The Hour Glass

[Temperament]

i may be wrong in my understanding God's way. Most Christians believe in "The Doctrine of Election"

"I'm so glad that God chose me before the foundation of the world, because he never would have chosen me after I was born!" Charles Haddon Spurgeon

And why GOD choose the Israelites as HIS people?

So it seems GOD is bias too. Right?

[shanrui_91]

Like CrabCrab, I am vested in the Hour Glass for many years now & I enjoy reading the analysis and discussion on this topic very much. Great contributions from “dydx”, “Shanrui” and “Boon” and many others, even though sometimes I find some comments being biased to a certain extent !
Three questions one each for “dydx”, ”Shanrui” and “Boon”
1. To “dydx” : Why r u so sensitive to negative comments on the Hour Glass?
2. To “Shanrui”: Why do u have a bias view now after attending the AGM?
3. To “Boon”: Why r u so against paying for a good management team of the Hour Glass?
This topic will become even better if each of u can become less bias and more objective in your comments. U have earned my great respect. Keep up with the good works

biasness will always exist whether it is consciously or subconsicously so long as some form of interests exist. when you meet a stranger, you will also be quick to form a first impression which will already affect how you interact with this person.

Of my 5 holdings, I have always viewed THG as my weakest holding on the basis of the lack of a sustainable competitive advantage. However, I choose to hold on to it because it is not only cheap, but that it has shown its excellence management through their operating metrics.

I am very impressed by Mr Michael Tay for his intimate knowledge of the industry as well as for being the key who has bring focus to the company. Whatever that I have written about the individual geographic markets are mostly information gleaned from him. He knows the margin of foreign firms like Xinyu Hendeli and Emperor at the back of his finger tip. He can list out the the shopping malls in the orchard belt and discuss about the individual malls one by one. The scar of AFC is deeply ingrained in him, as he recounted how the turnover drops by half overnight and how the company has gotten into trouble.

I can see the similarity between Barnett C. Helzberg, the writer of "What I learned before I sold to Warren Buffett" and Mr Michael Tay and THG. Barnett is the 3rd generation owner of Helzberg Jewellery before he sold it to Warren Buffett.

Helzberg Jewellery also does not really enjoy any sustainable competitive advantage as it is basically just a diamond and jewllery retailer that is relying on its management excellence and customer orientation. Similar to THG, it has a superior per-store productivity that triump over all its competitors. The company has previously ventured into selling watches and silverware before they return to their core of selling diamonds and jewellery. They also paid their employees very well as they believe that if a company treats its employees as No.1, then the customer will be served well.

If there's one word to describe why I like the company so much, it will be "focus". I believe that the company is now at its highest focus in its history of operation. If you were to track their closure and opening of stores and their respective locations from the last page of Annual Report since 2004, you will have seen a management that knows what they are doing and are focusing on that long-term goal.

With regards to how the company has been able to achieve such a margin, the key lies in the very tight control that the management has over their sales staffs and operation. The management even has a limit as to how much space each shop should occupy to enjoy the maximum efficiency. I don't think it will be good to reveal the figure and exact mechanics in the forum though.

To sum up, I am buying the management and not the business for THG. And when you are talking about management and not business, obviously I will be talking from a bias point of view instead of fact and figure that you can easily verify.

[pianist]

michael tay is that young chap with a bald head rite?

[freedom]

the valuable intangibles within The Hour Glass is not just its good management, but its good reputation and customer relationship. These take years to build and can be considered good moat.

[Thriftville]

I believe buddies here enjoy hearing different views about this company. That helps everyone to make better judgement. Especially, when we are planning to invest for long term.

I certainly hope there are more people like Boon, who's willing to voice out his concerns.

---

It's inevitable that those with vested interest can be biased.
But why not treat the opposing view as an opportunity to re-evaluate your initial judgements/assumptions.

[Temperament]

I believe buddies here enjoy hearing different views about this company. That helps everyone to make better judgement. Especially, when we are planning to invest for long term.

I certainly hope there are more people like Boon, who's willing to voice out his concerns.

---

It's inevitable that those with vested interest can be biased.
But why not treat the opposing view as an opportunity to re-evaluate your initial judgements/assumptions.

Vested of course bias lah! If not why you invest? Even though i am not vested in THG but i think i am bias too. My bias is i am always weary of family own & run businesses. Same to UOB and associated companies. On the other hand, take DBS BANK, i am weary of employees treat it as "AH KONG's" money. You see both way i am bias. What to do? Is there a better way not to be bias? You tell me. i am ready to learn how not to be bias. Another words buy what you think is fundamentally sound. Still is your own bias.

