[K-INVESTORS]① 'Korea's Buffett' Choi Joon-cheol... "You may not start a good company, but you can own one"

Cumulative Return of 1210.5% Over 20 Years Managing Fund
Assets Under Management 3 Trillion KRW... Recent Public Funds Sold Out One After Another
Striving to Change the Formula 'Real Estate is Sure Win, Stocks are Sure Loss'
“Hope to Contribute to Creating a Retirement Pension Market Responsible for Citizens' Old Age”

Editor's NoteThe Korean capital market is more turbulent than ever, driven by greed and selfishness. Manipulations and foul play are rampant. However, many investors have pioneered their own investment worlds and emerged as role models for individual investors, having endured numerous crises from the foreign exchange crisis, dot-com bubble, global financial crisis, to COVID-19. Through meetings with these investors, this series aims to convey the value of money through war-like stories, their philosophies, failures, and successes. Starting now, we will share stories from various experts, including top domestic pension fund CIOs who have transformed into global 'big players' in value investing and activism, leaders of private equity and asset management firms, and CEOs of financial companies.

In the 1980s, Busan was a manufacturing hub overflowing with wealthy individuals. A boy attending a distant private elementary school from a house perched high on a steep hill visible right from Busan Station thought, "My friends have ships, factories, and cold storage, but why don't we have any? I want means of production rather than toys." This boy grew up to be called the 'Korean Buffett' and became the CEO of an asset management company that recorded a cumulative fund return of 1200%. He is Choi Jun-cheol, CEO of VIP Asset Management, Korea's leading value investor entrusted with funds from the National Pension Service and high-net-worth individuals.

VIP The First, the first public offering fund launched by CEO Choi in February, was fully subscribed with 30 billion KRW on its first day. The second public offering fund, VIP Korean Value Investment, launched in April, attracted over 50 billion KRW within a month. Among 29 newly established domestic equity active funds in the past two years, VIP Korean Value Investment is the first to surpass 50 billion KRW in assets under management. Despite an unstable investment environment, these funds' popularity owes much to VIP Asset Management's proven management capabilities over 20 years. Currently, VIP Asset Management manages approximately 3 trillion KRW in assets. The cumulative return of funds managed by CEO Choi over 20 years reaches 1210.5%.

The boy who wanted a company... becoming an investment master with 1200% returns

CEO Choi's investment story begins from his childhood attending a private school. He experienced a profound gap between 'those who own companies' and 'those who do not.'

"My father was an ordinary salaried worker. However, due to high educational enthusiasm, he sent me to a private elementary school in Busan. Our family was by no means poor, but comparatively, I felt very poor. I hated losing, so I obsessed over studying well, but the stress made me sick. I kept thinking, 'I want to own capital.' I was interested in that direction. At that time, large company chairmen published many books. Reading them, I thought I should start my own business."

The boy who climbed 600 steps daily to his house on the hill nurtured his dream of becoming a businessman and entered Seoul National University’s Business Administration department in 1996. During his extensive reading, he encountered Warren Buffett's "The Midas Touch" and Benjamin Graham's "The Intelligent Investor," the founder of value investing.

"I couldn't start a ramen company myself, but buying Nongshim stock meant I was in the ramen business. Moreover, if I had the eye to identify the number one, the best company, I was running a business. I was completely hooked on this concept."

He felt, "This is it." Owning companies through stocks seemed to solve the deep-rooted inferiority complex and the incomprehensible unfairness of the world that had troubled him since childhood. From then on, he dropped everything and devoted himself to tutoring and studying stocks.

"I started from a very basic level, like 'What is a Coca-Cola-like company in Korea?' I see stocks as ownership of companies, not for short-term trading or flipping. When I buy a company's stock, I consider it my company. For example, when investing in Dongseo Food, I eat only their coffee mix every day. If I find coffee from another company at the office, it's chaos. I see stocks as companies and consider myself the owner to feel at ease. I mainly invest in Korean companies."

Choi Joon-chul, CEO of VIP Asset Management, is being interviewed on the 11th at VIP Asset Management in Seocho-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

Proving value investing with numbers... the original intention from university is the current motto

CEO Choi has about 27 years of stock management experience. He is an alumnus of the Seoul National University investment club SMIC (Seoul Market Investment Club).

"SMIC is famous now, but in its early days, we struggled a lot. The perception of stocks was very low, and outsiders thought our club was a 'casino club,' as if we were gamblers."

Choi, who entered university in 1996, experienced the foreign exchange crisis during his college years. As the economy worsened, social views on stock investment deteriorated further, and few peers entered the financial investment industry. It was an era of aversion to stock investment.

"Kang Sung-bu (CEO of KCGI), Hwang Sung-hwan (CEO of Timefolio Asset Management), and others founded the investment club SMIC, and juniors like me took over to promote the club externally, publish books, and engage in various activities. Our simple goal was to change the perception of stocks. Looking back, those who did this during such economic conditions had a special determination toward the capital market."

Though students, they took club activities seriously. To improve stock market perception and promote value investing, they published books, school newspapers, created websites, and appeared on broadcasts.

