Cepatwawasan - Unlocking Investment Opportunities
As value investors, you have been told that the market is not always efficient. You look for underprice companies to invest in anticipation that the market would eventually be rational and re-rate them.
Unfortunately, my 20 years’ experience is that my average holding period is 6 to 8 years. I was told that to shorten the waiting period, I should look for catalysts.
One of the catalysts I now look for is the price vs ROE trend discrepancy. This is exemplified by Cepatwawasan, a Bursa Malaysia plantation company. Its past 10 years ROE lie in between my 2 reference Bursa plantation companies – BPlant and KLK.
But look at the price vs ROE trend. Historically prices seem to move in tandem with the ROE but recently the price has been flat while the ROE dropped.
So, if a fundamental analysis shows that the drop in ROE is temporary, it would be an investment opportunity. But this fundamental analysis is a story for another day.
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