Snowball Special Issue No. 015: Looking for Ten-fold Stocks
Chapter 12 Experienced people talk about investment experience in growth stocks
Chapter 12 Experienced people talk about investment experience in growth stocks (1)
Wang Xiaogang, partner and deputy general manager of Dingfeng Assets, published on July 2012, 7
Interview summary:
Looking for high-growth stocks mainly depends on three points: First, it depends on the growth rate of the industry.Whether the industry is developing continuously and stably, and whether there will be a compound growth rate of 3% to 20%; secondly, it depends on the company's growth rate.Look at the company's competitive strength and status in the industry, whether the growth rate is higher than the industry; third, look at the management.It depends on whether the character of the management is reliable, whether the vision is long-term, whether the management is in place, and whether the realm is sufficient.
If the annual profits are expected to grow by more than 50% in the next few years, the price-earnings ratio below 30 times is not expensive, and 30-40 times is acceptable. If it exceeds 40 times, you should be careful.If the growth rate of more than 50% is now more than 0.5 times the price-earnings ratio, I think it is still cheap, which is equivalent to a PEG of 20.But PEG is also a rough idea. If the growth rate is 10%, the price-earnings ratio is 100 times; or if the growth rate is 50%, the price-earnings ratio is more than 0.5 times. Such a PEG of [-] times does not mean much to me.Because a growth rate may lead to risks, and systemic risks cannot be avoided through growth.
Interview record:
Xueqiu: When did you start to enter the investment industry?
王小刚:1994年从中央财经大学毕业后开始正式做投资。先是在美的集团待了两年;1996年到国泰证券深圳分公司工作;1999年国泰君安合并后,先后在自营和资产管理部工作了6年,2005年离开国泰君安;2006年-2009年在国元证券自营部工作;2009年底加盟鼎锋资产。到现在严格来讲是从业18年,不过炒股票是从1992年大二时就开始了,也可以算是20年的经验。
Xueqiu: Why did you choose this industry?
Wang Xiaogang: I entered university in 1990, and the establishment of the Shanghai Stock Exchange at the end of 1990 aroused my interest in stocks. In 1991, a group of people from my school and I set up a simulated securities trading market in Zhongcai. We should be the second one in colleges and universities.At that time, I vaguely felt that this industry was a sunrise industry, but looking back now, this direction is generally correct.
Xueqiu: In terms of investment, who have the greatest influence or help on you?
Wang Xiaogang: The direct leaders of several departments have helped me a lot since I worked. These direct leaders are of high level, and their investment ideas have subtly influenced me.We all belong to the so-called brokerage school. One of the characteristics of self-operated brokerages is concentrated holdings, bottom-up, and long-term holding of selected stocks. Generally, the holding period is as little as a few months or as long as a few years. time span.
In theory, the biggest influence on me is Peter Lynch. I read his "Overcoming Wall Street" in 1991. The book was written in 1990, and the Chinese version was only available in China in 1991. I read this book many times, and it inspired me to choose the direction and method of high-growth stocks.For example, choose a company that has feelings and understanding in daily life; for example, the stockings he mentioned are stocks found in shopping.Of course, this is only the first step. Later, it is necessary to judge whether this company has investment value.Lynch's method helped me a lot, and most of the stocks I picked were related to consumer goods.
Of course, this can also be attributed to Buffett's circle of competence principle.I went to Omaha with Xueqiu in May this year. After returning from the United States, I feel that the principle of the circle of competence is my greatest achievement.
Lynch has the greatest influence on me, followed by Buffett and Munger, who also emphasize the principle of circle of competence.In addition, what Munger said about "buying excellent companies at a reasonable price" has actually changed Buffett.
Xueqiu: When did you first come into contact with Buffett and Munger's investment ideas?
Wang Xiaogang: It's too late.Because their books are not systematic, Lynch's is relatively systematic. In 1991, I was reading Lynch's book, and when I was very confused in 2004, I continued to read his book.I have come into contact with some books by Buffett and Munger before, but if it is systematic, I went to Omaha this time, and carefully studied it back and forth.
Xueqiu: You just said that you were still confused in 2004. Since when did you feel more determined?
Wang Xiaogang: It was around 2004 that I really stabilized. I firmly established the concept of stock selection based on fundamentals.The first step in my understanding of value investing is to start with the fundamentals of the company. Although I began to pay attention to fundamental research in 1996, after experiencing stocks such as Qiongminyuan, Dongfang Electronics (SZ000682), Environmental Protection, and Yinguangxia In 2003 and 2004, a group of outstanding colleagues at Guotai Junan at that time selected Moutai and other individual stocks from the bottom up. The investment strategy was obviously very successful and inspired After that, I still have to choose stocks in a down-to-earth manner from the fundamentals.
