a partner basis. He’s got a terrific record over the years, and you know, it is something that we will own for 100 years. It really fits Berkshire – it’s the kind of business we can expand a lot because there are 17,000 dealers in the country and we are buying 78 of them through this means. So we will get a lot of opportunity to expand the business. This will be a big business for Berkshire. The Van Tuyl Group fits perfectly into Berkshire Hathaway from both a financial and cultural viewpoint. Larry Van Tuyl along with his father, Cecil, spent decades building outstanding dealerships operated by local partners. The Van Tuyl Group enjoys excellent relations with the major auto manufacturers and delivers unusually high volumes at its 78 locations.

- Warren Buffett commenting on Berkshire Hathaway’s acquisition of Van Tuyl Group, the fifth largest auto dealership firm in the U.S. with $8 billion in sales, at an undisclosed price estimated at around $3 billion

 

“One thing that business, institutions, governments and key individuals will have to realize is spiders and starfish may look alike, but starfish have a miraculous quality to them. Cut off the leg of a spider,  you have a seven-legged creature on your hands; cut off its head and you have a dead spider. But cut off the arm of a starfish and it will grow a new one. Not only that, but the severed arm can grow an entirely new body. Starfish can achieve this feat because, unlike spiders, they are decentralized; every major organ is replicated across each arm.”

- Rod Beckstrom and Ori Brafman in their 2008 book “The Starfish and the Spider: The Unstoppable Power of Leaderless Organizations

 

Starfish and Spiders seem to have crawled over the phenomena from Hong Kong’s “leaderless” protests to Buffett’s purchase of Van Tuyl’s network of 78 auto dealers, most of them located in the Southwest and Midwest.

 

Using the metaphor of “Spider” to depict traditional, top-down organizations and the “Starfish” to represent groups that lack structure, leadership and formal organizations, authors Rod Beckstrom and Ori Brafman in their book “The Starfish and the Spider: The Unstoppable Power of Leaderless Organizations” presented a thought-provoking view on how “Spider” organizations are increasingly being challenged and defeated by the “starfish”. Decentralized organizations exploiting strong networks are creating a wide-moat competitive advantage over conventional, centralized operations and they are incredibly resilient. Power and knowledge is disseminated across the “starfish” organization, and individual units can respond quickly to the increasingly complex internal and external forces of today.

 

Van Tuyl has a unique operating structure in which general managers of the individual dealerships typically retain a stake in their local business. The Van Tuyls commented: “I believe in people, people, people. There is no substitute for good people who really care and do a good job. We cut all of our people in on ownership because we believe that’s the way to go. We’re waiting to get more guys ready for general manager and partner. If they’re part owner, they’re going to look after business a little bit better.” Thus, the starfish organizations like Van Tuyl recognize that in today’s fast-changing and competitive environment, it’s the folks on the ground who have the best real-time information on how the battle is shaping up. They build an environment that respects their opinion, which seeks to make sure they understand the mission, and simultaneously empowers them to take the fight to the enemy in a way that optimizes their chances of success in whatever conditions they might find themselves.

 

Because each of Van Tuyl’s 78 dealerships is itself a partnership, a separate legal entity, like a starfish, the details of Berkshire’s acquisition took many months. Buffett added: “I like the Van Tuyl people enormously. But if I had had to deal with the contract’s complications, I probably wouldn’t have lasted it out.” The accounting for partnerships and joint ventures is also complicated by the IFRS 11 Joint Arrangements accounting standard. Under the US GAAP, JVs are accounted for using the equity method. Before IFRS 11, JVs may be accounted for under either the equity method or proportional consolidation but now IASB requires the use of equity method to bring about comparability of financial statements on a global basis.

 

<Article snipped>

 

“It’s easy to mistake starfish organizations for spiders,” the authors warn. Both have the appearance of multiple “legs” or divisions/units. So what are the distinctive characteristics of these “starfish”? There are five legs to a decentralized organization that can help it take off: (1) circles, (2) the catalyst, (3) the pre-existing network, (4) an ideology, and (5) a champion. Circles are essentially independent, autonomous groups that function on the basis of some implicit norms. The catalyst is the person who initiates a circle and then cedes control to its members, developing the idea, sharing it with others, and leading by example. Ideology is the glue that holds people together within such circles. Without access to the culture of trust prevalent in a pre-existing network, it is almost quixotic to attempt to build a decentralized organization. There is a champion who promotes the idea relentlessly. Instead of command and control through rational, powerful, directive instruments to organize and bring about order, the catalyst is a peer connecting people, who show: a genuine interest in others, a desire to help, a tolerance for ambiguity, and the ability to map new connections, to meet people where they are, to inspire others, to let go.

 

So is the starfish really undefeatable? The starfish can disintegrate quickly once the indestructible intangible ideology or trust is weakening. For instance, if the HK student protesters start to be aware that their actions have caused tremendous distress to the livelihoods and rights of the ordinary citizens that they are fighting for, confusion strikes the starfish about the legitimacy of its ideology and the terrifying strength starts to fade away. Similarly, the introduction of wealth and tangible rules and rights into the starfish may disperse the power of the starfish. The U.S. government finally bested the Apaches, for instance, when it provided its leaders with cattle, a form of wealth that reshaped the amorphous, nomadic tribes into easily manageable hierarchies. As the authors put it, “The moment you introduce property rights into the equation [be they intellectual, physical, or otherwise], everything changes: The starfish organization turns into a spider.”

 

Having got a clearer understanding about starfish organizations, are there any Asian starfish? From our Bamboo Innovator Index of 200+ companies, we think … have qualities of the starfish just like Van Tuyl, Jim Pattinson Auto and O’Reilly Automotive.

