What I learnt in March/April 2018

Fooling some of the People all the time (https://www.amazon.com/Fooling-People-Complete-Updated-Epilogue-ebook/dp/B004D4YO6A/ref=sr_1_1?ie=UTF8&qid=1523785012&sr=8-1&keywords=fooling+some+of+the+people+all+of+the+time) 

Einhorn is a very smart and detailed guy.  Most people have heard of the story, i guess what the book really showed me were:

1. How much detail is detail?  It redefines (or explaining properly) the word "detail"

2. The reason that Shorting or Activism Shorting is a 10ft hurddle to make money as the target company will do anything to defend themselves.  Whitley Tilson's recent exit  provided another example here.
3. A new appreciation on what is bad credit policy.  What are the games to play in small business lending?  Do i really understand a bank's lending and credit policy? Which leads to...
4. What is a financial institution's risk philosophy and corporate culture? 
5. Incentive scheme and benchmark drives behaviour (SBA's incentive to lend where the pool size is the benchmark)

Morris Chang's Autobiography - Part I (in Chinese). http://idreambooks.com/Morris-Chang-s-autobiography-last-magazin-by-tian-xia-yuan-jian-ch/reviews/1004352  

Great book! Worth re-reading.  Unfortunately, Part II is not out yet even after 17 years of Part I.  Few things I learnt there:

1. Successful people do read a lot, and life long learning is (one of) the meaning of life
2. Innovation and the culture of innovation is so important in a corporate
3. Possessing knowledge is not enough, application is what make you rich.  
4. TSMC itself is a disruption which changed the whole semi industry in 1987.  A disruption that created the Fabless industry by changing the model.  He contributed significantly to the flourishing of the IC design industry 
5. reward innovation and don't penalise failure
6. Have a diverse interest before specialising.  The diverse interest helps to build mental models.
7. he is a thinker, very rational and logical in analysing a situation.

The Sam Zell Book.  https://www.amazon.com/dp/1591848237/ref=as_at?creativeASIN=1591848237&linkCode=w61&imprToken=3wQQDzPZd4SKxBHcKQh4hQ&slotNum=0&tag=thneyo0f-20

Started his ppt management biz while he was in university.  He is a big picture and decision guy while his parter Bob Lorie a detailed numbers guy.  He went from property investing to corp investing.  His philosophy is similar to that of his ppt investment style where he was a distress player.  He calls himself the grave-dancer.  Like the way he bought the $4b portfolio of property asset with $1 just by guaranteeing the bank the next 3 year cash flow (bought an upside call), he bought a portfolio of companies with good business but bad balance sheet and formed his own conglomerate, funding the cash strapped biz with the real estate biz with consistent CFO.  He is a bit of a boardroom activist as well.  He asked the board about Return on CapEx, and ROIC and the board was stunned.  I find the Return on CapEx concept easier to understand than that of ROIIC.  Buying property at cheaper than replacement cost is an important concept.  Replacement cost can be interpreted as book value, or literally the cost to build that biz from scratch.  This is how i should think about price to book, the price to rebuild the biz.

Work/Other's

• Stephen took me to the TK analyst meeting and get to learn more about how he sees TK which is growth at a reasonable price. 
• Met with Dream's CFO Mr Lee and learnt about Dream Int'l.  This one is a really growth at a bargain price idea except it's different to TK where the growth is less "exciting" and they don't have a technological edge compared to TK.  Scale and Quality is the selling point.  The boring OEM model and the reporting issue in 2009 is probably why it's trading at a discount (http://www.hkexnews.hk/listedco/listconews/sehk/2013/0918/LTN20130918514.PDF)

• Looked into HKTVMall.  I like their culture, alignment, drive and energy.  Ricky Wong has good track record.  The fact that he is exiting TV biz is a plus.  But this is a harder investment decision (a high hurdle) given it has no free cash flow (yet), and the industry changes a lot faster than many other industries i am accustom to.  Competitions according to Ricky Wong is good, but the potential competitiors can be so powerful and resourceful that can really dwarf them.  This is a hard one but at the same time, payoff can be great.  Hence this one is like a call option.  Problem is sizing? It cannot be big given downside, and that means it won't move the needle.
• Looked briefly into RB.  A CPG that i like better than others because i think milk powder and Condom have better brand differentiation and less disruption by eCommerce on distribution 
• Meeting Fund Admin candidates, this is probably the most expensive on-going cost in having a fund.