To briefly recapitulate, the period from May 2014 to August 2022 was filled with the following major events: crude oil price plunging in 2015, a dangerous escalation in United States’ anti-China campaign since president Trump, the Covid-19 pandemic and a sharp recession breaking out, soaring inflation especially in the developed countries, aggressive monetary tightening especially by the US Federal Reserve, a strong US$, the Ukrainian Crisis, the plunging S&P 500 and NASDAQ Composite and Malaysia’s protracted political instability.

While the MSCI Malaysia index plunged 30.28%, your Fund’s NAV jumped 9.61%. Disappointingly, despite this strong performance in a most challenging period, your Fund’s market price fell by 15.19% (the returns of your Fund’s NAV and market price assumed the dividends paid in September 2013 and December 2021 were reinvested).

As some share owners have suggested, such an irrational behaviour needs to be probed further.

The performance of your Fund’s market price ultimately depends on the quality and behavior of its existing and potential investors, especially for a listed collective investment scheme like icapital.biz Berhad. Your Fund has nearly 3,300 share owners with a large majority of them owning less than 100,000 shares.

Given such a widely distributed ownership structure and the fact that your Fund does not have a controlling shareholder, a substantial shareholder of your Fund has a disproportionately large and unhealthy impact on your Fund’s market price.

A negative impact would see a large majority of shareowners suffering persistent price and NAV distortions.


i Capital.biz Berhad 2022 Annual Report

We compare the NAV and share price performance of icapital.biz Berhad in its 2022 financial year; that is, from 1 June 2021 to 31 May 2022 with that of the performance of Scottish Mortgage (SMT) over the same period.

On both counts, the performance of icapital.biz Berhad was way ahead of SMT. There are good reasons that the NAV discount of your Fund will eventually reverse.

The NAV and share price performance of your Fund is substantially better than that of SMT, itself a well-managed investment trust.

And yet, icapital.biz Berhad still has around RM155 million in cash or RM1.11 per share as at 15 September 2022, down from RM1.49 as at 31 May 2021, waiting to be put it to good use.

If the NAV discount of SMT can swing to parity or a premium, with a sound long-term investor education strategy, an appropriate ownership structure and continued superior investment performance, the same can eventually happen to icapital.biz Berhad.

With icapital.biz Berhad, share owners get a well-managed fund, founded on integrity, and offers excellent long-term prospects.

With an attractive compound rate of return, the best gains for icapital.biz Berhad are still ahead of us. It does not make sense to chop down a bountiful fruit tree before it has matured.

i Capital.biz Berhad 2022 Annual Report

Scottish Mortgage (SMT) is more than 113 years old and still growing. Your Fund’s age is a spring chicken in comparison. Stan Truhlsen, an Omaha ophthalmologist turned 100 on 13 November 2020.

In 1959, Stan, along with 10 other young Omaha doctors, formed a partnership with Warren Buffett, called Emdee, Ltd. When this partnership distributed its Berkshire Hathaway shares in 1969, all of the doctors kept the stock they received.

Two of Stan’s comrades from Emdee are now in their high-90s and continue to hold their Berkshire shares. Value investing succeeds because it goes hand in hand with a focus on the long-term.

Value investing demands patience and the ability to be a long-term investor. Longterm is defined not just in terms of years but in decades.

Can icapital.biz Berhad enjoy an outcome similar to SMT or Berkshire Hathaway where its share price trades at a rational level ?

The case for this is strong indeed and it used to be like that when individual shareowners own nearly 98% of your Fund.

i Capital.biz Berhad 2022 Annual Report

As we were working hard to educate the existing and potential individual investors about the benefits of owning icapital.biz Berhad and its time-proven value investing philosophy, your Fund’s institutional investors were undermining our well-thought out efforts by sending out wrong or “conflicting messages” about your Fund.

An example was the 2012 messy AGM, which prevented us from conducting our Investor Day for that year. Another instance was the public posting in August 2015 of numerous false allegations about icapital.biz Berhad and its fund manager by your Fund’s institutional investor.

