“Berkshire’s shareholders are unusual. They embrace the idea of Berkshire as a partnership. They believe that they are owners and relish that Berkshire has no corporate veil, no monitoring board, and no corporate bureaucracy or hierarchies.

Buffett’s fellow owners resemble partners in a private firm more than shareholders of a private company. Mutual trust is the glue. What makes these shareholders so special?

Above all, Berkshire’s ownership remains dominated by individuals, not institutions. In 1965, individuals owned 80 percent of US corporate equity and institutions owners 20 percent; today those figures for large public companies are reversed.

At Berkshire, in contrast, the figures remain close to what they were in 1965.”


Margin of Trust: The Berkshire Business Model by Lawrence A. Cunningham and Stephanie Cuba

“I don’t have to pay daily, or even monthly, attention to the stock market, since it tells me nothing about whether I should buy or sell.

Hence, the turnover on my investments is very low, to the discouragement of the brokers with whom I do business (and from whom, also, I never take tips or advice).

Nothing that I learned while serving on the Finance Committee of the Carnegie Mellon Board of Trustees has shown me that this strategy is wrong.”


Models of My Life by Herbert A. Simon

“What Charlie finds interesting when thinking back about all this progress is how few big business decisions were involved in creating billions of dollars out of less than $40 million, fewer than one every three years.

“I think the record shows the advantage of a peculiar mindset of not seeking action for its own sake, but instead combining extreme patience with extreme decisiveness.””


Damn Right! Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger – by Janet Lowe

“We all know the success of Warren Buffett as an investor. Many of us can quote his famous sayings, advice and even more can talk about his value investing philosophy and long-term investment horizon.

There are, however, sadly few people who can put into actual practice what they admire so much about Warren Buffett.

The FORTUNE magazine recently featured him and I would highlight some key points from this interesting piece. In 1986, he bought a farm near Omaha for US$280,000. He was not an expert farmer and knew nothing much about operating a farm.

What he knew were a few basic facts about long-term economics of farming like how many bushels of corn and soybeans the farm would produce, what the operating expenses would be, that productivity would improve over time and that crop prices would move higher.

From these estimates, he figured that the normalised return from the farm would be around 10%. He was able to conclude that the investment had no downside and potentially had substantial upside. There would be the bad crop, and commodity prices would disappoint.

Now, 28 years later, the farm has tripled its earnings and is worth five times or more than what he paid for. What is Buffett telling us about successful investing?”


icapital.biz Berhad 2014 Annual Letter by Designated Person Tan Teng Boo

“Ben Graham, the father of value investing who survived the 1929-32 stock market crash and also the 1972-74 debacle, had this to say about both periods:

“What should a conservative analyst have done in the heady area and era of high growth, high-multiplier companies? I must say mournfully that he would have to do the near impossible – namely, turn his back on them and let them alone.”

Reflecting on his years on Wall Street, Ben made the point that “in one important respect, we have made practically no progress at all and that is in human nature… people still want to make money very fast.”

The extremely short term focus in the markets today with undue emphasis on quarterly earnings, promotional quarterly conference calls and huge volatility in stock prices suggests Ben’s observation is alive and well.”


Fairfax Financial Holdings 2001 Annual Letter by Chairman and CEO V. Prem Watsa

“Making money in the market is tough. The brilliant trader and investor Bernard Baruch put it well when he said,

“If you are ready to give up everything else and study the whole history and background of the market and all principal companies whose stocks are on the board as carefully as a medical student studies anatomy –

if you can do all that and in addition you have the cool nerves of a gambler, the sixth sense of a clairvoyant and the courage of a lion, you have a ghost of a chance.””


Principles by Ray Dalio

“Apart from the economic advantages and disadvantages of stock exchanges – the advantage that they provide a free flow of capital to finance industrial expansion, for instance, and the disadvantage that they provide an all too convenient way for the unlucky, the imprudent, and the gullible to lose their money – their development has created a whole pattern of social behavior, complete with customs, language and predictable responses to giant events.

What is truly extraordinary is the speed with which this pattern emerged full blown following the establishment, in 1611, of the world’s first important stock exchange – a roofless courtyard in Amsterdam – and the degree to which it persists.

The first stock exchange was, inadvertently, a laboratory in which new human reactions were revealed. By the same token, the New York Stock Exchange is also a sociological test tube, forever contributing to the human species’ self-understanding.”