Xueqiu: Is the experience accumulated in the past telling you that you need to sort out?
Wang Xiaogang: That's right.
Xueqiu: How did you sort it out?
Wang Xiaogang: One is to read Lynch's book; the other is to exchange and learn with colleagues from the asset management department of Guotai Junan. It is very rewarding to learn how to choose from the fundamentals.
Takeaway from Omaha: Investing in growth stocks is also value investing
Snowball: What kind of thoughts did you go to Omaha this time?
Wang Xiaogang: On the one hand, you have to learn from the old when investing. I will be 40 next year. The so-called 82 is not confused, but I still have a lot of doubts about investment. and strategies to sort out systematically again, so as to reduce some confusion.On the other hand, Buffett is [-] this year. Such a person will only appear in hundreds of years. In theory, it is unlikely to become the top few rich people in the world because of relatively scattered investment, but Buffett has done it.
Another reason is that when I watched Buffett's video, I found that he is a very happy person, which I am particularly envious of and want to learn from.I happened to do a private placement, and my time was relatively free, so I wanted to seize this opportunity to have a look.
Xueqiu: It is both a study and a "pilgrimage", can you say that?
Wang Xiaogang: Yes.
Xueqiu: So what kind of gains will you get from going there?
Wang Xiaogang: There are two main ones: First, it affirms that investment in growth stocks is also a type of value investment, and it is also an important investment strategy of Buffett since 1973.In the past, we said that value investing always emphasized buying cheap and the margin of safety. In fact, when Buffett invested in Coca-Cola, the price-earnings ratio was about 30 to 10 times, which was 20% higher than the market’s average price-earnings ratio. The investment strategy for this stock is no longer buying cheap. Instead, buy growth, and the growth stock strategy is also a successful strategy that Buffett has proven through practice.I don’t think it’s accurate to say whether the valuation is cheap. It’s not clear whether the price-earnings ratio of 30 times, [-] times, or [-] times is reasonable. I just need to stick to the listed companies that continue to grow at a high rate. As profits grow, assuming that the valuation remains unchanged In the case, I mainly make money for profit growth.
Second, the focus of the circle of competence.Buffett answered a lot of questions at the shareholder meeting, but what I am most concerned about is a circle of competence.Zhuangzi said: "My life has a limit, but my knowledge has no limit. If there is a limit, follow the limitless, it is over!" There are many listed companies, and there are many opportunities. It is impossible for us to grasp all the opportunities. I only grasp the opportunities that I can grasp.The manifestation of following the circle of competence is that the number of stocks should not be too many, and the investment should be concentrated on a few stocks that you are familiar with.
Xueqiu: But this is different from Lynch's approach. He pays attention to many stocks?
Wang Xiaogang: Lynch has a lot of stocks because of the scale of more than 200 billion yuan in the later stage and liquidity problems.I think Lynch is exhausting himself because he spends most of his time at work.He joked that "when I go home every two weeks, I don't know any of my daughters, and I have to rely on my daughters to introduce themselves to know who is older." This is of course a joke, but he later gave birth to Huafa early.Lynch worked as a fund manager in 1977 and retired in 1990, when he was only 46 years old.Buffett doesn't choose many stocks and puts them away for a long time, so he can be in his eighties and do it happily.We can learn from the directors of many companies, use Lynch's method to study stocks, and select high-growth stocks, those that can be felt in life, and those that can be judged by common sense, but the operation strategy can be concentrated, and we can focus on a few stocks. The work is relatively easy, and you don't have to spend all day exploring new opportunities or taking new risks.In addition, our current scale is not large. The scale I manage does not exceed 2 million yuan, and about 10 stocks are enough.
One more stock, some people feel that there is an extra investment opportunity, I think it also has some more investment risks, and I may not know it, and it also reduces the attention to the old stocks currently held, so I emotionally Some resist adding new species to my mix.
Three elements to judge the growth type of the company
Xueqiu: How would you describe your investment philosophy in one or two sentences?
Wang Xiaogang: Relying on the continuous improvement of the dynamic value of high-growth companies to obtain long-term higher compound returns, this should be regarded as my investment philosophy.The investment strategy is to select stocks with a compound growth rate of more than 50% from bottom to top. After selection, long-term follow-up and mid- to long-term holding.
Xueqiu: Speaking of high growth, what factors do you mainly consider when judging whether a company has definite and sustainable growth space in the future?