 

Asian Wide-Moat Starfish #1 and #2 Stock Price Performance

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<Article snipped>

********

“When you give people freedom, you get chaos, but you also get incredible creativity”. Starfish organizations are incredibly resilient and powerful because they work on the fundamental premise that their employees and business partners are good, can be trusted and wish to contribute. However, the powerful forces of the starfish can be abused like in the case of the “leaderless” terrorist networks al-Qaeda and ISIS. German philosopher Friedrich Nietzsche said, “One must still have chaos in oneself to be able to give birth to a dancing star.” To this, we add, “One must cultivate ‘emptiness’ as a Bamboo Innovator to be able to give birth to a resilient and positive dancing Starfish.”

 

Warm regards,

KB

Managing Editor

The Moat Report Asia

www.moatreport.com

SMU: http://accountancy.smu.edu.sg/faculty/profile/108141/Kee%20Koon%20Boon

 

To read the exclusive article in full to find out more about the story of the wide-moat starfish business model and companies in Asia, please visit:

 

  • Buffett’s Van Tuyl Auto Dealership: Starfish Vs Spider and Any Asian Starfish? Oct 6, 2014 (Moat Report Asia, BeyondProxy)
The Moat Report Asia
 

“In business, I look for economic castles protected by unbreachable ‘moats’.”

- Warren Buffett

 

The Moat Report Asia is a research service focused exclusively on competitively advantaged, attractively priced public companies in Asia. Together with our European partners BeyondProxy and The Manual of Ideas, the idea-oriented acclaimed monthly research publication for institutional and private investors, we scour Asia to produce The Moat Report Asia, a monthly in-depth presentation report highlighting an undervalued wide-moat business in Asia with an innovative and resilient business model to compound value in uncertain times. Our Members from North America, the Nordic, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, secretive global hedge fund giants, and savvy private individual investors who are lifelong learners in the art of value investing.

 

Learn more about membership benefits here: http://www.moatreport.com/subscription/

 

  • Individual subscription at $1,994 per year:

https://www.moatreport.com/individual-subscription/?s2-ssl=yes

 

The Moat Report Asia Members’ Forum has been getting penetrating quality dialogues from our subscribers.Questions range from:

 

  • The nuances of internal dealings in Asia, including the case discussion of the recent deal in which HK billionaire’s Lee Shau-kee Henderson Landacquiring Towngas or Hong Kong & China Gas (3 HK) from his family holdings, seemingly déjà vu from the early Oct 2007 transaction when the market peak.
  • The case of F&N Singaporespinning out its property unit FCL Trust and getting “free” special dividend-in-specie and the potential risk in asset swap restructuring to deleverage the hidden debt in the entire Group balance sheet.
  • The dilemma of whether to invest in a Southeast Asian-listed company and hidden champion with a domestic market share of 60% due to family squabbles and a legal suit over the company’s ownership.
  • Discussion of the wise and thoughtful 107-year-old Irving Kahn’s investment into a US-listed but Hong Kong-based electronics company with development property project in Shenzhen’s Qianhai zone and the possible corporate governance risks that could be underestimated or overlooked, as well as their history of listing some assets in HK in 2004.. This is also a case study of “buy one get one free” in John’s highly-acclaimed book The Manual of Ideasin which the “free” property is lumped together with the (eroding) core business to make the combined entity look cheap and undervalued. What are the potential areas that value investors need to watch out for when adapting the SOTP (sum-of-the-parts) valuation method in Asia?
  • And many more intriguing questions.

 

Do find out more in how you can benefit from authentic and candid on-the-ground insights that sell-side analysts and brokers, with their inherent conflict-of-interests, inevitable focus on conventional stock coverage and different clientele priorities, are unwilling or unable to share. Think of this as pressing the Bloomberg “Help Help” button to navigate the Asian capital jungle. Institutional subscribers also get access to the Bamboo Innovator Index of 200+ companies and Watchlist of 500+ companies in Asia and the Database has eliminated companies with a higher probability of accounting frauds and  misgovernance as well as the alluring value traps.

 

Professional Development Workshops for Executives and Lifelong Learners
Our 8th run of the series of workshop From the Fund Management Jungles: Value Investing Exposed and Explored – (Part 1) Moat Analysis, (Part 2) Tipping Point Analysis and (Part 3) Detecting Accounting Fraud – on 14 June 2014 has been well-received with serious value investors, professionals, and serious lifelong learners attending, with some who flew in from Jakarta and KL!..

 

Our 9th workshop will be sometime later in the year.

 

Thank you for your support all this while!

 

Thank you so much for reading as always.

 

Warm regards,

KB Kee

Managing Editor

The Moat Report Asia

Singapore

Mobile: +65 9695 1860

 

A Service of BeyondProxy LLC

1608 S. Ashland Avenue #27878

Chicago, Illinois 60608-2013

Other offices: London, Singapore, Zurich

 

P.S.1 Here is a little more about my background:

KB Kee has been rooted in the principles of value investing for over a decade as an analyst in Asian capital markets. He was head of research and fund manager at a Singapore-based value investment firm. As a member of the investment committee, he helped the firm’s Asia-focused equity funds significantly outperform the benchmark index. He was previously the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company.

 

He holds a Masters in Finance and degrees in Accountancy and Business Management, summa cum laude, from Singapore Management University (SMU) and had also published articles on governance and investing in the media, as well as published an empirical research paper Why ‘Democracy’ and ‘Drifter’ Firms Can Have Abnormal Returns: The Joint Importance of Corporate Governance and Abnormal Accruals in Separating Winners from Losers in the Special Issue of Istanbul Stock Exchange 25th Year Anniversary Best Paper Competition,Boğaziçi JournalReview of Social, Economic and Administrative Studies, Vol. 25(1): 3-55. KB has also presented his thought leadership as a keynote speaker in global investing conferences. KB has trained CEOs, entrepreneurs, CFOs, management executives in business strategy, value investing, macroeconomic, industry trends, and detecting accounting frauds in Singapore, HK and China, and had taught accounting at the SMU where he is currently an adjunct lecturer.

 

P.S.2  Why do I care so much about doing The Moat Report Asia for you?