Business Adventures: Twelve Classic Tales from the World of Wall Street by John Brooks

“The strongest emotions in the marketplace are greed and fear. In rising markets, you can almost feel the greed tide begin. The greed itch begins when you see stocks move that you don’t own.

Then friends of yours have a stock that has doubled; or, if you have one that has doubled, they have one that has tripled. This is what produces bull market tops.

Obviously no one rationally would want to buy at the top, and yet enough people do. It is the unwillingness to be out of step. It is really quite amazing how time horizons and money goals can change.

Investors can start out tentatively after a market bath, and they buy something they hope will go up 50 percent in eighteen months.

But as the pace accelerates, 50 percent in eighteen months seems much too slow, when there are stocks around – owned by somebody else – that are going up 100% in six months.

Finally it all turns into a marvelous carmagnole that is great fun if you leave the party early. The same thing happens in reverse. When stocks start down, the tendency is to wait until they come back a little before lightening up.

They head down further, and the idea that you have made a mistake, that you have been betrayed by your own judgment, can be so paralyzing that you wait a little longer. Finally faith evaporates entirely.

If stocks were down 10 percent yesterday, they may be down 20 percent today. One day, when all the news is bad, you have to get rid of the filthy things which have treated you so cruelly. Again, it all ends in a kind of paroxysm that is no fun unless you have anticipated it.

No matter what role the investor has started with, in a climax on one side or the other the role melts into the crowd role of greed and fear.

The only real protection against all the vagaries of identity playing, and against the final role of being part of the crowd when it stampeded, is to have an identity so firm it is not influenced by all the brouhaha in the marketplace.”


The Money Game by Adam Smith

"If you're not a little confused by what is going on, you don't understand it. We are in uncharted territory."


Berkshire Hathaway 2021 Annual Shareholders Meeting - Charlie Munger

"Valuing is not the same as predicting. In the short run, the market is a voting machine. In the long run, it's a weighing machine. Weight counts eventually.

But votes count in the short term. And it's a very undemocratic way of voting. Unfortunately, they have no literacy tests in terms of voting qualifications.

What you're doing when you invest is deferring consumption and laying money out now to get more money back at a later time. And there are really only two questions.

One is how much you're going to get back, and the other is when.

Aesop was not much of a finance major, because he said something like 'A bird in the hand is worth two in the bush' but he doesn't say when. Interest rates are the price of 'when'.

And that is why sometimes a bird in the hand is better than two birds in the bush and sometimes two in the bush are better than one in the hand."


The Snowball: Warren Buffett and the Business of Life by Alice Schroeder

"I want to see whether I can predict with a very high degree of confidence, 90% of confidence, that at a minimum what the business will look like in 10 years under all different contingencies. And most of the time by the way, we don't have an answer and we just keep study and keep at it.

Sometimes we study for years and years before we see, okay, we really get it. And then we wait for the price to come to our striking zone, and a lot of the time they don't. And so that makes our selection very, very difficult.

And so when we do select them, we tend to own them for a very, very long time because the businesses that are really good and we really fully understand are very rare."


13th Annual Columbia China Business Conference: Value Investing in China - Li Lu

"It is reported that Berkshire Hathaway was a net seller in 2020 even though the Warren Buffett controlled company has more than US$130 bln in cash. It not only sold all its airline stocks but also a substantial part of its US banking stocks.

At the end of Nov 2019, icapital.biz Berhad held around RM288 mln in cash. By end Feb 2021, this has dropped to RM210 mln. Although icapital.biz Berhad sold some stocks in the last 12 months, it has on the whole been a net buyer.

Unfortunately, although the NAV of icapital.biz Berhad has recovered to its pre-pandemic level, the market price of icapital.biz Berhad in 2020 has performed disappointingly.

This has led to some investors sharing with us their observation that the share price performance of icapital.biz Berhad indeed looks strange."


icapital.biz Berhad 3Q2021 report - commentary by fund manager

"Where the cash holdings are exceptionally large in relation to the market price of the securities, this factor usually deserves favorable attention.

In such a case the common stock may be worth more than the earnings record indicates, because a good part of its value is represented by cash holdings which contribute little to the income account.

Eventually, the stockholders are likely to get the benefit of these cash assets, either through their distribution or their productive use in the business."


