Tong's Portfolio - A ‘sure bet’ to make big money

TheEdge Mon, Jan 19, 2026 01:00pm - 1 month View Original

This article first appeared in The Edge Malaysia Weekly on January 12, 2026 - January 18, 2026

A “sure bet” is a wager against uncertainty — and the irony is that uncertainty is the only thing that is truly certain. So, almost always, the phrase is used less about probability and more about psychology, a desire for reassurance or a shortcut around uncertainty. In fact, the phrase is often used right before failure!

With that caveat, let us present what we do believe is our sure bet for 1Q2026, one that we believe is almost guaranteed to succeed and make you big money — but (yes, a but) only if you play big and are willing to be an activist investor. In other words, this is a rare occasion where our view is not directed at the average investor but colossal investment funds such as Khazanah Nasional Bhd, Permodalan Nasional Bhd, Employees Provident Fund, Kumpulan Wang Persaraan (Diperbadankan), Eastspring Investments, BlackRock Inc, Vanguard Group Inc, Principal Asset Management Bhd, Maybank Asset Management Sdn Bhd, Hong Leong Asset Management Bhd, AHAM Asset Management Bhd and Areca Capital Sdn Bhd.

The idea

BUY 250 million or more of the 331 million outstanding Insas Bhd warrants. They are trading at 0.5 sen (at the point of writing), or almost nothing. Even if the price of the warrants were to rise to, say, two sen with the mopping-up of the warrants by a large buyer, the total investment amount would still be minuscule (less than a RM5 million bet).

The reason

It is not because the warrants are priced incorrectly. The reason for the almost valueless warrant is that the exercise price is 90 sen and the warrants will expire on Feb 28, 2026 (less than two months away). Because the stock price is below 90 sen, or more precisely 87.5 sen, investors should not buy the warrants and then pay 90 sen per share, when the shares can be bought for below 90 sen. So, the warrants valuation makes sense.

But we know the valuation of the Insas Bhd ordinary shares does not make sense. The total outstanding number of shares is 663 million, and at 87.5 sen a share, it has a market capitalisation of RM580 million. Yet, the company has a net cash of RM1,062 million. And as shown in the table below, the net assets of the company are at least RM2,229 million — and almost 90% are liquid assets that can be realised into cash quickly. The fundamental value per share is about four times the current stock price (see table)!

You might then ask, why not just buy the ordinary shares? And why is the market so imperfect that it does not reflect the much higher fundamental value?

As we have previously written, Insas is a perfect example of a “value trap”. The current major shareholder, board of directors and management are not aligned with minority shareholders to realise the company’s maximum potential. Cash is hoarded despite generating incredibly low returns (at times, less than bank deposit interest rates). Presumably at some stage, a privatisation exercise is likely.

Given the above, unless a new and independent shareholder(s) gains a substantial block of shares that can influence the future direction of the company and force the board of directors to act in the interest of all shareholders, the actual value of the company cannot be realised for minority shareholders.

Of the existing 663 million ordinary shares, the present major shareholder is reported to own 25.04%. Likely, the controlling block is larger, including friendly parties. To be substantial and influential, one would need, say, 20% of the paid-up capital or some 133 million shares of the 663 million now issued. The average daily volume of transaction on Bursa Malaysia is only 635,771 shares over the last 200 days. There is no possibility of acquiring such a large block of shares, and certainly not anywhere close to the stock price now.

Herein lies this unique opportunity.

There are 331 million warrants that are expiring in two months and almost worthless. At the current warrant price of 0.5 sen, they are valued at RM1.655 million. Even assuming the price goes up to an average of two sen, the cost is RM6.6 million.

Assuming an investment fund collects 250 million of these warrants during the next few weeks at, say, two sen each and then pays another 90 sen to convert them into ordinary shares, the total investment cost would be RM230 million. This gives the fund ownership of Insas’ enlarged share capital of between 25% and 27%.