Wang Xiaogang: It mainly depends on three points: first, it depends on the growth rate of the industry.Whether the industry is developing continuously and steadily, and whether there will be a compound growth rate of 3% to 20%; secondly, it depends on the company's growth rate.Look at the company's competitive strength and status in the industry, whether the growth rate is higher than the industry; third, look at the management.It depends on whether the character of the management is reliable, whether the vision is long-term, whether the management is in place, and whether the realm is sufficient.
Xueqiu: How does the management judge?
Wang Xiaogang: More research and contact.It takes a long time to see people's hearts. It may not be possible to judge the first contact, but after contacting the management several times, you will know the character, ability and vision of the management after a long time.
Xueqiu: Just these three factors?
Wang Xiaogang: If we only analyze companies, we mainly focus on these three.These 3 items are satisfied, and then look at the pricing.
Valuation method: High growth of over 50%, price-earnings ratio of less than 30 times
Xueqiu: Then how do you price the company?
Wang Xiaogang: I don't really believe in valuation through accurate modeling. I think it's unreliable because there are too many assumptions.In the long run, the value of a company is a reflection of cash flow. I agree with this concept, but cash flow is also difficult to calculate, so I personally think that valuation is a general direction to judge whether it is too high or too low. It is OK, and it is not necessary to calculate accurately .Munger was also joking. I have never seen Buffett use a calculator to calculate the company's value.
Xueqiu: Then how do you grasp the general direction?
Wang Xiaogang: To put it simply, let’s talk about growth stocks. If the annual profit is expected to grow by more than 50% in the next few years, the price-earnings ratio below 30 times is not expensive. .If the growth rate of more than 30% is now more than 40 times the price-earnings ratio, I think it is still cheap, which is equivalent to a PEG of 40.But PEG is also a rough idea. If the growth rate is 50%, the price-earnings ratio is 0.5 times; or if the growth rate is 20%, the price-earnings ratio is more than 10 times. Such a PEG of 100 times does not mean much to me.Because a growth rate may lead to risks, and systemic risks cannot be avoided through growth.
Xueqiu: How many years do you usually watch?
Wang Xiaogang: Two or three years is the shortest time to watch, and try to watch as long as possible, but if it is too long, you may not be able to see clearly.For a few industries, such as healthcare, I think it may be clearer in the long run. With the aging population and consumption upgrading, it will continue to grow, and it can be seen in 5 or even 10 years.The ideal state must be to see as far away as possible.
(End of this chapter)
Wang Xiaogang, partner and deputy general manager of Dingfeng Assets, published on July 2012, 7
Interview summary:
Looking for high-growth stocks mainly depends on three points: First, it depends on the growth rate of the industry.Whether the industry is developing continuously and stably, and whether there will be a compound growth rate of 3% to 20%; secondly, it depends on the company's growth rate.Look at the company's competitive strength and status in the industry, whether the growth rate is higher than the industry; third, look at the management.It depends on whether the character of the management is reliable, whether the vision is long-term, whether the management is in place, and whether the realm is sufficient.
If the annual profits are expected to grow by more than 50% in the next few years, the price-earnings ratio below 30 times is not expensive, and 30-40 times is acceptable. If it exceeds 40 times, you should be careful.If the growth rate of more than 50% is now more than 0.5 times the price-earnings ratio, I think it is still cheap, which is equivalent to a PEG of 20.But PEG is also a rough idea. If the growth rate is 10%, the price-earnings ratio is 100 times; or if the growth rate is 50%, the price-earnings ratio is more than 0.5 times. Such a PEG of [-] times does not mean much to me.Because a growth rate may lead to risks, and systemic risks cannot be avoided through growth.
Interview record:
Xueqiu: When did you start to enter the investment industry?
王小刚:1994年从中央财经大学毕业后开始正式做投资。先是在美的集团待了两年;1996年到国泰证券深圳分公司工作;1999年国泰君安合并后,先后在自营和资产管理部工作了6年,2005年离开国泰君安;2006年-2009年在国元证券自营部工作;2009年底加盟鼎锋资产。到现在严格来讲是从业18年,不过炒股票是从1992年大二时就开始了,也可以算是20年的经验。
Xueqiu: Why did you choose this industry?
Wang Xiaogang: I entered university in 1990, and the establishment of the Shanghai Stock Exchange at the end of 1990 aroused my interest in stocks. In 1991, a group of people from my school and I set up a simulated securities trading market in Zhongcai. We should be the second one in colleges and universities.At that time, I vaguely felt that this industry was a sunrise industry, but looking back now, this direction is generally correct.
Xueqiu: In terms of investment, who have the greatest influence or help on you?