Coincidence or otherwise, this led to the publication of a defamatory article by a senior editor of a local financial publication just a few days before the 2015 AGM of icapital.biz Berhad.

The consequences of these conflicting messages were to seriously damage the reputation of your Fund and grievously undermined the tireless efforts of the Board and Fund Manager to increase the individual ownership and deal with the discount problem.

Let me quote Buffett again : “The market price for Berkshire stock has almost always been sensible. This unusual result has been achieved by a shareholder group with unusual demographics: virtually all of our shareholders are individuals, not institutions.”

The annual general meetings of icapital.biz Berhad used to be a very joyous and productive engagement for all. My hope is that the 2022 AGM and those after that will be like them again.

The journey to achieving fewer or even zero institutional investors for your Fund will not be easy. We have to also undo the damages inflicted on your Fund by the institutional investors.

To achieve this important objective and permit the share price of icapital.biz Berhad to trade at a rational level, I will need the support of like-minded individual share owners and here is my sincere appeal.

Whether it is to share with other individuals about the benefits of owning icapital.biz Berhad or speaking up in its AGM or participating in its Investor Day, I will need all your support.

Every step helps.


i Capital.biz Berhad 2022 Annual Report

This brings me to our Investor Day. Unlike the London or New York stock market, where closed-end funds or investment trusts are common, in Malaysia, we need to educate investors on the many benefits of investing in icapital.biz Berhad, the only listed closed-end fund in Malaysia.

The Board and Fund Manager have been considering implementing an effective, systematic and sustained investor relations strategy for your Fund with the eventual aim of increasing the ownership of individual investors or share owners as we prefer to call them in icapital.biz Berhad.

Conducting the highly popular Investor Day was one of the activities held to achieve this objective of increased individual ownership.

However, your Fund’s institutional investor in September 2015 rejected this solution outright, arrogantly saying that it is not a discount control mechanism.

The experiences of Scottish Mortgage (SMT), Pershing Square Holdings (PSH), Berkshire Hathaway and your Fund have proven this rejection very foolhardy or perhaps the institutional investor wanted fewer individual investors to compete with them in buying the shares of icapital.biz Berhad.

With hindsight, our recommended strategy is the right step to take in future. For a start, the Investor Day of icapital.biz Berhad will be back, starting with the 2022 event.

Buffett correctly counselled : We feel that high quality ownership can be attracted and maintained if we consistently communicate our business and ownership philosophy - along with no other conflicting messages.


i Capital.biz Berhad 2022 Annual Report

That the type and quality of shareholders matter to the share price performance of Scottish Mortgage (SMT) or Pershing Square Holdings (PSH) or Berkshire Hathaway or icapital.biz Berhad frankly comes as no surprise to me.

icapital.biz Berhad’s own experience has the same message to deliver. I have been saying the same thing and doing the same thing ever since your Fund was promoted and listed in 2005.

During the 2005 initial public offering (IPO) of icapital.biz Berhad, Capital Dynamics intentionally took charge of its fund raising. This was done for two simple reasons.

First, Capital Dynamics did not charge icapital.biz Berhad any placement fees and related expenses of about RM2.000 million even though it was entitled to then in order to boost the NAV of your Fund even before it was listed.

Secondly, in conducting your Fund’s IPO roadshows, I intentionally targeted only individual investors and for the same reasons as Warren Buffett, I intentionally stayed away from promoting icapital.biz Berhad to institutional investors (events years later have proven my fears correct).

As Buffett said and as what I have been doing since your Fund’s IPO in 2005, “Our goal is to attract longterm owners who, at the time of purchase, have no timetable or price target for sale but plan instead to stay with us
indefinitely.”

The result of your Fund’s IPO was as I had expected – on its very first day of listing on 19th October 2005, the share price of icapital.biz Berhad closed at an outstanding 1% premium to its NAV.

The share price of icapital.biz Berhad then went on to trade at a persistent premium to its NAV until October 2008. Unfortunately, the ownership experience of icapital.biz Berhad has turned out to be different from that SMT.

