Ex-Buffett in-law looks behind his success

Ex-Buffett in-law looks behind his success

Thanong Khanthong
The Nation April 27, 2013 1:00 am


Will Warren Buffett live forever? He might not, but his legendary value-investment strategies will certainly outlive any other.

And who is in a better position to know him and relate his ideas and messages better than Mary Buffett, his former daughter-in-law, who spent 12 years in the family? At a talk-show event called “Exploring Buffettology with Mary Buffett” in Bangkok yesterday, she provided several insights and anecdotes related to the investmtne guru, apart from laying down his strategies that beat the stock market for the long haul.For a start, Warren Buffett advises us to invest when we are young so that we may enjoy the compounding annual return on our investment, she said. Don’t wait until you are rich before making investment. 
Buffett himself started off with an initial investment of US$100,000, doing only stock picks. Over a 30-year period, he turned that initial investment into $50 billion, making him the world’s fourth-richest billionaire. Starting with $20,000, if you make the right stock pick that earns 20 per cent a year, the compounding effect over a 30-year period will turn that investment into $9.9 million (Bt290 million).
Warren Buffett is a value investor in the sense that he pays attention to the businesses of the companies – not the stocks. Companies that have durable competitive advantage or offer branded products or services with a consumer monopoly attract his interest. 
The next questions are the debt-to-equity ratio, the management, and the outlook of the companies, and finally the stock prices. For the higher the price you pay, the lower return you’ll get, and the less you pay, the more you’ll get. 
Once he buys into the companies, Buffett stays for the long haul. He stays away from the market when there is a prevailing mood of greed. He steps in to buy stocks when people panic and get out of the market. That’s when he can buy stocks at a substantial bargain. If the companies have been doing well over the past 10 years, chances are that they are likely to do well for another 10 years.
Mary Buffett pointed out the favourable macroeconomic conditions for Thailand. It has been ranked as the third-most-attractive investment destiny after China and South Korea. 
Between 2013 and 2017, the Thai economy is forecast to grow by a total of 25 per cent while inflation remains subdued at 2.7 per cent per year. In spite of heavy infrastructure investment, debt to gross domestic product will be kept at well below 50 per cent. 
S&P, Mama cited 
She cited S&P, the Thai restaurant chain, and Mama instant noodles as the kind of business that Warren Buffett would be interested in and invest his money for the long haul. 
For S&P and Mama fit the principle of his value investment – they both enjoy durable competitive advantage and also are well-known brands with a consumer monopoly. Even in an economic downturn, people still eat out at S&P and purchase Mama instant noodles.
Warren Buffett is also well known for his wisdom. His advice to young people visiting him is that they should invest in themselves because they are the most important assets.
Mary Buffett summed up her ex-father-in-law’s investment advice as follows:
_ Invest in companies that have durable competitive advantage;
_ Invest in branded products and services with consumer monopoly;
_ Buy at the lowest prices possible;
_ Educate oneself all the time.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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