Wang Xiaogang: The direct leaders of several departments have helped me a lot since I worked. These direct leaders are of high level, and their investment ideas have subtly influenced me.We all belong to the so-called brokerage school. One of the characteristics of self-operated brokerages is concentrated holdings, bottom-up, and long-term holding of selected stocks. Generally, the holding period is as little as a few months or as long as a few years. time span.
In theory, the biggest influence on me is Peter Lynch. I read his "Overcoming Wall Street" in 1991. The book was written in 1990, and the Chinese version was only available in China in 1991. I read this book many times, and it inspired me to choose the direction and method of high-growth stocks.For example, choose a company that has feelings and understanding in daily life; for example, the stockings he mentioned are stocks found in shopping.Of course, this is only the first step. Later, it is necessary to judge whether this company has investment value.Lynch's method helped me a lot, and most of the stocks I picked were related to consumer goods.
Of course, this can also be attributed to Buffett's circle of competence principle.I went to Omaha with Xueqiu in May this year. After returning from the United States, I feel that the principle of the circle of competence is my greatest achievement.
Lynch has the greatest influence on me, followed by Buffett and Munger, who also emphasize the principle of circle of competence.In addition, what Munger said about "buying excellent companies at a reasonable price" has actually changed Buffett.
Xueqiu: When did you first come into contact with Buffett and Munger's investment ideas?
Wang Xiaogang: It's too late.Because their books are not systematic, Lynch's is relatively systematic. In 1991, I was reading Lynch's book, and when I was very confused in 2004, I continued to read his book.I have come into contact with some books by Buffett and Munger before, but if it is systematic, I went to Omaha this time, and carefully studied it back and forth.
Xueqiu: You just said that you were still confused in 2004. Since when did you feel more determined?
Wang Xiaogang: It was around 2004 that I really stabilized. I firmly established the concept of stock selection based on fundamentals.The first step in my understanding of value investing is to start with the fundamentals of the company. Although I began to pay attention to fundamental research in 1996, after experiencing stocks such as Qiongminyuan, Dongfang Electronics (SZ000682), Environmental Protection, and Yinguangxia In 2003 and 2004, a group of outstanding colleagues at Guotai Junan at that time selected Moutai and other individual stocks from the bottom up. The investment strategy was obviously very successful and inspired After that, I still have to choose stocks in a down-to-earth manner from the fundamentals.
Xueqiu: Is the experience accumulated in the past telling you that you need to sort out?
Wang Xiaogang: That's right.
Xueqiu: How did you sort it out?
Wang Xiaogang: One is to read Lynch's book; the other is to exchange and learn with colleagues from the asset management department of Guotai Junan. It is very rewarding to learn how to choose from the fundamentals.
Takeaway from Omaha: Investing in growth stocks is also value investing
Snowball: What kind of thoughts did you go to Omaha this time?
Wang Xiaogang: On the one hand, you have to learn from the old when investing. I will be 40 next year. The so-called 82 is not confused, but I still have a lot of doubts about investment. and strategies to sort out systematically again, so as to reduce some confusion.On the other hand, Buffett is [-] this year. Such a person will only appear in hundreds of years. In theory, it is unlikely to become the top few rich people in the world because of relatively scattered investment, but Buffett has done it.
Another reason is that when I watched Buffett's video, I found that he is a very happy person, which I am particularly envious of and want to learn from.I happened to do a private placement, and my time was relatively free, so I wanted to seize this opportunity to have a look.
Xueqiu: It is both a study and a "pilgrimage", can you say that?
Wang Xiaogang: Yes.
Xueqiu: So what kind of gains will you get from going there?
Wang Xiaogang: There are two main ones: First, it affirms that investment in growth stocks is also a type of value investment, and it is also an important investment strategy of Buffett since 1973.In the past, we said that value investing always emphasized buying cheap and the margin of safety. In fact, when Buffett invested in Coca-Cola, the price-earnings ratio was about 30 to 10 times, which was 20% higher than the market’s average price-earnings ratio. The investment strategy for this stock is no longer buying cheap. Instead, buy growth, and the growth stock strategy is also a successful strategy that Buffett has proven through practice.I don’t think it’s accurate to say whether the valuation is cheap. It’s not clear whether the price-earnings ratio of 30 times, [-] times, or [-] times is reasonable. I just need to stick to the listed companies that continue to grow at a high rate. As profits grow, assuming that the valuation remains unchanged In the case, I mainly make money for profit growth.
