Investor’s Bookshelf: The HK CIO whose books are inspired by the world's top managers
Ronald Chan, founder and CIO of Hong Kong-based investment firm Chartwell Capital, exemplifies someone who is both teacher and student.
Not only is he a seasoned hand at value investing, he also likes to interview other experts in the field -- and write books about those encounters.
As if that weren't enough, he also juggles his time to advocate Hong Kong's role as a stock listing centre and is currently bringing together single family offices to create a networking alliance for investments and other related initiatives.
It's clear, however, that his first love is investing.
He has two books in his name: Behind the Berkshire Hathaway Curtain: Lessons from Warren Buffett’s Top Business Leaders in 2010, and The Value Investors: Lessons from the World’s Top Fund Managers in 2012 (with an updated version in 2021).
“Writing for me is a way to consolidate my thoughts,” Chan told AsianInvestor.
“I used it to document my investment decisions and substantiate each trade I made. I would show them to my father and he would assess them and give me some pointers. He wasn’t a fund manager, but he offered sensible advice.”
Chan -- a well-known name in Hong Kong's financial services industry -- started investing when he was just 18 years old.
Once he finished university, he launched his own investment vehicle.
Initially he worked at his family’s office and then spun out to launch Chartwell Capital in 2007.
TAKING IT FORWARD
In the early days, it was his father, a successful serial entrepreneur, who was his guiding light to managing money.
When his father passed in 2007, Chan wanted to ensure that legacy of always learning to continue. So he looked at new avenues for guidance and mentorship.
He was also inspired by investing legends such as Warren Buffett and Peter Lynch and eventually decided to write a book related to Buffett in the hope that this endeavour would enhance his own investing knowledge.
After striking a deal with US publisher Wiley -- and winning approval from Buffett himself – Chan’s first book was published in 2010.
It provides a behind-the-scenes look into the careers of Berkshire Hathaway executives who have directly and indirectly contributed to the conglomerate’s success.
Drawing on exclusive interviews from these leaders, Chan vividly described how an exceptional group of managers built a culture of achievement.
The second book was conceived and published over the next two years.
It took Chan up to a year to write each book as he tried to stay focused and committed to writing each day. “I tried to write 100-200 words every day,” he said.
He said the research and interviews for his books offered some incredible yet simple lessons in life.
“Good investing encourages you to understand human behaviour and psychology and it makes you a contrarian – to buy when everyone is fearful and to sell when everyone is greedy.
“To me, these [ideas] sound very logical, and are like basic principles of investing and life,” he said.
He also noted that all investing is essentially value investing.
“Why would you be paying for something that doesn’t justify its value? The term value investing is redundant,” he added.
MEMORABLE MEETINGS
His books led him to meet some of the world's heavyweights in investing and finance.
“Every interview is a memorable encounter,” he said.
One of the remarkable people Chan interviewed is American investor and philanthropist Irving Kahn. Until his death in 2015, Kahn was believed to be the oldest living active investor.
Kahn was an early disciple of Benjamin Graham, who popularised the value investing approach.
Other interviewees include emerging markets investor Mark Mobius, who now is strategic advisor to Chartwell Capital, and Don Keough, former chairman and president of Coco Cola.
One of the biggest lessons Chan has learnt from writing his books is that the investment world consists of four pendulums swinging in different directions.
These pendulums are the business or company, the stock price, the stock market and the economy.
The business or company is not equivalent to the stock price and the stock market is not equivalent to the economy, Chan noted.
“A buy and hold investment strategy - a value investing style – requires you to take these into consideration.
“You have to understand that even if you pick a good company your investment can get wiped out by volatility. While you invest in a quality business, you also need to ensure you gauge the volatility of the stock price. And rebalance the portfolio proactively,” he added.
“It is important to acknowledge the dynamics of the market to position your investment accurately. Not all value investors are typical buy-and-hold managers.
"There is no right or wrong here; my writing journey has allowed me to understand that there are so many forms of value. And as an investor, you have to prescribe to the form you are most comfortable with.”
With his curious mind and enthusaism, it's clear he's not done yet.
“I always wanted to write one book, compose one song and produce one movie. So you can see, there is still a lot more to do!”