My personal motivation in embarking on this lifelong journey has been driven by disappointment from observing up close and personal the hard-earned assets of many investors, including friends and their families, burnt badly by the popular mantra: “Ride the Asian Growth Story!” I witnessed firsthand the emotional upheavals that they go through when they invest their hard-earned money – and their family’s – in these “Ride The Asian Growth Story” stocks either by themselves or through money managers, and these stocks turned out to be the subject of some exciting “theme” but which are inherently sick and prey to economic vicissitudes. They may seem to grow faster initially but the sustainable harvest of their returns is far too uncertain to be the focus of a wise program in investment. Worse still, the companies turned out to be involved in accounting frauds. Their financial numbers were “propped up” artificially to lure in funds from investors and the studiously-assessed asset value has already been “tunnelled out” or expropriated. And western-based fraud detection tools and techniques have not been adapted to the Asian context to avoid these traps.

 

After a decade-plus journey in the Asian capital jungles, it has been somewhat disheartening as I observe many fraud perpetrators go away scot-free and live a life of super luxury on minority investors’ hard-earned money. And these perpetrators make tempting offers to various parties in the financial community to go along with their schemes. When investors have knowledge in their hands, we have a choice to stay away from these people and away from temptations and do the things that we think are right. With knowledge, we have a choice to invest in the hardworking Asian entrepreneurs and capital allocators who are serious in building a wide-moat business.

 

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A Service of BeyondProxy LLC
1608 S. Ashland Avenue #27878
Chicago, Illinois 60608-2013

Other offices: London, Singapore, Zurich

 

Morning Bamboo Insight: 6 Oct 2014

Morning Bamboo Insight: 6 Oct 2014

Macro

  1. Agricultural land: Farmland prices are outperforming prime London property

http://www.economist.com/news/britain/21621884-farmland-prices-are-outperforming-prime-london-property-raking-it

  1. The world’s biggest container ships, longer than the Eiffel Tower is high, are a symbol of an increasingly global marketplace. But they also face strong economic headwinds

http://www.nytimes.com/2014/10/05/business/international/aboard-a-cargo-colossus-maersks-new-container-ships.html?ref=business&_r=0

  1. Investors Are Sick of Convertible Notes

http://pointsandfigures.com/2014/10/01/investors-are-sick-of-convertible-notes/

  1. “You buy emerging markets because per capita GDP is half in Indonesia what it is in Thailand, and half in the Philippines what it is in Indonesia, and half in Cambodia what it is in the Philippines. It remains a long-tail story.”

http://online.barrons.com/news/articles/SB51517841841143733463604580184331222965518

  1. The incredible shrinking dividend payout

http://online.wsj.com/articles/not-your-fathers-dividend-stocks-1412345258

Asia Pacific

  1. (HK/China) – Stark choices face Beijing over any PLA on Hong Kong streets

http://uk.reuters.com/article/2014/10/05/uk-hongkong-china-pla-insight-idUKKCN0HU02C20141005

  1. (HK) – Tremors from Hong Kong: Are protests over China’s broken promise doomed to end in violence?

http://business.financialpost.com/2014/10/04/tremors-from-hong-kong-are-protests-over-chinas-broken-promise-doomed-to-end-in-violence/

  1. (China) – China’s Inscrutable Contraction

http://www.project-syndicate.org/print/questioning-chinese-economic-climate-by-kenneth-rogoff-2014-10

  1. (Isia) – Blue Bird IPO Could Be One of Indonesia’s Largest Ever

http://thejakartaglobe.beritasatu.com/business/blue-bird-ipo-one-indonesias-largest-ever/

  1. (Isia) – Red-and-White Coalition Gives Jokowi the Blues as Prabowo Rides Over President-Elect

http://thejakartaglobe.beritasatu.com/news/red-white-coalition-gives-jokowi-blues-prabowo-rides-president-elect/

  1. (Isia) – With limited space available and skyrocketing land prices in Jakarta, theme park operators have started looking to areas outside the capital city to expand their amusement center businesses

http://www.thejakartapost.com/news/2014/10/03/theme-park-businesses-expand-regions.html

  1. (Isia) – Indonesian conglomerates need to scale down to stay relevant in business

http://www.thejakartapost.com/news/2014/10/04/ri-conglomerates-need-scale-down-stay-relevant-business.html

Life

  1. Paul Graham: Before the Startup

http://paulgraham.com/before.html

  1. What Can the McLaren Racing Team Teach the Rest of Us?

http://www.businessweek.com/printer/articles/228594-what-can-the-mclaren-racing-team-teach-the-rest-of-us

  1. Maker’s Schedule, Manager’s Schedule, Investor’s Schedule

http://hunterwalk.com/2014/09/30/makers-schedule-managers-schedule-investors-schedule/

  1. VCs Are Not Your Friends

https://www.linkedin.com/today/post/article/20141001120038-95015-vcs-are-not-your-friends

  1. There is No Such Thing as a Great Team, Only Great Habits

http://www.thisisgoingtobebig.com/blog/2014/9/29/there-is-no-such-thing-as-a-great-team-only-great-habits.html

  1. Why It’s Important to Reinvent Yourself

https://www.linkedin.com/today/post/article/20140929234617-29478030-why-it-s-important-to-reinvent-yourself

  1. How American parenting is killing the American marriage

http://qz.com/273255/how-american-parenting-is-killing-the-american-marriage/

  1. The Self-Made Man: The story of America’s most pliable, pernicious, irrepressible myth

http://www.slate.com/articles/news_and_politics/history/2014/09/the_self_made_man_history_of_a_myth_from_ben_franklin_to_andrew_carnegie.html

  1. The Four New Breeds of Entrepreneurs? To run a successful start-up, figure out if you’re a diamond, a star, a transformer or a rocket ship

http://online.wsj.com/articles/the-four-new-breeds-of-entrepreneurs-1412282673

  1. Jane Goodall on Empathy and How to Reach Our Highest Human Potential

http://www.brainpickings.org/2014/09/30/jane-goodall-empathy/

  1. Too-ticky’s Guide to Life: Wisdom on Uncertainty, Presence, and Self-Reliance from Beloved Children’s Book Author Tove Jansson

http://www.brainpickings.org/2014/09/29/too-ticky-quotes-tove-jansson/

TMT

  1. (Korea/Tech) – Samsung Raises Its Venture-Capital Profile; South Korean Electronics Firm Pushes Into New Businesses, Acts More Quickly With Acquisitions

http://online.wsj.com/articles/samsung-raises-its-venture-capital-profile-1412373782

