Books/Letters:
- Dear Chairman, this is a good complement to the King Ichan book to understand a bit more about activism and it's evolution. To change people is hard (and entrenched people is even harder). Activism is a 10 feet hurdle way to invest. This book also gives a good picture on the social mechanics of the Board dynamics.
- Joe Zhang's book on how Fintech in china saved the banks by absorbing all the questionable and low standard loans.
- Fai Go's book on a couple of interviews with local investors. One of those was a ex-Value Partner PM.
- Read lots of letters this month, CLC, First State, Hayden Cap, Saber Cap, Buffett interview, DJCO transcript etc. but all a bit fragmented. Perhaps a more focus way is warranted by having a theme every month. (Someone asked Munger about difficulties CPG is facing, the answer was despite we know the answer, we subconsciously deny it. A reminder on bias.)
- A good article with lots of example on use of EBITDA (https://www.toptal.com/finance/financial-analysts/ebitda)
Work:
- thinking a bit more about how to find growing companies that has low capital requirement; and how to find companies that has operating leverage.
- thinking a bit more about the RV Shake Shack mindset on investing. Is that speculation vs investing? How certain are we on consumer taste change, execution, and competitions when we are looking into the future? Bond proxy (quantitative certainty) vs Compounder (quality assessment)....
- Stephen showed me how 0400.HK played with their financial statement where the loan to third party is booked in OCF to give the illusion of better OCF than it really is.
- we also discussed whether there's much value add from good trade execution. Stephen uses a trailing stop on exiting positions to maximise irrational exuberance. I use a staggered approach. I question Stephen on whether he would do the same trailing method on accumulation.
- tried to understand a bit more about the Neff's total return approach as I never really understand qualitatively about the Overlook PE=(ROE+g)/4 meaning. Created a ranking system using the Neff total return PEG ranking approach to allocate how we spend time on research.
- had a bit of revelation on Tax minimisation schemes when we're thinking about our fund structure. Martin Lau puts it succinctly, they don't like companies spending too much effort on the same.
- i have come to realisation how i don't like the commercial aspect of funds management. Alignment shouldn't be just lip service.
Personal:
- I have a new revelation about problem solving. I had a fight with a cab driver as he was blocking the road waiting to goto the public loo in Happy Valley. Instead of solving his problem by asking him nicely to move a bit forward so that i get room to pass, i turned a bit impatient and scold him for being inconsiderate. Sometimes, to achieve what you want, the most effective way maybe to solve other people's problem as well. That's the most rational way to achieve you purpose, but may not be the most emotionally appealing way.
- Buffett said first priority in life is raising (and i read influencing) kids
- Depth vs breadth when it comes to extracting meaning (The Fault in Our Stars). Being loved deeply rather then broadly. Good movie.
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