While the latter saw a substantial decline in institutional ownership over the years and its discount disappearing, icapital.biz Berhad was cursed with a substantial increase in institutional ownership and a persistent discount problem.

In 2006 and 2007, only 3.000 million shares or 2.14% of your Fund’s shares were held by an institution, which sold all its shares in late 2008.

Regretably the institutional ownership of icapital.biz Berhad has now surged to 32.39 million shares or 23.13% and in the process, its NAV discount has widened and persisted.

Taking into account the experience of SMT, PSH and Berkshire Hathaway and the wisdom of Warren Buffett, it is obvious what the solution to your Fund’s nagging discount problem is – increase the ownership of individual investors.

How can this be done ?


i Capital.biz Berhad 2022 Annual Report

The long-term investment success of Warren Buffett is world famous.

What is often neglected in the long-term success of Berkshire Hathaway is the role played by its shareholders or more specifically, by the type and quality of its shareholders.

Let me quote Warren Buffett on this fundamentally important factor in determining the success of a company’s share price performance.

“Over the long term, there has been a more consistent relationship between Berkshire’s market value and business value than has existed for any other publicly-traded equity with which I am familiar.

This is a tribute to you. Because you have been rational, interested, and investment-oriented, the market price for Berkshire stock has almost always been sensible.

This unusual result has been achieved by a shareholder group with unusual demographics: virtually all of our shareholders are individuals, not institutions. No other public company our size can claim the same.

You might think that institutions, with their large staffs of highly-paid and experienced investment professionals, would be a force for stability and reason in financial markets.

They are not: stocks heavily owned and constantly monitored by institutions have often been among the most inappropriately valued.”

The messages from Warren Buffett are very simple and very clear.

He is not keen at all to attract institutional investors for very good reasons and that he and Charlie Munger have a special kinship for the million-plus individual investors of Berkshire Hathaway.

As he explained in 1985 and many times after that, “stocks heavily owned and constantly monitored by institutions have often been among the most inappropriately valued.”

As a long-term value investor myself, I cannot agree with Buffett more.


i Capital.biz Berhad 2022 Annual Report

The strategy of attracting more individual investors has been copied by Pershing Square Holdings (PSH), the 2nd largest closed-end fund in the world.

Despite massive share buyback and regular dividend payments, Pershing Square Holdings encountered the same NAV discount issue.

The Board of PSH “believes that the best way to close the discount is for PSH to attract long-term investors by continuing to deliver strong investment performance over time. We can also do more to increase awareness of our performance and our strategy among investors. In recent years the Board has actively taken steps to broaden our investor base by securing a listing on the London Stock Exchange. Our subsequent elevation to the FTSE 100 index has increased the visibility of PSH to investors. In 2021, we increased our marketing efforts in the U.K., specifically to retail investors and the “platforms” they use, and remain focused on reaching a broader array of potential investors” (2021 Annual Report of PSH).

In March 2021, Pershing engaged Frostrow to cultivate demand across UK-based wealth managers, retail/adviser platforms, targeting individual investors.

i Capital.biz Berhad 2022 Annual Report

In last year’s annual report, I wrote about Scottish Mortgage (SMT), an investment trust or a closed-end fund listed on the London Stock Exchange and a constituent of the FTSE 100 Index.

For some investors who kept asking about the NAV discount of icapital.biz Berhad and whether your Fund has an expiry date, SMT offers plenty of lessons to learn from.

SMT was launched in 1909, about 113 years ago and is still going strong with total assets of US$11.36 billion (icapital.biz Berhad is only 16 years young). It once traded at a persistent discount to its NAV.

After around twenty years, its NAV discount disappeared in 2013, endowing
its share price with a premium to NAV before trading around parity.

After I wrote about SMT in the said annual report, some uninformed investors, especially those from overseas, say that icapital.biz Berhd should follow SMT by buying back its own shares.

Was the discount narrowing of SMT due to its share buyback and/or dividend payment ? The simple answer is no.