With a shareholding of more than 25%, it becomes a new ball game. Just forcing the board to pay out the existing cash of RM1,062 million plus the cash from the warrant conversion of 331 million at 90 sen, or RM298 million, would mean a cash dividend of RM1.36 a share (based on the enlarged number of shares of 994 million). Since the warrants were converted into ordinary shares at only 90 sen each, and the warrants cost is minimal, the entire shareholding of this new substantial shareholder of some 25% would, in fact, be better than FREE — free 25% shareholding plus RM110 million in excess cash back. And the fundamental value of the company would still be in excess of RM1.17 a share (or valued at about RM300 million).

There is potentially at least RM400 million in capital gains from this exercise. Is this a “sure bet”? It all depends on whether you can execute. And whether you are prepared to go all the way (a general offer for the remaining shares), if necessary.

And to the Securities Commission, Bursa Malaysia and some of our friends who manage large pools of funds in Malaysia, it is our “proof of concept” — that shareholder activism can drive the beleaguered Bursa to once again be an outperforming stock market for all investors.

Portfolio commentary

In the interest of full transparency, Tong’s Portfolio owns the Insas warrants as disclosed in the portfolio table. Also, Avarga Ltd, a company substantially owned by me, manages an equity portfolio that includes Insas Bhd ordinary shares.

The Malaysian Portfolio gained 0.9% for the week ended Jan 7, faring better than the benchmark FBM KLCI, which fell 0.2%. Insas Bhd – Warrants C (+100.0%), United Plantations (+4.6%) and Malayan Banking (+1.9%) were the biggest winners while LPI Capital (-1.3%) and Hong Leong Industries (-0.7%) ended in the red. Total portfolio returns now stand at 206.1% since inception. This portfolio is outperforming the FBM KLCI, which is down 8.4% over the same period, by a long, long way.

Meanwhile, the Absolute Returns Portfolio gained 3.5% for the week, lifting total returns since inception to 47.3%.

ChinaAMC Hang Seng Biotech ETF (+11.7%), Ping An Insurance-H (+9.1%) and Trip.com (+8.2%) were the notable gainers last week. The sole losing stock was Berkshire Hathaway (-1.3%).

The AI Portfolio was also up last week, by 3.3%. Last week’s gains boosted total returns since inception to 6.7%. The biggest winners were Naura Technology (+12.2%), Horizon Robotics (+8.0%) and Amazon (+4.7%). The two losers for the week were ServiceNow (-1.5%) and Marvell Technology (-0.4%).

Pax Silica: The global tech divide formalised

Much ink has been spilled on the deepening technological rivalry between the US and China. In this column, we have explored this issue from multiple angles, including the speculative question of what it might look like if the two superpowers were to collude rather than compete. Reality, however, usually proves less imaginative, and more predictable.

On Dec 12, 2025, Under Secretary of State for Economic Affairs Jacob Helberg convened the inaugural summit of Pax Silica in Washington, DC, formally establishing the nine-nation strategic initiative that brings the US together with key allies to build a secure and strategically aligned semiconductor stack. Besides the US, the coalition currently consists of Australia, Israel, Japan, the Netherlands, Singapore, South Korea, the UAE and the UK. In other words, a familiar line-up drawn from Washington’s circle of partners, and whose established positions along key semiconductor choke points make their participation indispensable to Pax Silica’s objectives.

In truth, the ambition to control a self-contained technology stack is nothing new. Growing recognition of artificial intelligence’s (AI) transformative potential has recast technological leadership as a strategic asset inseparable from national security. As a result, governments worldwide have expended great efforts in pursuit of technological — particularly AI — sovereignty in the hope of securing a valuable geopolitical lever. On one level, Pax Silica reflects this view, writ large.

Separately, and as we have articulated before, there is the clear understanding that the technological domain exhibits winner-takes-all dynamics. This logic both explains and reinforces the intensifying US-China hostilities: Washington has made considerable effort to curb China’s advancing tech capabilities in recent years. The trilateral US-Japan-Netherlands agreement forged under the Biden administration in 2023, restricting the export of advanced semiconductor equipment including ASML’s most advanced lithography systems to China, is one such example. Contextualised as such, Pax Silica represents little more than the formalised expansion of existing efforts to shape access to the global tech supply chain.