The Interpretation of Financial Statements by Benjamin Graham and Spencer Meredith

"Many unsuccessful investors regard the stock market as a way to make money without working rather than as a way to invest capital in order to earn a decent return. Anyone would enjoy a quick and easy profit, and the prospect of an effortless gain incites greed in investors.

Greed leads many investors to seek shortcuts to investment success. Rather than allowing returns to compound over time, they attempt to turn quick profits by acting on hot tips.

They do not stop to consider how the tipster could possibly be in possession of valuable information that is not illegally obtained or why, if it is so valuable, it is being made available to them.

Greed also manifests itself as undue optimism or, more subtly, as complacency in the face of bad news. Finally greed can cause investors to shift their focus away from the achievement of long-term investment goals in favor of short-term speculation."


Margin of Safety: Risk-averse Value Investing Strategies for the Thoughtful Investor – by Seth Klarman

"We came to this notion of finding a mispriced bet and loading up when we were very confident that we were right. So we're way less diversified. And I think our system is miles better.

If you're investing for forty years in some pension fund what difference does it make if the path from start to finish is a little more bumpy or a little different than everybody else's as long as it's all going to work out well in the end? So what if there's a little extra volatility.

It makes sense to load up on the very few good insights you have instead of pretending to know everything about everything at all times. You're much more likely to do well if you start out to do something feasible instead of something that isn't feasible."


Poor Charlie's Almanack by Charlie Munger

"As Benjamin Graham and David Dodd taught us, financial markets are manic and best thought of as an erratic counterpart with whom to transact, rather than as an arbiter of the accuracy of one's investment judgements.

There are days when the market will overpay for what you own, and other days when it will offer you securities at a great discount from underlying value.

If you look to "Mr. Market" for advice, or if you imbue him with wisdom, you are destined to fail.

But if you look to Mr. Market for opportunity, if you attempt to take advantage of the emotional extremes, then you are very likely to succeed over time.

If you see stocks as blips on a ticker tape, you will be led astray.

But if you regard stocks as fractional interests in businesses, you will maintain proper perspective.

This necessary clarity of thought is particularly important in times of extreme market fluctuations."


Baupost Group 2008 Letter by Seth Klarman

"We can't compensate what we can't predict with a higher discount rate. Warren Buffett says:

'When we look at the future of businesses, we look at riskiness as being sort of a go/no-go valve. In other words, if we think that we simply don't know what's going to happen in the future, that doesn't mean it's risky for everyone.

It means we don't know - that it's risky for us. It may not be risky for someone else who understands the business. However, in that case, we just give up. We don't try to predict those things.

We don't say "well, we don't know what's going to happen. Therefore, we'll discount some cash flows that we don't even know at 9% instead of 7%." That is not our way to approach it.

Once it passes a threshold test of being something about which we feel quite certain, we tend to apply the same discount factor for everything. And we try to only buy businesses about which we're quite certain.'"


Seeking Wisdom: From Darwin to Munger by Peter Bevelin

"In 1958, Phil Fisher wrote a superb book on investing. In it, he analogized running a public company to managing a restaurant.

If you are seeking diners, he said, you can attract a clientele and prosper featuring either hamburgers served with Coke or a French cuisine accompanied by exotic wines.

But you must not, Fisher warned, capriciously switch from one to the other. Your message to potential customers must be consistent with what they will find upon entering your premises."


Berkshire Hathaway 2020 Shareholder Letter by Warren Buffett

"At times in my life, I have put myself to a standard that I think has helped me: I think I'm not really equipped to comment on a subject until I can state the arguments against my conclusion better than the people on the other side.

If you do that all the time; if you're looking for disconfirming evidence and putting yourself on a grill, that's a good way to help remove ignorance. What happens is that every human being tends to believe way more than he should in what he's worked hard to find out."


2021 Daily Journal Annual Meeting - Charlie Munger

"Investors avoid stocks outside their circle of competence; those who buy stocks outside their circle of competence are gamblers, speculators or fools.

If you lack the grounds for understanding a business - grounds ultimately for estimating a gap between value and price - but make a purchase anyway, you may as well be at a Las Vegas or Atlantic City blackjack table or at a local poker party.

All you are really doing is guessing, hoping, maybe even praying that things work out your way. Yet there is little reason, other than dumb luck, to think they will."