The move from discount to premium was primarily driven by increased demand from retail investors and an evolving ownership.

For decades, a significant portion of SMT was owned by institutional investors, mainly UK pension schemes. By the end of the last century, these investors had become disengaged with the investment trust structure as new open-ended pooled vehicles allowed greater operational efficiencies.

They were persistent sellers which drove the share price to a persistent discount to NAV. From 2010, SMT was more proactively marketed to retail investors, who in the UK had begun taking greater control over their own finances, via savings platforms.

Consequently, the SMT shares owned by institutions declined substantially, from 54% in 1994 to only 17% in 2021. At the same time, share ownership by individuals jumped.

It was the massive increase in ownership by individual investors that essentially removed the NAV discount of SMT.

Shareholders, existing and future ones, ultimately bear the responsibility of determining the market price of a listed company. So, the type and quality of shareholders matter.


i Capital.biz Berhad 2022 Annual Report

Once again, despite a very tough and rough environment, icapital.biz Berhad has achieved a superior NAV and share price returns of 19.60% and 7.71% respectively for the two years ended 30 September 2022.

Both have strongly outperformed the 12.77% plunge in the bellwether MSCI Malaysia index. Remember, icapital.biz Berhad is ideal for investors looking for a low-risk, high-return fund.

With over RM150 million still in cash reserves and Capital Dynamics’ time-proven value investing philosophy, it is an excellent time to invest more in icapital.biz Berhad.

This year, the highly popular and productive Investor Day will be back. It will be held on Saturday, 26th and Sunday, 27th November at the KL Convention Centre. Learn for yourself why icapital.biz Berhad works.

Finally, let me repeat what I think is a very important point to my fellow Malaysian shareowners - do not let any investor who refuses to think and act like a share owner destroy a precious gem like your Fund.

Do participate in its coming Annual General Meeting and make your ownership counts. It can help narrow the NAV discount.

i Capital.biz Berhad 1Q2023 Report

Last year’s AGM was held on 20th November 2021. In the question and answer session, I spent quite a fair bit of time explaining why share buyback does not and will not work for icapital.biz Berhad.

Let me update our share owners on this unproductive matter.


I used the example of Top Glove’s loss-making share buyback in last year’s AGM. On 19 November 2021, its closing price was RM2.31. On 30 November 2021, it closed at RM2.92. On 15 September 2022, Top Glove’s share price closed at RM0.765.

In short, since then, Top Glove’s share price has collapsed a further 67% and 74% respectively.

A share buyback of RM1.0 billion by Top Glove, for example, would have seen a further massive loss of RM670 million or RM740 million. In April 2022, Starbucks, the world’s leading coffee chain, suspended its share buyback program as Howard Schultz takes command again.

Schultz explained that the share buyback programme is suspended so that Starbucks can “invest more profit into our people and our stores.” Starbucks like Amazon.com and Apple Inc has seen a rising worker rights campaign that has seen many of their store workers voting to unionize.

In short, share buyback is destroying Starbucks in the long-term.


i Capital.biz Berhad 2022 Annual Report

An investor needs to match his or her own investment objective with the investment product before investing.

As Tan Teng Boo explained, to understand icapital.biz Berhad better and see if it is suitable for your investment needs, think of two types of properties: Property A as an empty land and Property B as a shop house.

Question: which type of property is suitable for your investment needs? If you are looking at an investment that can provide you with regular income, obviously buying a shop house with rental would be the most suitable.

If you are looking for an investment that offers high long-term capital appreciation, buying a piece of land would be far superior. In Malaysia, just think of the property tycoons that bought empty pieces of land 40 or 50 years ago in places like Bangsar, Bandar Utama, Subang Jaya, etc. and sat on them and let the land appreciate in value.

Investing in icapital.biz Berhad is like buying such a piece of empty land. icapital.biz Berhad calls its investors "share owners" instead of "shareholders".

icapital.biz Berhad is certainly meant for the serious long-term investors,
people who want to be able to sleep soundly at night and then wake up later to see their asset value has appreciated substantially.


i Capital Newsletter Volume 30 Issue 1

The intellectual approach towards investing in the stock market differs greatly between those who time the market or stocks and those who practise value investing.