  1. Google Working on Large-Scale Video Displays: Google X Is Developing Screens That Can Connect Like Legos to Form a Big Seamless Image

http://online.wsj.com/articles/google-working-on-large-scale-display-technology-1412346897

Commodities

  1. JP Morgan sells commodity arm to Mercuria for $800 million instead of the original $3.5 billion

http://www.reuters.com/article/2014/10/03/us-mercuria-jpmorgan-idUSKCN0HS1JA20141003

Energy

  1. (Energy) – World on the brink of oil war as Opec bickers over price; Oil prices ended last week in freefall as the world’s largest group of producers from petro-states in the Middle East dithered over whether to cut output

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11140156/World-on-the-brink-of-oil-war-as-Opec-bickers-over-price.html

Comeback Kid and Reinventing the Family Business

 image003

“Bamboo Innovators bend, not break, even in the most terrifying storm that would snap the mighty resisting oak tree. It survives, therefore it conquers.”

BAMBOO LETTER UPDATE | September 30, 2014
Bamboo Innovator Insight (Issue 52)

  • The weekly insight is a teaser into the opportunities – and pitfalls! – in the Asian capital jungles.
  • Get The Moat Report Asia- a monthly in-depth presentation report of around 30-40 pages covering the business model of the company, why it has a wide moat and why the moat may continue to widen, a special section on “Inside the Leader’s Mind” to understand their thinking process in building up the business, the context – why now (certain corporate or industry events or groundbreaking news), valuations (why it can compound 2-3x in the next 5 years), potential risks and how it is part of the systematic process in the Bamboo Innovator Index of 200+ companies out of 15,000+ in the Asia ex-Japan universe.
  • Our paid Members from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, some of the world’s biggest secretive global hedge fund giants, and savvy private individual investors who are lifelong learners in the art of value investing.
 

Can You Guess This Asian Wide-Moat Company? Comeback Kid and Reinventing the Family Business

Our latest monthly Moat Report Asia for October investigates an Asian-listed company who is the#1 healthy niche snack king in its domestic market with a market share of >73%. The company has spent over 30 years to build up an extensive wide-moat nationwide distribution network penetrating 200,000 Point-of-Sales (POS), including both modern trade (MT) (supermarkets,hypermarkets, convenience stores, gas stations, wholesales stores) and traditional trade (TT) (sundry stores, traditional shops). The company cultivates long-term customer relationships with its strong direct sales team of 200 professionals regularly visiting the stores with over 400 vehicles, comprising of trucks and the innovative mobile cash vans.

 

We observed that super compounders Ecolab (ECL, MV $34.8bn) and Keyence (6861 JP, MV $26.7bn) have a strong solutions-sales specialist team and we think this Asian company has accumulated deep know-how infused in its direct salesforce team over the years to sustain resilient growth. The company distributes 5 product categories: (1) Snacks eg the Japanese snack brand Calbee; (2) Confectionery, (3) F&B, (4) Medicine, pastille, nutrition food, (5) Personal care and household products. 75% of its sales are domestic while the rest are exported, mainly to Japan (20% of sales).

 

The company empowers its salesforce, particularly those traveling on mobile sales vans, with the utilization of modern technology in receiving orders, data verification, issuance of sales documents, delivery of goods. The company has created a sophisticated product storage and inventory management system and a delivery system that is flexible, convenient and fast. In terms of inventory management and working capital efficiency, the company performs far better with inventory period at 23 days (comparable peer 73 days) and cash conversion cycle (CCC) of 33 days (comparable peer 89 days). These long-term competitive advantages have translated to a superior ROE of 27.7% and sustainable cashflow generation.

 

Even when compared to Asian MNC giants Universal Robina Corp (URC PM, MV $9bn) and Calbee(2229 JP, MV $4.3bn) who have scale advantages in cost efficiency and pricing power, the company has surprisingly better fundamental performance in ROE and profitability and is trading at a huge relative valuation discount at its current EV/EBIT 10.7x and EV/EBITDA 10.4x. Net cash at 9% of market value is a healthy reserve that can be productively allocated to capitalize on future growth opportunities without straining the balance sheet. Its attractive 5.6% dividend yield, the highest in the industry, also limits short-term downside risks.

image009

Its unique low-fat high-protein healthy snack and wide-moat distribution network makes the company either an attractive takeover target or long-term strategic partner to the giant snack producers from URC to Mondelez and General Mills, thus providing long-term downside protection in its terminal value.

 

Organic food and healthy snack company Annie’s was acquired In Sep 2014 by General Mills for $820M at Price/Sales 4x (vs the company’s P/Sales 1.5x), following similar moves by General Mills, Kellogg, Campbell Soup, Hillshire Brands, Tyson Foods, JM Smucker, TreeHouse Goods, WhiteWave etc. The trend of forgoing meals in favor of healthy snacks is accelerating.

 

It is the flagship vehicle of a family business group whose storied history has been long forgotten following unusual succession challenges in the third generation. Led by the capable son-in-law to the daughter of the third-generation scion, the Group is the ‘comeback kid’ who has successfully resurrected from the 1997/98 Asian Financial Crisis and has listed 4 of its 6 major business assets to derisk the business group governance risk and instill a strong sense of accountability and transparency for long-term going-concern viability. As the flagship vehicle, this Asian listed company will be the most important vehicle in the Group to equitize the governance goodwill and long-term strategic partnerships seeking to leverage its wide-moat distribution network and global export potential. We are impressed by the company’s efforts over the years to develop its human capital in caring about their knowledge by providing them training opportunities and multiple opportunities to engage in company activities to foster sharing and commitment. This is rare in Asian firms and the company deserves credit and a long-term valuation premium.

