The Finn Who Stay With Asia’s Worst Market

After dropping out of a master’s degree program at the Helsinki School of Economics, Petri Deryng left Finland for Thailand in 1998 to set up PYN Fund Management Ltd. with about US$272,000 in capital which has jumped to a whooping US$150 million in only nine years.
So how did he do it?

Right time
Shortly after arriving in Thailand, the Thai baht dropped by 45 percent due to a regional financial crisis and the country slipped into the worst recession in 30 years. Naturally, investors were selling out stocks before they get burnt but Deryng did otherwise. “If you see that it’s at bottom and if you have some kind of facts, numbers to rely on, then yes, it’s time to buy.”
Then Thai markets began to pick up after he entered the fund business. The low baht helped boost the export value, while tax cuts increased consumer spending, leading to economic growth and so did Deryng’s business.

The strategy
This Finnish fund manager invests in companies that are trading below their actual values, he digs deep into their price-to-earnings, price-to-sales and sales to market value ratios before investing as much as 10 percent in the ones he likes.
“That’s the advantage that he has over some other fund managers: he doesn’t really need to make quick profit,” said Tom Paiboon, head of equities at Bangkok-based Tisco Securities Co., who Deryng because he subscribes to the broker’s research. “He’s done well in the past three to five years because that’s how he’s taken his investment approach.”
Investments among the fund’s top 10 in Thailand range from financial-services provider Thanachart Capital Pcl, valued at US$520 million, to Tongkah Harbour Pcl, a gold miner valued at US$59 million.

Impressive portfolio
Since Elite was formed in 1999, returns have increased sevenfold while SET increased by threefold from the end of 2000 to 2003.
One of Deryng’s biggest holdings was Bank of Ayudhya, in which he sold out in 2006 after doubling his investment in two years, while one of his first investments, Regional Container, was sold in 2004 for more than 10-fold gain in five years.
For 2007, the top 10 performers include Pranda, a maker of gold and silver rings and bracelets, and Indorama Polymers Pcl of Bangkok, a producer of pellets used to make plastic containers.

What’s next?
With the economic slowdown in Thailand due to the current political instability, Deryng has aims to get the type of returns he’s had in Thailand with the new Populus Fund which was set up last year for Asia investments in Singapore and the Philippines.
Thailand’s stock market has been the worst in Asia over the past 12 months, with a loss of 5.3 percent, while stock indexes in South Korea, Australia and China have reached record highs. Still, Deryng is not giving up.
“We’ve had three frustrating years in Thailand,” he said. “It’s very clear that we’re going to make quite good gains in Thailand with our current portfolio.”

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