How To Think Like Benjamin Graham and Invest Like Warren Buffett by Lawrence A. Cunningham

"If you're going to be an investor, you're going to make some investments when you don't have all the experience you need. But if you keep trying to get a little better over time, you'll start to make investments that are virtually certain to have a good outcome.

The keys are discipline, hard work and practice. It's like playing golf - you have to work on it.

You need a different checklist and mental models for different companies. I can never make it easy by saying, 'Here are three things.' You have to derive it yourself to ingrain it in your head for the rest of your life.

The ethos of not fooling yourself is one of the best you could possibly have. It's powerful because it's so rare."


2002 Wesco Financial Corporation Annual Meeting by Charlie Munger

"What counts for most people in investing is not how much they know, but rather how much they don't know. An investor needs to do very few things right as long as he or she avoids big mistakes.

Equally important, we insist on a margin of safety in our purchase price. If we calculate the value of a common stock to be only slightly higher than its price, we're not interested in buying.

We believe this margin-of-safety principle, so strongly emphasized by Ben Graham, to be the cornerstone of investment success."

Berkshire Hathaway 1992 Annual Letter by Warren Buffett

Compounding at high rates over an investment career is very hard, but doing it by finding something that doubles, then moving on to another thing that doubles, and so on and so on is, in my opinion, nearly impossible.

It requires that you develop correct insights about a large number of investment situations over a long period of time. It also requires that you execute well on both the buy and sell each time.

“It’s important to understand the paramount importance of compounding, and how rare and special long-term compounders are. This is antithetical to the “it’s up, so sell” mentality but, in my opinion, critical to long-term investment success.

As Charlie Munger says, “the first rule of compounding is to never interrupt it unnecessarily.” In other words, if you have a compounding machine with the potential to do so for decades, you basically shouldn’t think about selling it (unless, of course, your thesis becomes less probable).

“In his work Buffett has not let the complexities of his thinking prevent him from forming a very simple view of life. The key point about the two Buffetts, the investor and the businessman, is that they look at the ownership of businesses in exactly the same way.

The investor sees the chance to buy portions of a business in the stock market at a price below intrinsic value – that is, below what a rational buyer would pay to own the entire establishment. The manager sees the chance to buy the whole business at no more than that intrinsic value.

The kind of merchandise that Buffett wants is simply described also: “good businesses.” To him that essentially means operations with strong franchises, above-average returns on equity, a relatively small need for capital investment, and the capacity therefore to throw off cash.

That list may sound like motherhood and apple pie. But finding and buying such businesses isn’t easy; Buffett likens the hunt to be bagging “rare and fast-moving elephants.” He has avoided straying from his strict criteria. The Sainted Seven all possess the characteristics of a good business.

Naturally, good businesses do not come cheap, particularly not today when the world has caught on to their attributes. But Buffett has been consistently shrewd as a buyer – he simply will not overpay – and patient in waiting for opportunities.”



Tap Dancing to Work – Warren Buffett on Practically Everything, 1966 – 2012 – Collected and Expanded by Carol Loomis

“After all the panic in 2020, the NAV of icapital.biz Bhd ended the year more or less at the same value as when it ended 2019. On 31 Dec 2020, its NAV was RM3.10, compared with RM3.12 at the end of 2019.

If one had not been told that there is a fierce pandemic ravaging the world community, one would, based on the NAV of icapital.biz Bhd, be forgiven for thinking that it has been business as usual as its NAV bounced back to the pre-pandemic crash level. Of course, the underlying reality has been very different.

Unfortunately, the market price of icapital.biz Bhd in 2020 performed differently, as it reflected a different reality, one that is based on misguided perceptions, instead of facts. Its price fell more than 8% from its 31 Dec 2019 closing price when it should have risen.

2020 was also a year when some stocks on the stock exchange went berserk and traded in a right-angle fashion. It was not just the glove companies, which one could argue is based on fundamental reasoning, whether one agrees with it or not. Prices of some other companies surged without any fundamental rhyme or reason.

Bursa Malaysia was like a market where investors know the price of everything but value of none.”


icapital.biz Berhad 2Q21 report – Commentary by Fund Manager

“To win, the first thing you have to do is not lose. That is my own distillation of one of Graham’s first principles. It sounds absolutely simplistic. Of course you shouldn’t lose if you want to win. There is more to it than that.

