Some of the best investments rarely look obvious at the time they are made.
When Wilson Sy began accumulating shares of Philippine Long Distance Telephone Company (PLDT) in the years following the People Power Revolution, few investors were paying attention. The Philippine economy was emerging from a period of political uncertainty, interest rates were extraordinarily high, and confidence in the stock market remained fragile.
Yet Sy believed PLDT could eventually reach ₱1,000 per share.
At the time, many investors thought the prediction was unrealistic.
Investing During a Period of Uncertainty
The mid-1980s were a very different environment from today’s market.
The Philippines had just emerged from one of the most significant political transitions in its history. Economic conditions were uncertain, investor confidence was weak, and many investors preferred the safety of fixed-income instruments.
According to Sy, treasury bills were yielding as much as 40 percent.
“Jobo bills was like 40%.”
Under such conditions, convincing investors to buy stocks was not easy. Why take equity risk when government securities were offering extraordinarily high returns?
Yet Sy saw the situation differently.
He believed that political change would eventually improve investor sentiment and attract capital back into the equity market. More importantly, he believed certain companies were trading at valuations that made little sense when compared with their international peers.
One of those companies was PLDT.
A Simple Valuation Observation
At the time, PLDT was trading at roughly ₱30 per share. To many investors, the stock appeared unremarkable. The Philippine economy was still recovering from political turmoil, interest rates were extraordinarily high, and few investors were willing to assign premium valuations to Philippine equities.
Yet Sy believed the market was significantly undervaluing the company.
“PLDT was trading only at 3x PE,” he recalled.
Telecommunications companies in other markets were trading at substantially higher valuations, often at 16 times earnings or more. Sy believed the gap was far too large to be justified indefinitely. Even a partial re-rating toward the valuation levels enjoyed by foreign telecommunications companies could generate significant upside for shareholders.
But Sy’s investment thesis extended beyond a simple valuation re-rating. He believed PLDT possessed the characteristics of a long-term winner and would benefit from the country’s economic recovery, growing telecommunications demand, and improving investor confidence.
As a result, he became convinced that the stock could eventually reach levels that few investors considered possible at the time.
“I was telling people it was going to ₱1,000,” he recalled.
When Nobody Believed the Story
One of the most interesting aspects of the investment was how little support Sy initially received for his view.
“Nobody believed me.”
This reaction is common in investing. The market often pays the greatest rewards when an investor is willing to hold an opinion that differs from consensus. If everyone already agrees that a stock is attractive, much of the opportunity may already be reflected in the price.
In PLDT’s case, investors were focused on uncertainty, high interest rates, and the lingering effects of political instability. Sy focused on valuation. While others saw risk, he saw mispricing.
Looking Beyond the Headlines
Investors frequently allow current events to dominate their thinking.
Political developments, economic news, and market volatility often create strong emotional reactions. While these factors can influence short-term prices, they do not always determine long-term value.
Sy’s analysis of PLDT reflected a more fundamental approach. Rather than concentrating exclusively on headlines, he examined the company’s earnings and compared its valuation with similar businesses abroad.
The exercise suggested that the market was assigning a valuation that was significantly below what comparable telecommunications companies were receiving elsewhere.
From his perspective, the opportunity was obvious. “It was a no-brainer.”
A Meeting of Similar Minds
For some time, Sy felt largely alone in his assessment, then he encountered someone who had reached a similar conclusion.
An analyst published a report suggesting that PLDT could eventually reach ₱1,000 per share. That analyst was Joey Salceda.
Sy remembers being intrigued. “I better meet this person who is saying the same thing I am saying.”
More importantly, he discovered that their reasoning was similar.
Both were focused on valuation and believed the market was underestimating PLDT’s potential. They both recognized that the discount relative to global peers could not persist indefinitely if business fundamentals remained strong.
The experience reinforced another important investing lesson. Independent analysis can sometimes lead different investors to the same conclusion.
What Happened Next
For Sy and Salceda, the thesis would eventually prove remarkably accurate.
At the time they shared their views, PLDT was trading at roughly ₱30 per share and was valued at only about three times earnings. Most investors remained focused on political uncertainty, high interest rates, and the risks facing the Philippine economy. Few imagined that the stock could eventually reach four-digit territory.
The market, however, gradually began moving in their direction. Within two years, PLDT had already climbed above ₱100 per share, more than tripling from the levels where Sy had first accumulated shares. The gains reinforced his belief that the market had significantly undervalued the company.
The story did not end there. As the Philippine economy recovered and investor confidence returned, PLDT’s earnings continued to grow while the market assigned increasingly higher valuation multiples to the company. By 1993, the stock had reached approximately ₱1,200 per share, surpassing the target that many investors had once dismissed as unrealistic.
Over the following decades, PLDT remained one of the country’s most important corporate franchises. The stock eventually reached as high as ₱3,500 in 2014, turning what initially appeared to be an improbable forecast into one of the most memorable investment calls of that era.