 

Warm regards,

KB

Managing Editor

The Moat Report Asia

www.moatreport.com

SMU: http://accountancy.smu.edu.sg/faculty/profile/108141/Kee%20Koon%20Boon

 

The Moat Report Asia
 

“In business, I look for economic castles protected by unbreachable ‘moats’.”

- Warren Buffett

 

The Moat Report Asia is a research service focused exclusively on competitively advantaged, attractively priced public companies in Asia. Together with our European partners BeyondProxy andThe Manual of Ideas, the idea-oriented acclaimed monthly research publication for institutional and private investors, we scour Asia to produce The Moat Report Asia, a monthly in-depth presentation report highlighting an undervalued wide-moat business in Asia with an innovative and resilient business model to compound value in uncertain times. Our Members from North America, the Nordic, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, secretive global hedge fund giants, and savvy private individual investors who are lifelong learners in the art of value investing.

 

Learn more about membership benefits here: http://www.moatreport.com/subscription/

 

  • Individual subscription at $1,994 per year:

https://www.moatreport.com/individual-subscription/?s2-ssl=yes

 

The Moat Report Asia Members’ Forum has been getting penetrating quality dialogues from our subscribers. Questions range from:

 

  • The nuances of internal dealings in Asia, including the case discussion of the recent deal in which HK billionaire’s Lee Shau-kee Henderson Landacquiring Towngas or Hong Kong & China Gas (3 HK) from his family holdings, seemingly déjà vu from the early Oct 2007 transaction when the market peak.
  • The case of F&N Singaporespinning out its property unit FCL Trust and getting “free” special dividend-in-specie and the potential risk in asset swap restructuring to deleverage the hidden debt in the entire Group balance sheet.
  • The dilemma of whether to invest in a Southeast Asian-listed company and hidden champion with a domestic market share of 60% due to family squabbles and a legal suit over the company’s ownership.
  • Discussion of the wise and thoughtful 107-year-old Irving Kahn’s investment into a US-listed but Hong Kong-based electronics company with development property project in Shenzhen’s Qianhai zone and the possible corporate governance risks that could be underestimated or overlooked, as well as their history of listing some assets in HK in 2004.. This is also a case study of “buy one get one free” in John’s highly-acclaimed book The Manual of Ideasin which the “free” property is lumped together with the (eroding) core business to make the combined entity look cheap and undervalued. What are the potential areas that value investors need to watch out for when adapting the SOTP (sum-of-the-parts) valuation method in Asia?
  • And many more intriguing questions.

 

Do find out more in how you can benefit from authentic and candid on-the-ground insights that sell-side analysts and brokers, with their inherent conflict-of-interests, inevitable focus on conventional stock coverage and different clientele priorities, are unwilling or unable to share. Think of this as pressing the Bloomberg “Help Help” button to navigate the Asian capital jungle. Institutional subscribers also get access to the Bamboo Innovator Index of 200+ companies and Watchlist of 500+ companies in Asia and the Database has eliminated companies with a higher probability of accounting frauds and  misgovernance as well as the alluring value traps.

 

Professional Development Workshops for Executives and Lifelong Learners
 

Our 8th run of the series of workshop From the Fund Management Jungles: Value Investing Exposed and Explored – (Part 1) Moat Analysis, (Part 2) Tipping Point Analysis and (Part 3) Detecting Accounting Fraud – on 14 June 2014 has been well-received with serious value investors, professionals, and serious lifelong learners attending, with some who flew in from Jakarta and KL!..

 

Our 9th workshop will be sometime later in the year.

 

Thank you for your support all this while!

 

 

Thank you so much for reading as always.

 

Warm regards,

KB Kee

Managing Editor

The Moat Report Asia

Singapore

Mobile: +65 9695 1860

 

A Service of BeyondProxy LLC

1608 S. Ashland Avenue #27878

Chicago, Illinois 60608-2013

Other offices: London, Singapore, Zurich

 

 

P.S.1 Here is a little more about my background:

KB Kee has been rooted in the principles of value investing for over a decade as an analyst in Asian capital markets. He was head of research and fund manager at a Singapore-based value investment firm. As a member of the investment committee, he helped the firm’s Asia-focused equity funds significantly outperform the benchmark index. He was previously the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company.

 

He holds a Masters in Finance and degrees in Accountancy and Business Management, summa cum laude, from Singapore Management University (SMU) and had also published articles on governance and investing in the media, as well as published an empirical research paper Why ‘Democracy’ and ‘Drifter’ Firms Can Have Abnormal Returns: The Joint Importance of Corporate Governance and Abnormal Accruals in Separating Winners from Losers in the Special Issue of Istanbul Stock Exchange 25th Year Anniversary Best Paper Competition, Boğaziçi JournalReview of Social, Economic and Administrative Studies, Vol. 25(1): 3-55. KB has also presented his thought leadership as a keynote speaker in global investing conferences. KB has trained CEOs, entrepreneurs, CFOs, management executives in business strategy, value investing, macroeconomic, industry trends, and detecting accounting frauds in Singapore, HK and China, and had taught accounting at the SMU where he is currently an adjunct lecturer.

 

P.S.2  Why do I care so much about doing The Moat Report Asia for you?

My personal motivation in embarking on this lifelong journey has been driven by disappointment from observing up close and personal the hard-earned assets of many investors, including friends and their families, burnt badly by the popular mantra: “Ride the Asian Growth Story!” I witnessed firsthand the emotional upheavals that they go through when they invest their hard-earned money – and their family’s – in these “Ride The Asian Growth Story” stocks either by themselves or through money managers, and these stocks turned out to be the subject of some exciting “theme” but which are inherently sick and prey to economic vicissitudes. They may seem to grow faster initially but the sustainable harvest of their returns is far too uncertain to be the focus of a wise program in investment. Worse still, the companies turned out to be involved in accounting frauds. Their financial numbers were “propped up” artificially to lure in funds from investors and the studiously-assessed asset value has already been “tunnelled out” or expropriated. And western-based fraud detection tools and techniques have not been adapted to the Asian context to avoid these traps.