[Coattails]

Is it possible to get a transcript of the recent AGM? Anyone with past experience doing so?

[shanrui_91]

michael tay is that young chap with a bald head rite?

yes, he is the one. I believe that he has been in the operation for more than 10 years. It is a matter of time that he will be taking over the role of group MD

[Boon]

Like CrabCrab, I am vested in the Hour Glass for many years now & I enjoy reading the analysis and discussion on this topic very much. Great contributions from “dydx”, “Shanrui” and “Boon” and many others, even though sometimes I find some comments being biased to a certain extent !
Three questions one each for “dydx”, ”Shanrui” and “Boon”
1. To “dydx” : Why r u so sensitive to negative comments on the Hour Glass?
2. To “Shanrui”: Why do u have a bias view now after attending the AGM?
3. To “Boon”: Why r u so against paying for a good management team of the Hour Glass?
This topic will become even better if each of u can become less bias and more objective in your comments. U have earned my great respect. Keep up with the good works

Hi Luxurybrand,

Thanks for your kind words of encouragement. Like “orang”, I think you have given me far more credit than I deserve. As mentioned in my post#198, more credit should go to “dydx” and “Shanrui” both of whom have contributed so much to this tread, I was and still am playing catch-up.

I am sorry if you have the impression that I was biased toward the top management team of THG in terms of their remuneration packages. As a matter of fact, while I was looking at the fundamentals of THG, I was also doing some research on corporate governance issues on SGX listed companies in general. And I thought it would be more meaningful and rewarding if I could mix the two exercises together, i.e. subject THG with certain corporate governance issues I was looking at. That was how it started. I could have done it with any other company.

Don’t get me wrong, like “dydx”, I am an advocate of paying “fairly” for good and proven management team. I am even agreeable to scenario C (paying 7.8 million + 2.84 million to the directors) if it is justifiable. What seems fair to one might not seem fair to another. (Please make your own judgment and draw your own conclusion).

I am not a remuneration expert. The exercise I am doing by comparing pays of top 5 employees/executives of various companies seems like a convenient and logical one to do. Its result at best is only as good as the quality of its underlying samples. One could also interpret the finding as “the executives of other companies (Emperor Watch and Hengdeli) are “underpaid” relative to THG. Also, there are limitations to the study such as - “existence of an outlier” and “sample size is too small”. As more companies are added, the results will change, for worst or for better, who knows? May be, the management of THG are “underpaid”? (Please make your own judgment and draw your own conclusion).

The pay issue will remain a concern of mine until I am convinced otherwise.

Would seeking expert advice from outside remuneration consultants in determining Directors’ pays, as outlined in guideline 7.3 of the revised code of Corporate Governance, be a better way forward?

In my opinion, regardless of the revised code of Corporate Governance with more disclosure and transparency, I believe the issue relating to remuneration of the executive directors of listed companies will remain a contentious one, as it has always been.

Lastly,

Quote from Musicwhiz on confirmation bias: “When you are vested, you tend to look for positive news to affirm your convictions, and avoid negative news or news which does not conform to your beliefs.” In my opinion, avoid negative news at one's own risk, it could potentially lead to one's poor decision making.

Another quote from Thriftville : “It's inevitable that those with vested interest can be biased. But why not treat the opposing view as an opportunity to re-evaluate your initial judgments/assumptions". In my opinion, this is a good attitude to adopt.

(Vested in both THG and Emperor Watch)

[d.o.g.]

I was also doing some research on corporate governance issues on SGX listed companies in general.
...
(Vested in both THG and Emperor Watch)

Do note that the boss of Emperor Watch, Albert Yeung, has been documented to be a key officer of the Sun Yee On, Hong Kong's largest criminal triad. He was jailed 6 months in 1980 for perverting the course of justice (trying to bribe someone not to testify in court). In 1986 he was convicted of illegal bookmaking and given a suspended term of 6 months.

The Sun Yee On's influence in Hong Kong is such that, in another case where Albert was on trial in 1995 for criminal intimidation and false imprisonment of an employee who went to work for a competitor, it took the police 3 days just to get permission to arrest him. And even then, in court the victim said he was very frightened and refused to give evidence, and witnesses mysteriously got amnesia and couldn't remember anything.

So if you are concerned about corporate governance, maybe this should give you pause. Granted, these incidents happened a long time ago, but do leopards change their spots?

Oh - and if you are against gambling, note that Yeung's Emperor Entertainment Hotel houses a casino.

More on Albert Yeung:

http://casinoleaks-macau.com/Satellite_C...0Yeung.pdf