Aberdeen to focus on what counts

It says will ignore market noises and keep track of companies with good fundamentals
PETALING JAYA: Having positioned itself as a long-term strategic
investor in listed companies, global investment management group
Aberdeen Asset Management thinks it is essential to ignore market
noises and focus on what really counts the underlying fundamentals of
companies.
The reason is simple, and it is no secret: good
companies with sound fundamentals are usually the ones that can sustain
through difficult times and emerge stronger.
Abdul Jalil Abdul Rasheed, the CEO of Aberdeen Islamic Asset Management Sdn Bhd (AIAM) - the group's Islamic asset management arm based in Kuala Lumpur told StarBiz: “We are a bottom-up fund manager ... we are benchmark-aware, but not benchmark-driven.”
That
essentially means the group is undeterred by the prevailing broad
market or economic conditions when it comes to investing. Its focus is
strictly on the individual attributes of a company.
And as to
what attributes constitutes good investment potential from Aberdeen's
perspective, Abdul Jalil said the group emphasised strong corporate
governance, healthy profit and loss statement, stable balance sheet
position and cash flow, as well as a sensible business expansion plan,
among others.
The Aberdeen group currently has around RM12bil
worth of funds invested in Malaysian equities. The group's local
portfolio comprises around 30 stocks from various sectors including
banking, retail, telecommunications and plantations.
Among the stocks in which Aberdeen currently has significant position are AEON Co (M) Bhd, AEON Credit Service (M) Bhd, Public Bank Bhd, CIMB Group Holdings Bhd, Hong Leong Bank Bhd, Nestle (M) Bhd, DiGi.Com Bhd, Axiata Group Bhd, United Plantations Bhd and United Malacca Bhd.
Abdul
Jalil maintained: “We position ourselves as long-term shareholders in
the companies. Our position in any particular company is built over a
period of time; it is not our approach to rush in and buy stakes in any
particular company.”
The group's position in AEON, for instance,
has been built over the last 10 years. As part of its normal portfolio
adjustment, the group's Malaysian entity, Aberdeen Asset Management Sdn Bhd,
had on Monday disposed of 217,800 shares in AEON and ceased to be a
substantial shareholder after the share disposal resulted in its stake
being reduced to less than 5%.
But in aggregate, the Aberdeen
group still has around 70.54 million shares, or around 20% stake, in
AEON, held not only through Aberdeen Asset Management, but also through
its other vehicles such as AIAM, Aberdeen Asset Management Asia Ltd of Singapore and Aberdeen Asset Managers Ltd (UK). Hence, the group remains a substantial shareholder in AEON.
The
same goes for the group's position in Malaysian banks. Abdul Jalil
pointed out, for instance, that the group's position in CIMB, in which
it currently has about a 10% stake, was built over the last seven to
eight years.
“We usually buy a small position first, then we
monitor their financial performance on a quarterly basis. When we get
more comfortable with the company's standing, we will increase our
stake in it,” he explained.Abdul Jalil said the Aberdeen group believed
that to be successful in investing, one must be patient and diligent
enough to sift through and study the hundreds of listed companies to
find gems.
He said the group would send its team of fund
managers out to visit more than 200 companies in Malaysia each year to
learn about their management and strategy.
“We do our own due diligence; we do not rely on external research at all,” he said.
Abdul
Jalil reckoned that there were many well-run, medium-sized companies in
Malaysia that had sound fundamentals, and were sitting on a net cash
position, but many of these gems had been overlooked by investors.
“To
find gems, investors have to widen their horizon and look beyond the 30
largest companies by market capitalisation that give weightage to the
FTSE Bursa Malaysia KLCI,” he said.
He conceded that some of the
smaller stocks tended to be illiquid, that is, not easily tradable. But
for Aberdeen, he said, “we are patient investors, so we can afford to
gradually accumulate and increase our position in the companies that we
like.”