Second, the focus of the circle of competence.Buffett answered a lot of questions at the shareholder meeting, but what I am most concerned about is a circle of competence.Zhuangzi said: "My life has a limit, but my knowledge has no limit. If there is a limit, follow the limitless, it is over!" There are many listed companies, and there are many opportunities. It is impossible for us to grasp all the opportunities. I only grasp the opportunities that I can grasp.The manifestation of following the circle of competence is that the number of stocks should not be too many, and the investment should be concentrated on a few stocks that you are familiar with.
Xueqiu: But this is different from Lynch's approach. He pays attention to many stocks?
Wang Xiaogang: Lynch has a lot of stocks because of the scale of more than 200 billion yuan in the later stage and liquidity problems.I think Lynch is exhausting himself because he spends most of his time at work.He joked that "when I go home every two weeks, I don't know any of my daughters, and I have to rely on my daughters to introduce themselves to know who is older." This is of course a joke, but he later gave birth to Huafa early.Lynch worked as a fund manager in 1977 and retired in 1990, when he was only 46 years old.Buffett doesn't choose many stocks and puts them away for a long time, so he can be in his eighties and do it happily.We can learn from the directors of many companies, use Lynch's method to study stocks, and select high-growth stocks, those that can be felt in life, and those that can be judged by common sense, but the operation strategy can be concentrated, and we can focus on a few stocks. The work is relatively easy, and you don't have to spend all day exploring new opportunities or taking new risks.In addition, our current scale is not large. The scale I manage does not exceed 2 million yuan, and about 10 stocks are enough.
One more stock, some people feel that there is an extra investment opportunity, I think it also has some more investment risks, and I may not know it, and it also reduces the attention to the old stocks currently held, so I emotionally Some resist adding new species to my mix.
Three elements to judge the growth type of the company
Xueqiu: How would you describe your investment philosophy in one or two sentences?
Wang Xiaogang: Relying on the continuous improvement of the dynamic value of high-growth companies to obtain long-term higher compound returns, this should be regarded as my investment philosophy.The investment strategy is to select stocks with a compound growth rate of more than 50% from bottom to top. After selection, long-term follow-up and mid- to long-term holding.
Xueqiu: Speaking of high growth, what factors do you mainly consider when judging whether a company has definite and sustainable growth space in the future?
Wang Xiaogang: It mainly depends on three points: first, it depends on the growth rate of the industry.Whether the industry is developing continuously and steadily, and whether there will be a compound growth rate of 3% to 20%; secondly, it depends on the company's growth rate.Look at the company's competitive strength and status in the industry, whether the growth rate is higher than the industry; third, look at the management.It depends on whether the character of the management is reliable, whether the vision is long-term, whether the management is in place, and whether the realm is sufficient.
Xueqiu: How does the management judge?
Wang Xiaogang: More research and contact.It takes a long time to see people's hearts. It may not be possible to judge the first contact, but after contacting the management several times, you will know the character, ability and vision of the management after a long time.
Xueqiu: Just these three factors?
Wang Xiaogang: If we only analyze companies, we mainly focus on these three.These 3 items are satisfied, and then look at the pricing.
Valuation method: High growth of over 50%, price-earnings ratio of less than 30 times
Xueqiu: Then how do you price the company?
Wang Xiaogang: I don't really believe in valuation through accurate modeling. I think it's unreliable because there are too many assumptions.In the long run, the value of a company is a reflection of cash flow. I agree with this concept, but cash flow is also difficult to calculate, so I personally think that valuation is a general direction to judge whether it is too high or too low. It is OK, and it is not necessary to calculate accurately .Munger was also joking. I have never seen Buffett use a calculator to calculate the company's value.
Xueqiu: Then how do you grasp the general direction?
Wang Xiaogang: To put it simply, let’s talk about growth stocks. If the annual profit is expected to grow by more than 50% in the next few years, the price-earnings ratio below 30 times is not expensive. .If the growth rate of more than 30% is now more than 40 times the price-earnings ratio, I think it is still cheap, which is equivalent to a PEG of 40.But PEG is also a rough idea. If the growth rate is 50%, the price-earnings ratio is 0.5 times; or if the growth rate is 20%, the price-earnings ratio is more than 10 times. Such a PEG of 100 times does not mean much to me.Because a growth rate may lead to risks, and systemic risks cannot be avoided through growth.
Xueqiu: How many years do you usually watch?
Wang Xiaogang: Two or three years is the shortest time to watch, and try to watch as long as possible, but if it is too long, you may not be able to see clearly.For a few industries, such as healthcare, I think it may be clearer in the long run. With the aging population and consumption upgrading, it will continue to grow, and it can be seen in 5 or even 10 years.The ideal state must be to see as far away as possible.
(End of this chapter)
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