 

After a decade-plus journey in the Asian capital jungles, it has been somewhat disheartening as I observe many fraud perpetrators go away scot-free and live a life of super luxury on minority investors’ hard-earned money. And these perpetrators make tempting offers to various parties in the financial community to go along with their schemes. When investors have knowledge in their hands, we have a choice to stay away from these people and away from temptations and do the things that we think are right. With knowledge, we have a choice to invest in the hardworking Asian entrepreneurs and capital allocators who are serious in building a wide-moat business.

 

CONNECT WITH US
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The Moat Report Asia
A Service of BeyondProxy LLC
1608 S. Ashland Avenue #27878
Chicago, Illinois 60608-2013

Other offices: London, Singapore, Zurich

 

Morning Bamboo Insight: 4 Oct 2014

Morning Bamboo Insight: 4 Oct 2014

Macro

  1. Wealth without workers, workers without wealth: The digital revolution is bringing sweeping change to labour markets in both rich and poor worlds

http://www.economist.com/news/leaders/21621800-digital-revolution-bringing-sweeping-change-labour-markets-both-rich-and-poor

  1. Pimco: ‘Bonds are meant to be boring’; What Bill Gross’s exit means for the industry and the company he left behind

http://www.ft.com/intl/cms/s/0/2113c320-4a12-11e4-8de3-00144feab7de.html#axzz3F3bpNb7W

  1. Breaking research out of the lab: Canada doesn’t lack innovators, it lacks entrepreneurial innovators

http://business.financialpost.com/2014/10/01/breaking-research-out-of-the-lab-canada-doesnt-lack-innovators-it-lacks-entrepreneurs/?__lsa=216d-fbd3

  1. Auto Loans: A Subprime Market Grows in the Shadows

http://www.businessweek.com/printer/articles/228876-auto-loans-a-subprime-market-grows-in-the-shadows

  1. Market Manipulation Should Be a Crime

http://www.businessweek.com/printer/articles/228924-market-manipulation-should-be-a-crime

  1. Depression Denial Syndrome; The fall of Bill Gross at Pimco is an example of how decision-makers refuse to acknowledge that the rules are different in a persistently depressed economy

http://www.nytimes.com/2014/10/03/opinion/paul-krugman-depression-denial-syndrome.html?ref=opinion

  1. Co-chief executives run the risk of in-fighting and mutual over-reliance; As Oracle appoints two chief executives, Katherine Rushton asks whether corporate double acts can ever really work.

http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/digital-media/11136605/Co-chief-executives-run-the-risk-of-in-fighting-and-mutual-over-reliance.html

  1. Byron Wien: So Much to Worry About; The Wall Street pro’s concerns include valuations, housing, and a group scarier than ISIS.

http://online.barrons.com/news/articles/SB51517841841143733463604580190562922585580

Asia Pacific

  1. (HK/China) – Protests Dim Hong Kong’s Allure for Rich Chinese; Singapore May View Pro-Democracy Protests as an Opportunity to Grab Some Business

http://online.wsj.com/articles/protests-dim-hong-kongs-allure-for-rich-chinese-1412335181

  1. (China) – China Won’t Bail Out Local Governments; Beijing Will Impose Ceilings on Localities’ Borrowing

http://online.wsj.com/articles/china-wont-bail-out-local-governments-puts-cap-on-borrowing-1412333311?tesla=y&mg=reno64-wsj&url=http://online.wsj.com/article/SB12753519717962134038504580191702614415356.html

  1. (HK) – Hong Kong clashes break out away from Central protest site

http://www.reuters.com/article/2014/10/03/us-hongkong-china-idUSKCN0HN03Q20141003

  1. (Korea) – Korean private equity funds (PEF) taking over small family businesses unable to find successor

http://news.mk.co.kr/english/newsRead.php?sc=30800001&cm=Top%20Story&year=2014&no=1271857&selFlag=&relatedcode=&wonNo=&sID=308

  1. (Japan) – From free Wi-Fi to prayer rooms, Japan’s retailers are devising creative ways to encourage foreign tourists to spend.

http://www.japantimes.co.jp/news/2014/10/02/business/stores-see-profit-in-prayer-as-they-cater-to-foreign-tourists/

  1. (Korea) – Dozens of Korean corporate leaders will face questioning during the upcoming parliamentary audit of government agencies and public companies.

http://www.koreatimes.co.kr/www/news/biz/2014/10/123_165637.html

  1. (Isia) – Jokowi Urges Batik Resurgence to Boost Local Industry

http://thejakartaglobe.beritasatu.com/news/jokowi-urges-batik-resurgence-boost-local-industry/

  1. (Japan) – The weakening yen is starting to squeeze Japanese consumers as prices rise for everything from Burgundy wine to instant noodles, threatening Prime Minister Shinzo Abe’s plans to revive the country’s economy.

http://thejakartaglobe.beritasatu.com/business/burgundy-noodle-prices-rise-weaker-yen-hurts-consumers/

  1. (Isia) – In a House Far Removed From the People, Indonesia’s Oligarchic Forces Wage Battle

http://thejakartaglobe.beritasatu.com/opinion/house-far-removed-people-indonesias-oligarchic-forces-wage-battle/

  1. (India) – Honoring the Mahatma’s Legacy Through the Clean India Campaign

http://thejakartaglobe.beritasatu.com/opinion/honoring-mahatmas-legacy-clean-india-campaign/

  1. (Isia) – Insanity the Norm in Indonesian Politics

http://thejakartaglobe.beritasatu.com/opinion/editorial-insanity-norm-indonesian-politics/

  1. (Spore) – Singapore Sukuk Hub Goal Leaves a Lonely Sabana: Islamic Finance

http://www.bloomberg.com/news/print/2014-10-02/singapore-sukuk-hub-goal-leaves-a-lonely-sabana-islamic-finance.html