This is a rational statement in a rational world, even though Keynes once said there was nothing more disastrous than a rational investment policy in an irrational world. Graham does not do much to feed the fantasies of those who would, say, turn five thousand into a quarter of a million.

He starts with the supposition that your money is at risk; the first thing you must do is not lose your money, even before you think about making more with it.

The joys of compounding are there if you keep your stake growing, but all you need to have is one year in which you give back half, and your program, at the same growth rate, must stretch out years and years longer.”


Supermoney by Adam Smith

“To his family’s amusement and surprise, by the spring of 1942, his hoard totaled $120. Enlisting his sister Doris as a partner, he bought three shares of a stock for each of them, costing him $114.75 for his three shares of Cities Service Preferred.

“I didn’t understand that stock very well when I bought it” he says; he knew only that it was a favourite stock that Howard had sold to his customers for years.

The market hit a low that June, and Cities Service Preferred plunged from $38.25 to $27 a share. Doris, he says, “reminded” him every day on the way to school that her stock was going down.

Warren says he felt terribly responsible. So when the stock finally recovered, he sold at $40, netting a $5 profit for the two of them. “That’s when I knew that he knew what he was doing” Doris recalls.

But Cities Service quickly soared to $202 a share. Warren learned three lessons and would call this episode one of the most important of his life.

One lesson was not to overly fixate on what he had paid for a stock. The second was not to rush unthinkingly to grab a small profit. He learned these two lessons by brooding over the $492 he would have made had he been more patient.

It had taken five years of work, since he was six years old, to save the $129 to buy this stock. Based on how much he currently made from selling golf balls or peddling popcorn and peanuts at the ballpark, he realized that it could take years to earn back the profit he had “lost”. He would never, never, never forget this mistake.

And there was a third lesson, which was about investing other people’s money. If he made a mistake, it might get somebody upset at him. So he didn’t want to have responsibility for anyone else’s money unless he was sure he could succeed.”


The Snowball: Warren Buffett and the Business of Life by Alice Schroeder

“Some companies will conduct their affairs so as to gain the greatest possible profit right now. Others will deliberately curtail maximum immediate profits to build up goodwill and thereby gain greater overall profits over a period of years.

Treatment of customers and vendors give frequent examples of this. The company that will go to special trouble and expense to take care of the needs of a regular customer caught in an unexpected jam may show lower profits on the particular transaction, but far greater profits over the years.

The investor wanting maximum results should favor companies with a truly long-range outlook concerning profits.”


Common Stocks and Uncommon Profits by Philip A. Fisher

“If I was fortunate in the assortment of talents I brought to financial analysis, I was equally fortunate in the epoch in which I entered Wall Street. When I started, investment was almost entirely limited to bonds. Common stocks, with relatively few exceptions, were viewed primarily as vehicles for speculation.

Nonetheless, a considerable amount of window dressing began to be arrayed around common stocks, to impart some aura of respectability to what was previously considered a near relative of the gambling casino. Detailed information on operations and finances was beginning to be supplied by corporations, either voluntarily or to conform with stock exchange requirements.

The financial services had begun to present this material in convenient forms in their manuals and current publications. But in 1914 this mass of financial information was largely going to waste in the area of common-stock analysis. The figures were not ignored, but they were studied superficially and with little interest.

What counted most was inside information of various kinds – some of it relating to business operations, new orders, anticipated profits and the like, but more of it to the current activities and plans of the market manipulators – the famous “they” who were held responsible for all the significant moves, up and down, in every important stock.

To old Wall Street hands it seemed silly to pore over dry statistics when the determiners of price change were thought to be an entirely different set of factors – all of them very human.

But for a variety of reasons – not the least being the improvement in the financial strength of large industrial companies resulting from World War I – intrinsic value and investment merit were destined to assume increasing important in common-stock analysis after 1914. As a newcomer – uninfluenced by the distorting traditions of the old regime – I could respond readily to the new forces that were beginning to enter the financial scene.

I learned to distinguish between what was important and unimportant, dependable and undependable, even what was honest and dishonest, with a clearer eye and better judgement than many of my seniors, whose intelligence had been corrupted by their experience.

To a large degree, therefore, I found Wall Street virgin territory for examination by a genuine, penetrating analysis of security values.”


The Memoirs of the Dean of Wall Street by Benjamin Graham

"Clearly the pure investor must hold his security for long periods, while the pure speculator must sell promptly, if each is to get what he seeks.

