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Kenny Yang
Kenny Yang

ME AND MY MONEY

Young investor takes his stock picking seriously Add to ...

Kenny Yang, 22

Occupation

Recent university graduate

The portfolio

Includes shares in Manulife Financial Corp., Suncor Energy Inc. and BlackBerry Ltd.

The investor

Kenny Yang is just starting out as an investor. But if you read his blog, you’ll find a grasp of investing far beyond his years.

It turns out Mr. Yang is studying to become a chartered financial analyst – he’ll be taking the Level 3 CFA exam in June. His goal is to have a career in the financial industry.

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How he invests

Mr. Yang follows the value investing philosophies of Benjamin Graham, co-author of the classic Security Analysis, and Warren Buffett, chairman of Berkshire Hathaway Inc.

Like Mr. Graham, he looks for “cigar butt” companies that are out of favour and trading at very low valuations. An example is a company whose physical assets are worth more than its shares listed on the stock exchange (in the last resort, money could be made by winding the company down).

And like Mr. Buffett, he looks for “companies possessing a durable competitive advantage selling at fair prices.” They have good prospects for long-term earnings growth, but some bad news may have temporarily depressed their shares.

In April, he invested in Suncor Energy “when most investors were very negative, after the $1.5-billion writedown of its Voyageur project.” The shares were trading near the value of assets on the balance sheet (book value), yet the company was generating free cash flow of more than $2-billion annually.

Best move

It was buying Manulife Financial in late 2011 when the stock was at $10, on the expectation interest rates would rise over the next few years and boost Manulife’s net income. The share price was also trading at 70 per cent of book value.

Worst move

“I thought I had a reasonable margin of safety buying BlackBerry stock at 20 per cent below its tangible book value of $12. However, the hardware problems were bigger than I anticipated.”

Advice

Mr. Yang’s blog has informed views on topics such as share buybacks, stock splits and investment risk.

Want to share your strategies? E-mail mccolumn@yahoo.com

Follow us on Twitter: @GlobeInvestor

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