The art of contrarian investing (Amended)

Singapore

RETIRING at age 28 may be an inconceivable notion to many, but to 35-year-old Edward Lee it was a way of life. He has quite a story to share.

Mr Lee graduated in accounting and finance from the University of Melbourne at age 18 and became a millionaire by age 22, after starting with an initial capital of only S$2,000. By age 28, he was out of the workforce, having largely made his money through astute investments, much of them in property.

The experience he chalked up at First World Capital, Cambridge Associates as well as Lehman Brothers certainly helped hone his business acumen. Today, Mr Lee's greatest luxury is waking up without an alarm clock. But he says retirement is not about fishing or settling into a rocking chair.

"Retirement for me is about doing what you love doing without deadlines, stress or expectations from anyone. Fortunately for me, my passion since the age of 12 has been investing and I continue to enjoy this passion."

Describing himself as a value-driven, contrarian investor, he gets excited by assets that are unloved and out of favour. These could be companies, currencies or properties stuck in bear market cycles.

But he doesn't blindly buy fallen angels: "Catching a falling knife can be very costly if one is not able to ascertain their fundamental values."

"A company with an obsolete product and poor management will go bankrupt at whatever valuation. So I invest when valuations are cheap and only if there is potential for its instrinsic value to grow."

And he invests only if he can see "multi-bagger returns" in the span of two to three years. A case in hand is his investment in mDR, a Singapore-listed mobile-phone, prepaid card and gadget retailer.

Between June and December 2011, he bought 1.6 billion mDR warrants at 0.1 Singapore cent each. By January 2013, when its share price spiked up, he sold them off, pocketing a cool S$13 million.

"I'm not emotional with my investments. If its value goes up by 10 times, and I believe the valuation gap has closed, I will just sell. I don't fall in love with my stocks," he says.

He takes a barbell strategy approach, investing in both large-cap blue chips and small stocks, as well as real estate. Today, his publicly announced investments span from real estate and resources to technology and manufacturing. He has stakes in firms such as Top Global, Digiland, IPCO International, Swee Hong, Eurosports, Asia Fashion, Advanced Integrated Manufacturing and Sino Construction.

"Diversifying allows me the luxury of investing in both high-volatility stocks and illiquid small-cap stocks because I can spread the risk across 20-30 investments. I could be right, I could be wrong, but I won't lose sleep over it.

"Only the naive investor believes he must win all the time," he says. "I am happy to lose three times out of 10, as long as the other seven investments cover all my losses and deliver much more."

An earlier version of this article incorrectly stated that Edward Lee profited S$3 million from his warrants at mDR. It was in fact S$13 million. The article above has been revised to reflect this.