If the investor chooses his holdings wisely, he can make quite as much money as the speculator. In fact, he can probably make more, or so it would seem from the history of great fortunes.

But to buy when a security goes below its true worth, and to sell when it goes above it, is not enough to constitute wise investment, for such a policy would put the buying and selling points very close together, and in the end would yield no more than pure interest on the fund so invested.

Wise investments requires that only such issues as are selling far below their true worth should be bought; then, as large income payments are received in subsequent years because things turn out better for the security than most people expected, a handsome return on the principal can be enjoyed."


The Theory of Investment Value by John Burr Williams

“Mr. Buffett reported performance numbers to his partners once a year on December 31. This is highly unusual. Mutual funds report daily and most hedge funds report monthly.

Mr. Buffett’s annual reporting makes all the sense in the world to me. Real business change takes months, if not years. If you invest in a business, you ought to be quite content to get a datapoint on its valuation once a year.

Most entrepreneurs have no idea what their businesses are worth.”


The Dhandho Investor: The Low-Risk Value Method to High Returns by Mohnish Pabrai

“Confucius’s disciples frequently asked him to define goodness. He would give each of them a different answer each time, depending on the situation. That’s because Confucian goodness is not something you can define in the abstract.

It’s the ability to respond well to others; the development of a sensibility that enables you to behave in ways that are good for those around you and to draw out their own better sides.

Confucius would not define goodness; he wanted his disciples to know that we must feel it in all these different, shifting situations to understand what it means to express it.

We have all felt it, and once we recognize it, we can develop it further”


The Path: What Chinese Philosophers Can Teach Us About the Good Life – Michael Puett and Christine Gross-Loh

“The 16th annual general meeting of icapital.biz Bhd will be held on Saturday, 28 Nov 2020. Due to the Covid-19 pandemic, this year’s AGM will be a virtual one. Shareowners must register at http://boardroomlimited.my before 26 Nov to apply for attendance credentials in order to participate in the virtual AGM.

This event will provide a robust antidote to the growing taint of fake news and truthfully answer the questions that have become hot-button issues in certain circles.

Will icapital.biz Bhd wind up this year? What are the implications of the Judicial Review filed by ICAP? What has happened to the dual listing project and its related expenses?

As part of icapital.biz Bhd’s cherished tradition, Tan Teng Boo, the designated person, will present the portfolio review, investment outlook, and a talk on a special topic.

Please register now for this important event.”


icapital newsletter Volume 32 Number 15, 19 November-25 November 2020

"The wise ones bet big when they have the odds. And the rest of the time they don't. It's just that simple.

That is a very simple concept. And to me it's obviously right - based on experience not only from the pari-mutuel system, but everywhere else. And yet, in investment management, practically nobody operates that way.

How many insights do you need? Well, I'd argue that you don't need many in a lifetime. If you look at Berkshire Hathaway and all of its accumulated billions, the top ten insights account for most of it. Most of the money came from ten insights.

Just think of it as a heavy odds against game full of craziness with an occasional mispriced something or other. And you're probably not going to be smart enough to find thousands in a lifetime. And when you get a few, you really load up. It's just that simple.

When Warren lectures at business schools, he says "I could improve your ultimate financial welfare by giving you a ticket with only twenty slots in it so that you had twenty punches - representing all the investments that you got to make in a lifetime. And once you'd punched through the card, you couldn't make any more investments at all. Under those rules, you'd really think carefully about what you did, and you'd be forced to load up on what you'd really thought about. So you'd do so much better".

This is a concept that seems perfectly obvious to me. And to Warren, it seems perfectly obvious. But this is one of the very few business classes in the United States where anybody will be saying so. It just isn't the conventional wisdom.

To me, it's obvious that the winner has to bet very selectively. It's been obvious to me since very early in life. I don't know why it's not obvious to very many other people."


Poor Charlie's Almanack - The Wit and Wisdom of Charles T. Munger

“In his book The Science of Hitting, Ted explains that he carved the strike zone into 77 cells, each the size of a baseball. Swinging only at balls in his "best" cell, he knew, would allow him to bat .400; reaching for balls in his "worst" spot, the low outside corner of the strike zone, would reduce him to .230.

