Heartland Boy is depending on his investments returns to generate passive income during his retirement. As 2018 was not a very kind year in terms of his investment portfolio returns, he decided to brush up his investment skills. Therefore, he attended the Investment Quadrant Course 2.0 organized by the Fifth Person back in June 2018. On hindsight, he was glad he did because he could hardly devote such precious weekends now that he has become a dad. Investment Quadrant is based on 4 core principals of Business, Management, Financial and Valuation. As such, Heartland Boy is going to review Investment Quadrant course according to those principles.
What Heartland Boy Likes About Investment Quadrant
1. Provided Value Beyond S$597
Under the ‘Business Quadrant’ of Investment Quadrant, one of the key questions that The Fifth Person often asks is “Does the business provide value to the customer?”
Applying the same metric, Heartland Boy thinks that participants are clearly getting value beyond the S$597 that they have paid (S$100 off if you sign up during the promotion period, more details below). Beyond the face value of the lecture notes, it is the nuggets of wisdom that the speakers were able to provide. The speakers generously shared some useful tips that they have garnered from their years of professional experience. For instance, to get up to speed with any listed company’s business, here are a few nifty tips:
- Zoom right into the revenue component of the Annual Report by searching for these keywords “Revenue Recognition” and “Segment Information”
- Read the Chairman’s statement in the Annual Report
- Read analyst reports but you may want to ignore the price targets
The value provided transcends beyond the classroom experience. Participants can take their learning experience online by logging into the Investment Quadrant. The online materials are clearly designed to facilitate e-learning with its user-friendly interface. More importantly, the course materials allow participants to learn the concepts at their own pace and from the comforts of their home.
Diagram 1: One of the key lecturers: Victor from The Fifth Person
2. Behind The Scenes Sharing
The Fifth Person are advocates of meeting the Management of the companies. Basically, they need to feel comfortable with Management before parting with their monies. This explains the ‘Management Quadrant’ of their Investment Quadrant. The Fifth Person have the habit of buying only 1 lot in order to attend an AGM to observe the Management. It could even be a notorious company that they will never be interested in but would even attend the AGM just to observe how the Management behaves. Indeed, the sharing was so generous and forthcoming that some of those anecdotes should strictly not leave the confines of the classroom. Some examples of Management who are not aligned with shareholders:
- Management who talk up the prospects of their stocks but blatantly offload their own shares in the company
- Management who pays themselves beyond market standards because they can
Because of their years of meeting with Management, they are now better judges of Management’s character. This was however not the case when they first started out. What Heartland Boy felt comforting was that The Fifth Person were equally enthusiastic sharing their failures as well as their success stories. In the investing world where egos can be the size of footballs, it says something about a company when the owners are willing to admit their mistakes. Measuring them by the same yardstick, Heartland Boy thinks that these are chaps who are genuinely motivated to provide value for the participants’ monies.
3. Real Case Studies
For every concept explained, they are always supplemented with real-life case studies. When explaining the ‘Financial Quadrant’ of the Investment Quadrant, they illustrated it using BreadTalk Group as an example. At face value, the profits of BreadTalk Group can look plain boring.
Diagram 2: Compare the profits vs net operating cashflow of BreadTalk Group
However, The Fifth Person shared that a deeper analysis of the financials would reveal that BreadTalk Group has been conservative in their approach towards the depreciation of their Property, Plant & Equipment (PP&E). As a result, the reported profits are not a true reflection of the strength of their underlying business.
Another example of their dedication- The Fifth Person went down to various BreadTalk stores all over Singapore to monitor the queues after the fresh soy milk saga in 2015.
4. Hands On Practice In the Classroom
To hammer home the point of ‘Valuation Quadrant’, nothing beats hands-on practice. Students in the classroom were able to download an excel file and complete a valuation exercise by using Kingsmen Creatives’ Annual Report. As the proprietary Excel File already contain formulas, it is able to populate key financial ratios such as Price to Earnings (‘P/E’), Price to Book (‘P/B’) and Price to Cashflow (‘P/CF’)
Diagram 3: Simply extract the relevant financial information from the Company’s Annual Report to get the key financial ratios
Armed with the various financial ratios, the next step would be to deploy the right financial ratio to value a company. According to The Fifth Person, the general rule of thumb to value companies would be:
- P/E ratio for company with predictable earnings
- P/B ratio for companies that are asset-heavy (eg: real estate)
- P/CF ratio for companies with earnings distorted by depreciation/amortization
Yes, because you have paid for the course, you obviously get to keep the Excel file and use it to value the companies you are interested in. This would arm you with the necessary tools to find undervalued companies in the stock market.
How To Maximise Your Learning From Investment Quadrant
- Go through the online videos before attending the class. This enables you to absorb the information better in class. Heartland Boy’s opinion is that The Fifth Person tries to cover a lot of content within the 1-day session. Once again, this is testament to the value that they are providing.
- Get equipped with basic financial knowledge before attending this workshop. You should be familiar with the financial ratios used in Fundamental Analysis such as P/B, P/E etc. A very basic understanding of financial accounting will be necessary since the in-class assignments involve extracting information from the financial statements
- Do not be shy to clarify your doubts. You can post your queries online and the founders will endeavor to respond to them within 48 hours!
Diagram 4: Email blast to summarise the content of Investment Quadrant 3.0
Sign Up For Investment Quadrant 2022
Good news that Investment Quadrant, the 2022 edition, is finally open for registration from 20 Jun to 10 Jul 2022 (closes at midnight sharp).
Register using this link as an early bird to get SGD$200 discount off the course fee ($697 before discount).
Due to Covid-19 and social distancing measures in place, Investment Quadrant 2022 will be conducted via a webinar. This will be a live seminar whereby participants will be able to ask questions and the instructor will be on hand to answer. Not to worry, participants would be allowed to attend in person FOC for future runs (starting from 2023). This will be a good opportunity for revision of the concepts taught and to mingle with the rest of the like-minded participants.
The first run of Investment Quadrant takes place on 2 July (Saturday), from 1pm to 6pm. Registration is on a first come first serve basis and if you can’t make it for the first run, there will be another run still available on 3 July (Sunday) at the same timing. But if you are unable to make it in the month of July, the next one would unfortunately be in 2023!
*Do note that Heartland Boy earns a referral fee for each sign-up.
Diagram 5: Investment Quadrant Class 2.0 By The Fifth Person
Conclusion Of Investment Quadrant
Investing money is hard work and there is indeed no free lunch in this world. The trainers took care to ensure that this was communicated repeatedly throughout the workshop. Having been an active investor for over 5 years himself, Heartland Boy would be the first to agree to this stance. That is why he is well placed to gauge the effectiveness of this investment course. He wished that he had chanced upon such a stock investing class earlier in his investment journey. Such investment education would definitely have solidified his foundations when he was just a beginner. He would be very certain that he would have saved some tuition fees along the way that would have improved his investment performance.
For those who are curious, I use Tiger Brokers, an ultra low-cost online brokerage, to execute my equities trades.
Looks like the one of the few courses recommended on the web that is both legit and informative at the same time. Too bad I stumbled upon this so late this year! Hopefully they have one session each year, so will be there for the 2020 one instead.