  1. (Isia) – Indonesian Conglomerates Warned not to Under-Invest Amid Competition

http://thejakartaglobe.beritasatu.com/business/indonesian-conglomerates-warned-invest-amid-competition/

Life

  1. Meeting deadlines: Deadlines in the future are more likely to be met if they are linked to the mind’s slippery notions of the present

http://www.economist.com/blogs/babbage/2014/10/meeting-deadlines

  1. Scientists check the engine of cheetahs, animal world’s ‘Ferrari’

http://www.reuters.com/article/2014/10/02/us-science-cheetah-idUSKCN0HR2DK20141002

  1. Billionaire Peter Thiel Explains Why He Would Tell His Younger Self To Be Less Competitive

http://www.businessinsider.sg/peter-thiel-on-success-2014-10/#.VC45xPmSyCk

  1. One CEO Uses Warren Buffett’s Strategy Of Looking For These 3 Traits In Every Job Candidate

http://www.businessinsider.sg/warren-buffett-hiring-strategy-2014-10/#.VC440_mSyCk

  1. (HK/China) – Hong Kong’s value to China goes beyond numbers

http://www.ft.com/intl/cms/s/0/acfff900-4a0b-11e4-8de3-00144feab7de.html#axzz3F3bpNb7W

  1. (China) – China’s central administration will impose hard caps on local government borrowing, its boldest move yet to control financial risks from an explosive rise in regional debt.

http://www.ft.com/intl/cms/s/0/a2fb9fec-4a18-11e4-8de3-00144feab7de.html#axzz3F3bpNb7W

  1. Yummia founder Mia McCarthy talks creating a category as her product hits Woolworths big time

http://www.brw.com.au/p/entrepreneurs/yummia_founder_woolworths_mccarthy_zr0bKlaoLOZcSQRJTVYE9L

  1. The Problem With Pragmatism: Our dominant political mind-set (pragmatism) tends dangerously toward rationalism uninformed by moral emotion

http://www.nytimes.com/2014/10/03/opinion/david-brooks-the-problem-with-pragmatism.html?ref=opinion

  1. The Evolution of Sleep: 700 Million Years of Melatonin

http://www.nytimes.com/2014/10/02/science/the-evolution-of-sleep-700-million-years-of-melatonin.html?ref=science

  1. Young, Brilliant and Underfunded; We’ll never know what breakthroughs were missed because young investigators were not provided with resource

http://www.nytimes.com/2014/10/03/opinion/young-brilliant-and-underfunded.html?ref=opinion&_r=0

  1. How Thomson Reuters Is Creating a Culture of Innovation

http://blogs.hbr.org/2014/10/how-thomson-reuters-is-creating-a-culture-of-innovation/

  1. The Most Engaging Ideas Leave Something Out

http://blogs.hbr.org/2014/10/the-most-engaging-ideas-leave-something-out/

  1. The Mysterious Popularity Of The Meaningless Myers-Briggs (MBTI)

http://www.forbes.com/sites/toddessig/2014/09/29/the-mysterious-popularity-of-the-meaningless-myers-briggs-mbti/

TMT

  1. Bill Gates: Apple Pay Is A ‘Fantastic’ Idea

http://www.businessinsider.sg/bill-gates-apple-pay-is-a-fantastic-idea-2014-10/#.VC43x_mSyCk

  1. Yahoo and eBay pressed to return to cores; With a return to their original cores, both groups might get a fresh chance to reinvent themselves

http://www.ft.com/intl/cms/s/0/fc45aa50-4a4c-11e4-bc07-00144feab7de.html#axzz3F3bpNb7W

  1. (India/Tech) – Can the Internet of Things transform India?

http://e27.co/can-the-internet-of-things-transform-india-20141002/

Investing Process

  1. Here’s Why Warren Buffett Is Buying Car Dealerships; Dealerships Do More Than Sell New Cars

http://www.businessinsider.sg/heres-why-warren-buffett-is-buying-car-dealerships-2014-10/#.VC430_mSyCk

Morning Bamboo Insight: 2 Oct 2014

Morning Bamboo Insight: 2 Oct 2014

Macro

  1. FASB is gaining support for its projects to streamline rules around disclosure of extraordinary items and inventory accounting

http://blogs.wsj.com/cfo/2014/09/30/fasb-accounting-simplification-projects-see-early-support/?mod=WSJ_hpp_sections_cfo

  1. Markets Diverging in Emerging World; India and Indonesia Have Been Recent Winners; Not So Brazil and Turkey

http://online.wsj.com/articles/markets-are-diverging-in-the-emerging-world-1412119148

Asia Pacific

  1. (Japan) – $617 Billion in Japan Stock Orders Scrapped After Error

http://www.bloomberg.com/news/print/2014-10-01/oops-possible-617-billion-trading-error-in-japan.html

  1. (Australia/China) – Australia frets as property blows hot at home, cold in China

http://thejakartaglobe.beritasatu.com/business/australia-frets-property-blows-hot-home-cold-china/

  1. (Isia) – KPK Launches Theme Park-Style Anti-Graft Mobile App

http://thejakartaglobe.beritasatu.com/news/kpk-launches-theme-park-style-anti-graft-mobile-app/

  1. (Spore) – Should SGX allow dual-class structures?

http://www.businesstimes.com.sg/premium/editorial-opinion/opinion/should-sgx-allow-dual-class-structures-20141001

  1. (Asia) – Rectify Asia’s ‘governance deficit’

http://www.businesstimes.com.sg/premium/editorial-opinion/editorial/rectify-asias-governance-deficit-20141001

  1. (Spore) – Herbal product in health scare is Eu Yan Sang’s best seller

http://www.businesstimes.com.sg/premium/companies/others/herbal-product-health-scare-eu-yan-sangs-best-seller-20141001

