Interview with Myles Kuah
Private investor and blogger. Estimated reading time: 7 minutes
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Table of contents
1. Personal background
2. The Value Zoomer blog
3. Participating in "Survivor"
4. Investing the prize money
5. Shorting
6. MDR
7. Singapore Shipping
8. Thakral
9. Japanese SaaS companies
10. Contact details1. Hi Myles! Thanks for participating. Could you tell us about your background and how you became involved in investing?
I did a physics degree at university, but partway through, I realised I wasn’t good enough at maths to keep up. I got into investing in late 2019 while bartending because I made a bit of money and figured it was something I should do.
Over the next few years, I got hyperfixated on it and shifted my career goals from science to finance.
2. I love your Substack “Value Zoomer”; you always seem to find ideas that others have overlooked. Is there a common thread behind the 15 ideas that you’ve featured so far? What have you learnt from the winners and losers?
A key question for me is “why is this idea so cheap?” and there are two answers to this question:
For most ideas, the answer will simply be that “the market has a different view of this company to me”
But I’ve been focused on finding ideas with a different answer, namely that “nobody is looking or paying attention”
I think there are markets where these “easy money” ideas do exist and my Substack is a great example of that.
My worst-performing ideas have consistently been larger ideas with more analyst coverage, so I’ve focused on places with little analytical competition and attention.
3. You recently won the Australian edition of Survivor. How did it feel to be on the show? What did you experience from start to finish? And what did you learn from it when it comes to life or investing?
Australian Survivor was incredible. I’m a huge Survivor fan so just being there was a dream come true. Everything from strategising, finding idols, winning immunity challenges, to lying on the beach staring up at the stars was amazing. I would say that I discovered a resilience in myself I didn’t realise I had (growing up fairly privileged).
It was brutal physically, I lost 12 kg and I was a skinny guy to start, but it was also mentally tough. I played a lot of the game as an underdog, got the most votes against me in the history of the show and still won. It’s very tough to keep fighting when you’re exhausted and everything seems stacked against you.
4. You wrote on Substack that you won AU$500,000 in prize money. How are you planning to invest that money?
Winning the prize money has completely changed how I invest. Previously, I ran a very concentrated, high-conviction portfolio where I would feel comfortable betting at times up to 50% on an idea. My mindset has shifted now from wealth creation to wealth preservation, so I’m much more heavily diversified with around 100 names and a position size limit of 10%. I’m 24 and have made life-changing money; my focus is capital preservation first, performance second.
5. I understand from Twitter that you also have a short book. How have you constructed your short portfolio, and what types of stocks are you shorting right now?
To be honest, my short portfolio is more of a novelty. I LOVE shorting as an intellectual exercise; however, it is the hardest form of investing. I short a very diversified basket of frauds and pump and dumps, while also trying to find more interesting, unique shorts when I can. I keep it as a fairly small section of my portfolio.
Right now is the most short I’ve been in a while simply because it feels like a target-rich environment. The quantum and drone companies are all nonsense, same with blatant pumps like SoundHound AI (SOUN US — US$4.5 billion), Enovix Corporation (ENVX US — US$2.8 billion) and BigBear.ai (BBAI US — US$2.1 billion). But I also love shorts like Wayfair (W US — US$6.8 billion) which are simply failing businesses with large debt loads. My largest short at the moment is Commonwealth Bank of Australia (CBA AU — US$194 billion), a no-growth bank trading at over 30x earnings.
6. You invested in the Singapore telco company MDR. What did you see in the stock, and what do you think the outlook is from here?
This was a bizarre one that shows it’s better to be lucky than right. MDR (MDR SP — US$52 million) was my 3rd largest position on the basis that they were trading at .3x a book full of liquid securities and paying a solid dividend. The company announced a dilutionary rights offering and climbed 50% in a day, which I didn’t understand, so I sold, happy to book the profit. They’re up another 100% in the two weeks since then and I have no idea why.
While it’s still cheap relative to book value, it’s not cheap enough to justify all of the hairiness, so I’m no longer involved.
7. How about Singapore Shipping? What do you think about the quality of its assets and the current valuation?
Singapore Shipping (SSCL SP — US$95 million) has been my largest position for a while. They own a fleet of 5 old PCTC Car ships that (after renewing their oldest and largest ship at elevated rates) are leased out on long-term contracts that will be worth 150% of their current market cap (adjusted for cash) value in 5 years’ time. At that point, they will still have 3 ships left still operational, which is just further value.
There has been a lot of insider buying, and in the last shipping cycle (2007) the company paid out a huge amount in dividends.
8. Tell us about the Thakral story. It’s been a large position for you, and the stock has almost doubled. Do you think it’s still undervalued, and why?
Thakral (THK SP — US$138 million) is a small Singaporean company with an eclectic range of different assets including a lifestyle brand, Japanese and Singaporean commercial real estate and most importantly a 30% stake in Australian lendlease company Gemlife. I had a modest position while in the process of researching further when they announced that Gemlife was IPO’ing at a valuation that would make their stake worth $210m SGD (vs a market cap of $110m at the time). The company climbed 40% in two days, but understanding what the announcement meant for the company and having seen similar momentum dynamics in Singaporean small caps before (where price increases lead to attention, leading to more price increases), I sized up hard and made an extra 30% on a full-sized position in a week. I sold around $1.53, but am back in now, it has settled down a bit with a smaller position.
They still trade below the value of their Gemlife stake, while also owning a profitable operating business and the Japanese and Singapore real estate, and most importantly, buying back shares aggressively.
9. I believe you’re also interested in Japanese SaaS companies. I’ve personally found it to be a challenging sector to analyze. So what’s your conclusion so far, and have any of them made their way into your portfolio?
Japanese SaaS looks very cheap on the surface, with very strong, often profitable growth relative to cheap valuations. I struggle with the language and cultural barriers, with no Japanese and limited understanding of their business culture and economy. As a result, I invest in Japan generally with a basket approach, picking ideas I like from writers such as yourself, Altay Cap, Made in Japan and plenty of others. One of the benefits of my Survivor winnings is that the Japanese round lot rules no longer stop me from basket investing in Japan.
The ideas that have made it in so far include Avant Group (3836 JP — US$368 million), Robot Payment (4374 JP — US$62 million), Teamspirit (4397 JP — US$60 million), Poper (5134 JP — US$29 million), Rebase (5138 JP — US$45 million), Eguarantee (8771 JP — US$70 billion) and Nulab (5033 JP — US$39 million).
10. How can people contact you or follow your work?
You’re welcome to DM on Twitter @finphysnerd, I try my best to answer my Twitter DM’s, though sometimes I forget if I’m particularly busy. I post a lot of random ideas on Twitter, and then write long-form, high-conviction ideas on Substack for free at Value Zoomer.
Thanks for reading Asian Century Stocks.
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Amazing guy and investor. Would be curious to know if he invests in some Australian Smalls