Viewed more broadly, Pax Silica sits within a familiar historical pattern. As economic historian Chris Miller details in his comprehensive account of the industry in Chip War, the semiconductor chain has always been shaped by geopolitics. What has changed in recent years is the resurgence of “arms race” framing in discussions of technological competition, leaving no room for neutrality. For example: the Malaysian government’s highly controversial and since retracted announcement in mid-2025 that Huawei chips would form the backbone of a national AI initiative illustrates how technological choices now function as de facto declarations of geopolitical allegiance.

The key issue, then, is no longer why countries might feel compelled to take sides but whether exclusive initiatives like Pax Silica can meaningfully shape access to, and control over, critical technologies in a bifurcated world. Recent developments from China suggest the limits of this approach. Long-standing chip export controls introduced during the first Trump administration, while temporarily hobbling Chinese chipmaking capabilities, have done little to prevent the country from producing competitive AI models.

Other familiar challenges also remain. The reality is that each member country has to juggle between diverse and at times competing national interests. The balancing act is particularly acute for countries such as South Korea, Australia and Singapore, which maintain deep economic ties with China.

In an interview with the press, Helberg described the initiative as being “to the AI age what the G7 was to the industrial age”. Ironically, such a comparison only serves to underscore yet another central vulnerability. The G7 itself has faced growing criticism in recent years for its difficulty in forging consensus and delivering coordinated solutions, a reminder that strategic alignment does not automatically translate into effective collective action.

As it stands, the significance of Pax Silica lies not only in what it may achieve but in what it stands for. The choice of its name carries symbolic weight. From Pax Romana to Pax Americana, the invocation of the term “Pax” (Latin for “peace”) has historically been associated with eras of hegemonic stability. Paired now with “Silica”, a key input for modern semiconductors, the initiative situates semiconductors within the lineage of forces that have underwritten global order. In the age of AI, power is defined not by territory or trade routes alone but by control over the foundational technologies on which intelligence itself is built.

Finally, a necessary follow-up question is whether a parallel initiative — an opposing coalition led by China — might already be taking shape. Past patterns of pragmatic, low-profile decision-making suggest that any public announcements from Beijing are unlikely. This contrast in approach is characteristic: The West tends to publicise its breakthroughs, intentions and strategic alignments, whereas China rarely signals its objectives openly; in all likelihood, reflecting both political necessity and cultural norms.

Even in the absence of formal declarations, such a bloc probably already exists through a web of regional partnerships and emerging alliances across Asia and beyond. Over time, the two networks (Pax Silica and its China-led counterpart) are likely to expand and evolve independently, drawing more countries into their respective orbits and developing along increasingly divergent technological trajectories.

The main point is clear: The emergence of two competing technological blocs, each with distinct standards, architectures and systems for AI, appears inevitable. This digital bifurcation will give rise to two parallel ecosystems, each with its own strengths and weaknesses. In a sense, this development mirrors the broader historical patterns of how societies tend to diverge. Multiple precedents exist that point to the persistence of incompatible technical standards — from left- and right-hand driving systems to varying electrical voltage protocols, measurement systems and broadcast standards.

These modern-day examples of Tower of Babel-style fragmentation demonstrate the limits of technological universalism — the utopian belief that digital development can converge towards a single, standardised form. In practice, however — and as Pax Silica exemplifies — economic, political and cultural realities continue to shape how technologies are adopted, implemented and contested, and likely always will.

Disclaimer: This is a personal portfolio for information purposes only and does not constitute a recommendation or solicitation or expression of views to influence readers to buy/sell stocks. Our shareholders, directors and employees may have positions in or may be materially interested in any of the stocks. We may also have or have had dealings with or may provide or have provided content services to the companies mentioned in the reports.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.

The content is a snapshot from Publisher. Refer to the original content for accurate info. Contact us for any changes.

Related Stocks

BURSA	8.830
FBMKLCI	1718.060
HLIND	17.180
INSAS	0.860
INSAS-PB	1.000
LPI	14.960
MAYBANK	11.760
UTDPLT	30.280

Comments