This article first appeared in Capital, The Edge Malaysia Weekly on March 26, 2018 - April 1, 2018

THE Edge: Tell us about Value Partners. How did you make your first million?

Cheah Cheng Hye: Value Partners started with assets under management of US$5 million, with only two full-time staff — my secretary and me. Of the US$5 million we managed when we  started, about 20% came from me. The money was saved from the bonuses I received while employed by Morgan Grenfell in Hong Kong as a proprietary trader. The rest was subscribed by my partner V-Nee Yeh and other business friends.

How did you make a name for yourself in the industry?

We never thought that Value Partners would become a big company. We love investing, so we thought it would be fun to have a value-investing ‘hobby shop’. If you start a company trying to make money, you won’t make it because you spend too much time thinking about money and not doing a good job.

What are Value Partners’ secrets to success?

At Value Partners, we play several games. No 1 is the game of surprise. We know what will change share prices is the next surprise — a surprise not reflected in the prices yet. Another game is to imagine what the newspapers will report six months or two years from today.

If you can tell me what the front page of The Edge will look like six months or two years from today, I guarantee that you will make a few billions because you know exactly what to do. What you don’t want to do is to read a newspaper published six months or two years ago and invest on that basis, but that’s what most people are doing.

Did you ever get your fingers burnt?

The single worst experience was investing in an airline company — Oasis Hong Kong Airlines — set up by Reverend Lee (Lee Cho Min), a Sunday school preacher. We put in US$30 million and lost the money within six months. Eventually, we got back US$17 million, but still lost US$13 million.

My friend invited me to invest in this Hong Kong version of AirAsia, with only two or three aircraft flying to Moscow and Vancouver. It didn’t work. Unlike in Malaysia, it is difficult to operate a low-cost airline. Lee ended up with a high-cost airline, charging low-cost prices.

I think I misjudged him. There are many stories about getting cheated in mainland China, but I never thought I would have such an experience in Hong Kong. But again, making mistakes is part of our life.

The likes of Dr Neoh Soon Kean, Dr Tan Chong Koay and Fong Si Ling (better known as Cold Eye) are prominent investors who made a name for themselves in the Malaysian investment fraternity. Would you regard yourself as an investment guru?

I don’t like to be called the ‘Warren Buffett of Asia’. There is no definition of investment guru in the dictionary — it is a term used by the media. I would rather be known as the founding chairman of Value Partners. Over the years, I have followed great investors like Warren Buffett and Sir John Templeton. To me, they are the real investment gurus. They are my idols.

Most fund managers want to meet the management before they invest in a company, whereas Dr Neoh insists on being strictly data-driven. Do you prefer to meet people or are you data-driven, or a little bit of both?

I know Dr Neoh in person, I know he is data-driven, but I am too old to change now. I am not a data guy, I am hopeless. I was not born in a time with computers. I hardly know how to use the computer very well. It is just not my thing.

But I am good at evaluating situations with a lot of common-sense strategies. I stick to what I know best. You have a guy who is good at cooking beef curry, another who is excellent in French bread ... they have different specialities but they can produce good food. That’s all we want.

What do you do every day? What are your hobbies?

I spend a lot of time reading emails. I get about 2,500 emails a day, and I may read up to 100 of them. I have to run the company, there are a lot of meetings — I could work from 8am to midnight. I also take some work back home.

I like to play golf and poker. I like to drive. I like travelling. I work out in the gym almost every day. I am still very healthy. I feel motivated. I am blessed to be one of the very few people given this golden opportunity to run a firm that I believe will become a world-class company in the next three years, with offices all around the world.

Tell us why investors should be contrarians.

A contrarian seldom loses money. The contrarian buys when everybody has sold, and he sells when everybody has bought. A contrarian usually buys something that is so beaten up and overlooked that anyone who wants to sell would already have sold. So, by the time he buys, there is no seller left.

On the opposite side, when everyone who wants to buy has already bought and there is no buyer left, prices will have to drop. If 3,000 people want to buy stock, you wait for buyer No 2,999 to buy, then prices will have to drop — that’s the theory. In reality, you will never know who buyer No 2,999 is. But very often, you can guess.

Is share investing still the best way to grow wealth, compared to property, bonds and gold?

Equities are the best investment tool, but shouldn’t constitute more than 25% to 60% of a middle-class person’s savings. Equities are volatile.

What is your advice for youngsters?

We should never forget where we come from. [Don’t forget] our culture, our values and focus on education, a healthy body and a healthy mind. We should make a contribution to family and society.

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