"To sustain any activity, you need a burning passion inside. I wanted to change society's view of stocks as gambling. Stocks fulfilled my childhood dream. Stocks were companies, but people saw them as gambling cards. Why did people see what I loved that way? To change perceptions, I had to write logically and prove it myself. I had to show that it really works."

CEO Choi belongs to the second generation of Korean-style value investing.

"The first generation includes senior figures like Lee Chae-won (Chairman of Life Asset Management), Heo Nam-kwon (CEO of Shin Young Asset Management), and Kang Bang-cheon (former chairman of Asset Plus Asset Management). The first generation was somewhat like an indigenous religion. They joined securities firms for high salaries but researched how to succeed and later realized it was value investing. That's the story for most of the first generation.

Our second generation learned theories from books used in the U.S. and tried to apply them practically. So, we are very textbook-oriented. We follow concepts from Graham to Buffett. We analyze thoroughly, maintain low risk, pursue moderate long-term returns, and generate compound returns. This is exactly what we pursue. We have no doubt about this textbook investment. However, there are Korean-specific characteristics. We must reflect these local aspects in investment decisions. Ultimately, Korean-style value investing means reflecting the characteristics of Korean companies and the overall investment environment differences in final choices."

In the early days of the startup, Min-guk Kim (left) and Jun-chul Choi, co-CEOs of VIP Asset Management.

Meeting with Kim Min-guk... opposites attract

"When internet communities first emerged, there was a value investing site. Someone posted an analysis of stocks I owned. The analysis was good, and I thought we shared the same views. Since almost no university students invested, I thought he was an older man, but he was from the same school and the same age. I said, 'Hey, let's meet!'"

Kim Min-guk was already a member of the investment club SMIC, and at his invitation, Choi joined the club activities. Their personalities matched well. Together, they created the VIP Fund during university, starting with a few tens of millions of KRW among friends. They consistently posted investment records and company analysis reports on an internet site for two years?a kind of investment blog. The fund recorded a 117% return, while the KOSPI rose only 6% during the same period. Becoming famous as 'university student investment masters,' they gained fans. Later, in 2003, they founded an investment advisory firm advocating value investing and converted it into an asset management company in 2018.

"Kim and I share the same investment philosophy but have opposite personalities. Like couples, differences help us live well. Similarities cause conflicts. We have enjoyed our intersection enthusiastically until now. I like strong companies, while Kim prefers undervalued ones. Each has strengths, and combining them creates synergy. We complement each other in partnership and have come this far without major incidents."

During the time they worried about production costs for the university newspaper on value investing,

"We really had no budget and debated whether to print the next issue. I hated selling stocks, and lying in a small officetel near school felt suffocating. Kim suddenly went out and worked hard to get advertising from securities firms. Kim always rises in crises and finds solutions when we do business together."

While Kim is good at improvisation, Choi has strong endurance.

"I'm good at consistency. Kim calls me 'crazy persistent.' I exercise two or three times a week at the same place for ten years. I take the same supplements continuously and read the newspaper from front to back every day without fail. I'm confident in my consistency. For example, I set 8:20 to 10:30 a.m. to review stocks daily. And I always sleep by midnight."

Kim and Choi still share an office, placing desks in an L-shape and harshly reminding each other not to lose their original intentions. They live in adjacent buildings in the same apartment complex. Their commonalities include investment philosophy, abstaining from alcohol, and responsibility. At 28, they started an investment advisory firm and have relied on each other through the rough waves of the capital market.

"At first, clients entrusted us with billions of won, which felt like a dream. How much opposition must they have faced not to go to bigger firms but to us? Some couples came together, and I even heard the husband persuading his wife in the next room, saying, 'These guys are not running away.' Because of the entrusted money, the responsibility was immense. Managing a large part of a family's assets was a heavy burden."

Choi Joon-chul, CEO of VIP Asset Management, is being interviewed on the 11th at VIP Asset Management in Seocho-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

No interest in 'hot companies'... how he finds investment targets

He has no interest in so-called 'hot stocks' that everyone chases.

"Everyone has different standards. People have different criteria for good stocks and companies. My taste tends to be somewhat minority."

He instinctively looks for 'hidden gems,' similar to a job interview process. The first hurdle is financial statement analysis, akin to a resume. It shows the company's history at a glance. Next is research?scrutinizing all publicly available information. After this, questions arise: 'Why was this decision made then?' 'Why did numbers suddenly change significantly?' For these, he visits companies or meets executives to ask questions and gather information.

"I don't try to grasp everything at once. I keep tracking persistently. After thorough pursuit, it becomes clear whether a company is worth investing in. It's not a decision made after one or two hours of analysis. Some take years."

This analysis is done as a team. At VIP Asset Management, CEO Choi holds a team 'morning meeting' once a week, lasting 20 minutes.

"Our rhythm is different. We give one person one or two months to analyze a company deeply. Even after buying a company, a 'markman' watches and reports every move of that company. Teamwork makes this possible."