In other words, waiting for the fat pitch would mean a trip to the Hall of Fame; swinging indiscriminately would mean a ticket to the minors. If they are in the strike zone at all, the business "pitches" we now see are just catching the lower outside corner.

If we swing, we will be locked into low returns. But if we let all of today's balls go by, there can be no assurance that the next ones we see will be more to our liking. Perhaps the attractive prices of the past were the aberrations, not the full prices of today.

Unlike Ted, we can't be called out if we resist three pitches that are barely in the strike zone; nevertheless, just standing there, day after day, with my bat on my shoulder is not my idea of fun.

When we can't find our favorite commitment -- a well-run and sensibly-priced business with fine economics -- we usually opt to put new money into very short-term instruments of the highest quality. Sometimes, however, we venture elsewhere.

Obviously we believe that the alternative commitments we make are more likely to result in profit than loss. But we also realize that they do not offer the certainty of profit that exists in a wonderful business secured at an attractive price. Finding that kind of opportunity, we know that we are going to make money -- the only question being when.”


Berkshire Hathaway 1997 Annual Report

“In 2003, Warren Buffett said “We love owning common stocks – if they can be purchased at attractive prices… Unless, however, we see a very high probability of at least 10% pre-tax returns, we will sit on the sidelines.”

We shouldn’t engage in false precision. Warren Buffett says, “We believe that if you can pinpoint it, you’re kidding yourself. Therefore, we think that when we make a decision there ought to be such a margin of safety – it ought to be so attractive – that you don’t have to carry it out three decimal places.” He continues: “We are very inexact… How certain we are is the most important part… you’d be amazed at how inexact we are.”

Charlie Munger says, “We never sit down, run the numbers out and discount them back to net present value… The decision should be obvious.””


Seeking Wisdom From Darwin to Munger by Peter Bevelin

“As long as you’re picking a fund, you might as well pick a good one. This is easier said than done.

Over the last decade, up to 75 percent of the equity funds have been worse than mediocre, failing to outgain the random baskets of stocks that make up the market indexes, year in and year out.

In fact, if a fund manager has even matched the market’s performance, he or she has ranked in the top quartile of all funds. “


Beating the Street by Peter Lynch with John Rothchild

"In the 1986 Berkshire Hathaway annual report, Warren Buffett looked back on his first twenty-five years as a CEO and concluded that the most important and surprising lesson from his career to date was the discovery of a mysterious force, the corporate equivalent of teenage peer pressure, that impelled CEOs to imitate the actions of their peers.

He dubbed this powerful force the institutional imperative and noted that it was nearly ubiquitous, warning that effective CEOs needed to find some way to tune it out. The CEOs in this book all managed to avoid the insidious influence of this powerful imperative. How? They found an antidote in a shared managerial philosophy, a worldview that pervaded their organisations and cultures and drove their operating and capital allocating decisions.

The business world has traditionally divided itself into two basic camps: those who run companies and those who invest in them. The lessons of these iconoclastic CEOs suggest a new, more nuanced conception of the chief executive's job, with less emphasis placed on charismatic leadership and more on careful deployment of firm resources.

At bottom, these CEOs thought more like investors than managers. Fundamentally, they had confidence in their own analytical skills, and on the rare occasions when they saw compelling discrepancies between value and price, they were prepared to act boldly.

If they couldn't identify compelling projects, they were comfortable waiting, sometimes for very long periods of time (an entire decade in the case of General Cinema's Dick Smith)."


The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success by William N. Thorndike, Jr.

“Investment is most intelligent when it is most businesslike.

It is amazing to see how many capable businessmen try to operate in Wall Street with complete disregard of all the sound principles through which they have gained success in their own undertakings.

Yet every corporate security may best be viewed, in the first instance, as an ownership interest in, or a claim against, a specific business enterprise.

And if a person sets out to make profits from security purchases and sales, he is embarking on a business venture of his own, which must be run in accordance with accepted business principles if it is to have a chance of success”


The Intelligent Investor by Benjamin Graham

“If there is one thing that the Covid-19 pandemic has taught investors throughout the whole world, it is this. Cash is really a king. What do we mean? Benjamin Graham said: “You will be much more in control, if you realize how much you are not in control”. When we held cash, it was due to two reasons.

One, despite searching high and low, we were unable to find attractively priced investments. Two, unexpected events will always happen and one needs to be ready to manage them. By holding cash, we were being very humble and patient as we realised how much we are not in control.