For the former, the market index or stock price is just a number to predict, making it in essence similar to gambling or speculating; for the latter, the market index is meaningless and irrelevant while the stock prices are to be used only in comparisons with the intrinsic value of a stock or business.


i Capital Newsletter Volume 31 Issue 36

Many investors and investment analysts have failed to understand that icapital.biz Berhad is ideal for investors looking for a low-risk, high-return Malaysia focused fund.

icapital.biz Berhad's strong performance is not a fluke shot and its consistency is but the logical result of its fund manager's Bamboo value investing philosophy.

Developed by Tan Teng Boo, this eclectic investing style has proven itself time and again throughout a variety of financial market and economic conditions, including the 2020 pandemic recession and our current bear market.

i Capital Newsletter Volume 33 Issue 36

Barring unforeseen circumstances, the odds favour the NAV of icapital.biz Bhd exceeding RM1 bln or RM7.14 per share.

icapital.biz Bhd is easily the most undervalued company on Bursa Malaysia and remains a misunderstood company; such a combination smells of a unique investment opportunity.

This is without taking into account the future strong increase in NAV.

In a world filled with uncertainty, icapital.biz Bhd represents a solid long-term investment.

If a subscriber starts with only RM500, and makes a monthly regular investment of RM500 and icapital.biz Bhd generates a return of only 8% per annum, the subscriber would have a total of RM251,278 in 224 months (18 years and 8 months).

If the return rises to 15% per annum, well, the end result will be much higher.


i Capital Newsletter Volume 33 Issue 7

Capital Dynamics did not get to be Asia's first global investment firm without good reasons. As an independent investment firm with no ties to the large investment banks or stockbrokers or political organisations, Capital Dynamics has no choice but to rely on its own brain power and internal resources to survive and succeed.

Capital Dynamics just has to be damn good in what it does.

Or else Capital Dynamics would not have been able to be around since 1989 in one of the toughest industries there is. And damn good Capital Dynamics has been, since 1989.

It is not just the deeply respected weekly i Capital (or www.icapital.biz) but also in the local and global funds that Capital Dynamics manages (bear in mind that Capital Dynamics does not have any agents selling its funds or its weekly i Capital) and the way Capital Dynamics has stubbornly stuck to its integrity principle.

Capital Dynamics has been damn good since 1989 because of one very good reason.

Tan Teng Boo, its CEO, makes sure that Capital Dynamics conducts solid, comprehensive primary research (not secondary research) and as a consequence, consistently produces world-class analysis on a wide range of subjects, which then enables Capital Dynamics to make far-sighted, wise investment decisions.



i Capital Newsletter Volume 33 Issue 40

The performance of icapital.biz Berhad has been outstanding, not just in terms of its NAV but also its share price over many years. Whether it is low inflation or high inflation, whether it is rising or falling interest rate, icapital.biz Berhad has consistently delivered superior returns to its shareowners and is still boasting of a substantial cash-laden war chest.

Let me recapitulate a fundamentally important point. A well-managed closed-end fund like icapital.biz Berhad is an excellent investment product for individual investors, especially during tumultuous times like now.

However, after so many decades, there is sadly still only one closed-end fund listed on Bursa Malaysia. The world-class London, Sydney and New York stock exchanges abound with hundreds of closed-end funds. Their investors have so many choices in terms of investment products.

Let me repeat what I think is a very important point to my fellow Malaysian shareowners - do not let any investor who refuses to think and act like a share owner destroy such a precious gem. It is indeed strange that the more a large foreign shareholder accumulates the shares of your Fund, the wider the discount becomes and persisted.

When your Fund was trading at a premium for many years, there was no such large foreign shareholder present. One does not need the IQ of Einstein to put two and two together. This is just my simple-minded observation.


icapital.biz Berhad 4Q22 report – commentary by fund manager