Extreme 'equanimity'... emotions are poison in investing

CEO Choi is a person with very little emotional fluctuation. He believes emotional temperament is poison for investing, and equanimity is medicine. He said this might be influenced by the great sorrow of losing his mother suddenly during adolescence.

His daily routine is roughly as follows: he goes to bed at midnight and wakes at 7 a.m., strictly adhering to seven hours of sleep. He arrives at the office by 8:20 a.m. and spends about two hours reviewing materials?updating information on invested and interested companies. After meetings, corporate visits, and other schedules, he exercises for about two hours from 4 p.m., then returns to work late. Leaving around 10 p.m., he works about 14 hours a day on average.

"If I took a psychological test, one of my biggest traits would be low emotional fluctuation. If I had big emotional changes, I wouldn't have survived in this field. You must be very calm when investing. I never engage in patriotic or emotional investing. I judge solely on whether the company performs well or not."

Of course, even his steel mentality was shaken once during the 2008 global financial crisis. It was the first time he saw negative returns in stock investing.

"Losing other people's money was a huge shock. When we did individual investing, returns were not a few percent but multiples. We were professionals. From 2003 to 2007, returns were excellent. Then suddenly came the 2008 global financial crisis."

Clients who trusted him turned away angrily. The organization collapsed completely. CEO Choi experienced failure for the first time. He received organizational management training and psychological counseling. Although he overcame the foreign exchange crisis well, protecting clients' money during the global financial crisis was extremely difficult. It took considerable time to recover mentally, but the experience strengthened the foundation of value investing.

"It was my first crisis. I had only succeeded and received attention at a young age. Then suddenly, I fell into the abyss. This experience laid the groundwork so that during COVID-19, I was okay. At first crisis, I shrank and did nothing, but now I think, 'Let's set up funds during such times.'"

The driving force is 'individual investors'... ambition in the retirement pension market

The only area where his cold rationality shows concern is when ordinary people, unfamiliar with the investment market, lose their hard-earned money all at once by investing in stocks.

"Honestly, I could just make money from stocks and live well alone. But that doesn't work. Warren Buffett also spends six hours answering questions at shareholder meetings, which I think reflects a similar mindset. Managing over 3 trillion KRW, I could live comfortably as is. No one would blame me. We have built strong trust with high-net-worth individuals and pension funds, and clients entrust us to manage their money. But why do I do public offering funds? It's because of retirement pensions."

He believes that Korea needs to activate retirement pension systems similar to the U.S. 401(k). Recently, among American retirees, the term '401(k) Millionaire' has become popular. The 401(k) is a retirement pension account similar to Korea's Individual Retirement Pension (IRP) and is a representative type of U.S. retirement pension. A '401(k) Millionaire' refers to retirees who have steadily contributed and invested in 401(k) accounts, accumulating over one million dollars (about 1.3 billion KRW) and living comfortably.

"Unlike Korea, the U.S. lacks a national pension system, so people contribute their earnings and manage well to receive pensions after retirement. The 401(k) is the best option for them. It significantly solves many Americans' retirement issues. Having witnessed this, I see this as the most vital area to revive for real retirement preparation in Korea, but it is actually the most neglected."

Retirement pensions are suitable funds for long-term value investment funds like VIP Asset Management. This is why CEO Choi wants to play a meaningful role in the retirement pension market.

"Looking back on my career, I thought entering the retirement pension market early and playing a role for the people would be meaningful and fulfilling. Retirement pensions cannot be handled through discretionary investment or private funds. That's why we started public offering funds. We felt a sense of debt toward those who came to us but turned away due to private fund minimum subscription amounts of 500 million KRW and other restrictions. Public offering funds have fewer such financial restrictions."

In the growing retirement pension market, public offering funds must be emphasized for about 20 years. It's a restart from zero returns.

"In all industries, society seems to believe AI will do everything. ETFs and structured funds are seen as good, and human involvement is viewed as distortion and unreliable. There's a critical view of 'those in Yeouido.' Is that really true? Is it right for everyone to do ETFs? The ETF menu is so long that it's hard to choose. At this rate, ETFs might surpass listed stocks. ETFs seem scientific, but there are too many theme-based ones. They say they track indices, but Buffett advised long-term investment in the S&P 500, not trading with leverage or inverse ETFs."

Restoring trust and pride in fund managers who are overshadowed by AI and ETFs is also his challenge. Unlike existing asset management firms that are betting heavily on ETFs and alternative investments, VIP Asset Management and the other two big public fund asset managers (Timefolio Asset Management, DS Asset Management) are actively promoting the public offering fund market.

"The capital market now repeats suffering like Sisyphus's stone. People lose their hard-earned money in stocks, curse, spit, leave, and come back again. I truly want to change this. As a fund manager, I can show pride through returns. I write books and actively engage with media because I want to prevent such situations. When I retire, I hope the formula 'real estate always wins, stocks always lose' will change. I am responsible for proving this with numbers. There is still a long way to go. We are still pursuing the founding purpose of 'proving value investing,' and I will do all I can in this process. If at first, we aimed to grow assets for clients who found us when we had nothing, now we want to expand and grow the nation's retirement pensions to reduce retirement anxiety.