Key Things I Learned at First State (FSSA)

This summer, I spent more time with First State Investments: one week at FSSA's Singapore office, and two weeks at their Hong Kong office. Attending internal meetings and company meetings during these three weeks allowed me to gain exposure to several sectors and markets, including Chinese FMCG and manufacturing, Japanese IT services, and Sri Lankan telecommunications. 

In addition to attending meetings, I conducted research and wrote a company report on Nissin Foods, the HK listed subsidiary of Nissan Japan (a instant noodle company). My report was then discussed by the entire FSSA team. This experience has allowed me to learn a great deal about the investment research process.


I am very grateful to the entire FSSA team, and look forward to more experiences like this in the future. Here are a few Key Things I Learned at FSSA:

• It is important to look for good quality, risk aware management who are frank about mistakes and determined to improve and grow the business strategically in the long term. Their interests must be aligned with minority shareholders’ and you have to be able to trust them.

• There is a big opportunity with formalization and premiumisation of consumer goods in developing countries.

• If the overall industry is not a good industry, even the best operators will struggle to be successful.

• You have to put down your thoughts and look back over what you were thinking. Otherwise, it is very easy to fool yourself and think you “knew it all along”. 

• It is a mistake to buy optically cheap businesses. Businesses that look cheap often deserve to be cheap because they are bad businesses, and good businesses are often expensive because they deserve to be. If you want to invest in good businesses either find those that are fundamentally undervalued due to short term challenges, or be willing to pay up for good businesses.

• You have to be somewhat contrarian to make high returns. i.e, it is important to have a view that is different to the consensus. However, you should not be contrarian for the sake of being different.

• It is very important to have a good investment process. A focus on process will drive returns over the longer term.

• Try to invest in companies that don’t need your money, and have the ability to grow organically.