Asia offers almost unrivaled long-term opportunity but also poses non-negligible risks for intelligent investors. In order to set ourselves up for success, it is not enough to approach investments with a value mindset. We also need to be cognizant of the peculiarities of Asian markets as they relate to culture, the incentives of controlling shareholders and “promoters”, the rights of minority owners, the interplay between regulation and business models, the impact of accounting peculiarities on valuation, structural tailwinds, and other factors. Within this context, our goal as long-term investors is to identify well-run, high-quality, shareholder-friendly businesses that are likely to survive downturns and compound capital at attractive rates for a long time to come. Asia also offers plenty of opportunity for Graham-style deep value investing, although the opportunity set has shrunk in the current environment.
In this issue, we highlight companies in various stages of becoming compounding machines, including BRAC Bank, Ctrip, ICICI Prudential, Piramal Enterprises, and Shriram Transport. We also draw your attention to special situations such as Jubilant Life Sciences, KyungDong City Gas, and Wellard. Finally, we cover deep value candidates such as Ajisen China, Haw Par, and Samho Development. These and other ideas included in this issue are the result of in-depth research and due diligence by selected instructors at the recent Asian Investing Summit 2017, the online conference presented annually by MOI Global.
Also inside, we feature selected instructors’ commentary on the backdrop for intelligent investing in Asia generally (see the exclusive Q&A with Jean-Marie Eveillard) and in selected countries—China, India, Japan, and Korea. Hong Kong-based value fund manager Max Hu shares his well-informed, unvarnished views on China. I found it a stark reminder of that country’s political system when Max stated that his comments might put him in danger if he made them in Chinese rather than in English. With regard to India, Rahul Saraogi’s take on the investment environment there reflects not only Rahul’s deep expertise but also his willingness to share with our members an unvarnished take on the dangers and the opportunities for intelligent investing in India today. In Korea, the governance situation seems to be improving, as described by local value investors Albert Yong and Chan Lee.
To facilitate cumulative learning, we also posed a number of “evergreen” questions on Asia to selected instructors. Inside this issue, we share their take on the following and other queries: How do you uncover value in your local market? What are some pitfalls of Western investors? Which CEOs do you admire most? Which investors do you follow in Asia? Which books would you recommend?
Also in this issue, we feature an exclusive interview with Adam Schwartz and Sean Huang of the FM First Hong Kong Funds, First Manhattan’s China-focused investment vehicles. First Manhattan, of course, is the venerable firm founded by Sandy Gottesman, one of the original investors in Berkshire Hathaway and a member of Berkshire’s Board of Directors. The interview includes a wealth of insights into intelligent investing in Asia. I am sure you will enjoy it.
All told, I hope this issue will serve as a valuable companion to you as you seek out opportunities for intelligent investing across Asia.
In light of the major push we are making to build a unique global membership community of intelligent investors, it is a special delight to bring you this edition of The Manual of Ideas. You will notice that the format is markedly different from that of past issues. We have taken this step in order to place greater emphasis on curating the most incisive insights, wisdom, and ideas from the global community we now call MOI Global. We have also decided to de-clutter the “look and feel” of The Manual of Ideas by opting for a simple, no-frills layout that puts the content above all else.
As you peruse this issue, I believe you will find the depth of insight and the quality of ideas shared by your fellow members to be unparalleled and not available anywhere else. Our members have long shared their insights and ideas with fellow members. There is a real spirit of mutual discovery and lifelong learning that permeates our member base. In the past, we have tapped into this generous spirit to bring you valuable content and foster meaningful relationships, but we had yet to harness the full power of this unique community.
I believe we are getting closer to finding the blueprint for creating a community of delight. Something that goes way beyond a newsletter. Something that is not merely a platform for investment ideas or insights. More pertinently, MOI Global will strive to become a lifelong companion to our members—a source of investment ideas and insights, but also of worldly wisdom, lifelong friendships, encouragement in an often-lonely endeavor and, yes, a source of delight.
There is no recipe for delight. Each member is different, and delight is not manufactured. It comes through caring, i.e., genuinely wishing for—and actively doing all in our power to bring about—the success of our members. Some of you have already experienced this. My colleague Shai Dardashti lives this approach. Shai was adding value to me long before a conversation about joining MOI Global even came up.
Delighting our members means knowing our members. This is why last month MOI Global closed the doors to new members. We are committed to devoting all our resources and energy to understanding you—your goals, your pain points, and what adds value to your process. We know you have come to us due to your interest in intelligent investing—this edition of The Manual of Ideas and similar content serve that interest to some extent. However, many of our members are more specifically interested in developing their skill as investors, expanding their circle of competence, meeting like-minded investors, building a great investment firm, investing their family assets, or exceling in an investment career.
At some point, we may choose to invite new members very selectively into the MOI Global community. While we are proud to have some of the world’s best investors among our members, we realize there are others who would add value to the community. To the extent new members are invited to join, they will need to come highly recommended by existing members. In addition, while the annual membership rate will go up in the future to reflect the higher value-add and give us more resources to build the community, your membership rate will remain unchanged. This rewards your loyalty and recognizes you as one of the foundational members of MOI Global. As your tenure with MOI Global increases, additional benefits will be unlocked.
The new MOI Global website, which is under development, will seek to address your investing-related needs and desires in unprecedented ways. However, we will neither be based on technology nor lead with technology. The latter should serve as a tool, with people in the foreground. This is why we are starting to bring numerous and varied opportunities to our members for interacting with one another and with thought leaders in business and investing. Flagship events like Latticework 2017 in New York City and Ideaweek 2018 in St. Moritz bring together members of our community in ways that enable lifelong learning and foster meaningful relationships. We will also do much more locally (on a global scale) to bring together members and enable knowledge- and idea-sharing within communities. Numerous members have already shown great initiative in facilitating local meetups with fellow members. For example, Tilman Versch is hosting dinners across Germany, including in Berlin on May 2nd, Frankfurt on May 17th, and Stuttgart on May 19th. Jeff Gramm is inviting fellow members for a post-Berkshire hangout in Omaha on May 6th. Brian Stout is organizing a post-Sequoia get-together in New York City on May 19th.
As I reflect on the past decade, next to my family and close friends, the relationships formed through what is now MOI Global have been some of the most meaningful of my life. Not only has this community enabled me to learn from investing heroes like Eveillard, Gayner, Greenblatt, Marks, Pabrai, Royce, Russo, Spier, Van Den Berg, and others, but I have also drawn inspiration from many of you, our members. As a uniquely self-selected group, you have not only achieved so much in business and investing, but you have demonstrated a zest for life, a passion for excellence, a constant drive for improvement, and an unquenching thirst for wisdom.
As intelligent investors, I believe we are on a never-ending journey—a quest to understand the world better and to understand ourselves better. It seems somewhat ironic that money is the scorecard of investing because what we do as investors is about so much more than money. We are capitalists but we are also philosophers. We are competitive individuals but we also yearn for meaningful relationships with like minds. Ultimately, once the material needs of life are met, life becomes about so much more.
At MOI Global, our goal on the one hand is, quite bluntly, to help you maximize the compounding of your capital. On the other hand, and more fundamentally, our goal is to maximize the compounding of your delight—by being the community that adds value not just to your portfolio, but to your life.
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