  1. (Thai/Asean) – Acquisition sprees ‘hits credit quality’ of large Thai corporations, according to S&P

http://www.nationmultimedia.com/business/Acquisition-sprees-hits-credit-quality-30244481.html

  1. (HK) – Hong Kong’s Status as Financial Hub Likely a Factor for Beijing; Heavy Crackdown on Protests Would Deepen Financial Firms’ Concerns About Autonomy

http://online.wsj.com/articles/hong-kongs-status-as-financial-hub-likely-a-factor-for-beijing-1412080251

  1. (HK) – Hong Kong Protests Have History of Success in Challenging Government

http://online.wsj.com/articles/hong-kong-protests-have-succeeded-in-other-challenges-against-government-1412081966

  1. (China) – Chinese Nets and Bolts Ensnare Basketball Hoops in Litigation; Should Lifetime Products’ Basketball Hoops Use ‘Made in USA’ Labels?

http://online.wsj.com/articles/chinese-nets-and-bolts-ensnare-basketball-hoops-in-litigation-1412099954

  1. (China) – A Chinese Investment on Fracking Fails to Deliver; How a Shanghai Real-Estate Mogul’s Bet in Canada’s Bakken Shale Went Sour

http://online.wsj.com/articles/a-chinese-investment-on-fracking-fails-to-deliver-1412118451?tesla=y&mg=reno64-wsj&url=http://online.wsj.com/article/SB12584803618636143833504580170103161794186.html

  1. (Isia) – Good news for planters, Indonesia drops foreign ownership clause in bill; New law requires plantation companies to allocate 20% of their concessions to people living in the nearby areas

http://www.thestar.com.my/Business/Business-News/2014/10/01/Good-news-for-planters-Indonesia-drops-foreign-ownership-clause-in-bill/?style=biz

  1. REDtone auditors give ‘qualified opinion’ on group’s financial statement due to “other receivables” in the financial statements

http://www.thestar.com.my/Business/Business-News/2014/10/01/REDtone-auditors-give-qualified-opinion/?style=biz

  1. (Macau) – Macau Publishes The Worst Numbers Since The Global Financial Meltdown

3-2014-9/#.VCrYFvmSyCk

Life

  1. Warren Buffett’s Best Productivity Hack Is A Simple 2-List System; Even though everybody wants a piece of his time, Warren Buffett stays focused. Here’s his approach

http://www.businessinsider.sg/warren-buffett-productivity-trick-2014-9/#.VCvOzfmSyCk

  1. PayPal’s New CEO Once Spent 24 Hours Living On The Streets Of NYC As A Homeless Person

http://www.businessinsider.sg/dan-schulman-new-paypal-ceo-spent-24-hours-on-streets-of-nyc-2014-9/#.VCrZ-_mSyCk

  1. Victoria’s Other Secret: The Low-Key Billionaire Behind The Lingerie Giant

http://www.forbes.com/sites/danalexander/2014/09/30/victorias-other-secret-the-low-key-billionaire-behind-the-lingerie-giant/print/

TMT

  1. (Isia/Tech) – Japanese Venture Capital Firm Funds Indonesian Startup Developing a News App; Kurio searches the Internet and filters millions of articles every day to find content that meets a user’s interest.

http://thejakartaglobe.beritasatu.com/business/japanese-venture-capital-firm-funds-indonesian-startup-developing-news-app/

  1. Wall Street’s Chat Plan Turns to Perzo Chief; David Gurle, CEO of an Instant-Messaging Company That Is Near a Deal to Be Acquired, Is No Stranger on Wall Street

http://online.wsj.com/articles/wall-streets-chat-plan-turns-to-perzo-chief-1412092673?mod=WSJ_hpp_sections_management

  1. More Cable Companies Take TV Off Menu; Customers Care More About Broadband, They Say, and Programming Has Gotten Too Expensive

http://online.wsj.com/articles/more-cable-companies-take-tv-off-menu-1412120310

  1. (Tech/Media) – Netflix Pushes Into Movies With First Original Film; ‘Crouching Tiger’ Sequel to Premiere Same Day in August 2015 on Netflix and in Some IMAX Theaters

http://online.wsj.com/articles/netflix-pushes-into-movie-making-with-first-original-film-1412081193

  1. Analytical Value From Data That Cries Wolf

http://sloanreview.mit.edu/article/analytical-value-from-data-that-cries-wolf/

  1. Apps re-invent smartphone keyboards to reduce typing frustration

http://www.reuters.com/article/2014/09/30/us-apps-keyboards-idUSKCN0HP1NO20140930

  1. The Ten Startup Nation Movers and Shakers You Need To Know

http://www.forbes.com/sites/ilyapozin/2014/09/26/the-ten-startup-nation-movers-shakers-you-need-to-know/print/

Consumer

  1. (Consumer) – New Balance Acknowledges Shoe Materials Aren’t All U.S. Made; Only About 70% of Their Value Reflects Domestic Content and Labor

http://online.wsj.com/articles/new-balance-shoe-materials-arent-all-u-s-made-1412109111

  1. Global health and wellness sales to hit US$774bil in 2014

http://www.thestar.com.my/Business/Business-News/2014/09/30/Global-health-and-wellness-sales-to-hit-US$774bil-in-2014/?style=biz

Healthcare

  1. Medical Mergers Are Driving Up Health Costs; Insurer health-care payments are up 3%-a fortune, given the $900 billion spent annually.

http://online.wsj.com/articles/suzanne-f-delbanco-medical-mergers-are-driving-up-health-costs-1412119178

  1. Doctors Net Billions From Drug Firms, financial ties that some critics say have compromised medical care

http://online.wsj.com/articles/u-s-agency-reveals-drug-makers-payments-to-doctors-1412100323

Investing Process

  1. FASB Revisits the Cash-Flow Statement

http://ww2.cfo.com/cash-flow/2014/09/fasb-revisits-cash-flow-statement/

Energy

  1. Oil trading mired in crude oversupply

http://www.businesstimes.com.sg/premium/top-stories/oil-trading-mired-crude-oversupply-20141001

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