Despite the constant battering that I have been receiving from a large investor, I have stuck to our time-proven investment philosophy and held on to a relatively high level of cash in the last few years. Who could imagine a world that is instantly turned upside down by a microscopic virus?

It has shuttered businesses and schools, wreaking havoc on global economies and leaving millions unemployed. Businesses and companies that we one thought were resilient and recession-proof turned out to be the highly vulnerable.

Our strongly guarded cash holdings have made icapital.biz Berhad the strongest company on the stock exchange. If not for the false negative perception created by some people, its share price ought to be selling a premium to its NAV.

Seth Klarman, a well-regarded value investor puts it more graphically: “The inability to hold cash and the pressure to be fully invested at all times meant that when the plug was pulled out of the tub, all boats dropped as the water rushed down the drain”

What is the secret of Charlie Munger’s investing success? He said: “You don’t make money when you buy a stock, you don’t make money when you sell a stock, you make money by being patient and you make money by waiting”.

Of course, one needs to have the cash to take advantage when the opportunities arise. Compared with 31st May 2019, I have precisely been doing this. Finally, this year's Annual General Meeting will be most interesting. Whether held physically or virtually, please make sure you attend.”


icapital.biz berhad 1Q21 report – commentary by fund manager

“Graham delivered the silver bullet of investing when he said the three most important words in investing philosophy are “margin of safety”.

Recognising that it is essentially impossible to pinpoint the precise intrinsic value of a business and that the best you can do is compute reasonable ranges of value based on reasonable assumptions, Graham thought you should give yourself a break by making sure the price you pay is way lower than the low end of your valuation estimate.

Graham said the margin of safety principle ultimately served as the touchstone in distinguishing between investing and speculation. Those who deny the difference between price and value or fail to get a margin of safety take their seats at the roulette wheel. Place your bets!”


How to Think Like Benjamin Graham and Invest Like Warren Buffett – by Lawrence Cunningham

“The flexibility of institutional investors is frequently limited by a self-imposed requirement to be fully invested at all times.

Remaining fully invested at all times certainly simplifies the investment task. The investor simply chooses the best available investments. Relative attractiveness becomes the only investment yardstick; no absolute standard is to be met.

Unfortunately the important criterion of investment merit is obscured or lost when substandard investments are acquired solely to remain fully invested.

Such investments will at best generate mediocre returns; at worst they entail both a high opportunity cost – foregoing the next good opportunity to invest – and the risk of appreciable loss.

Remaining fully invested at all times is consistent with a relative-performance orientation. If one’s goal is to beat the market (particularly on a short-term basis) without falling significantly behind, it makes sense to remain 100 percent invested.

Funds that would otherwise be idle must be invested in the market in order not to underperform the market. Absolute performance oriented investors, by contrast, will buy only when investments meet absolute standards of value.

They will choose to be fully invested only when available opportunities are both sufficient in number and compelling in attractiveness, preferring to remain less than fully invested when both conditions are not met”


Margin of Safety: Risk-averse Value Investing Strategies for the Thoughtful Investor – by Seth Klarman

“The primary investment objective of icapital.biz is long-term capital appreciation of its investments.

icapital.biz will select companies where there is a disparity between the company’s market price (in the case of listed securities) and selling price (in the case of unlisted securities) and underlying business values over the medium to long-term.

icapital.biz may also invest in cash deposits and/or in short-term obligations in order to have funds available for general corporate purposes. It may also maintain such cash deposits for defensive purposes or to enable it to take advantage of buying opportunities.

The primary asset that icapital.biz will be investing in will be equities listed on Bursa Securities. Theoretically, the asset allocation can range from 0% equities to 100% equities.

The actual asset allocation of icapital.biz’s investments is a function of its value investment philosophy that is based on two (2) factors, the valuation of the company and its share price.

When the market is undervalued and there are many investment opportunities whereby companies are trading below their valuation, icapital.biz may invest as much as 95% of its assets in equities with the balance in cash and/or near cash assets.

Likewise, if the market is overvalued and there are minimal investment opportunities, icapital.biz’s asset allocation would have a lesser bias towards equities and can go as low as 10-20% for example. The balance 80-90% will be in cash and/or near cash assets.

However, it should be highlighted that certain levels of cash and/or near cash assets will be maintained in order for icapital.biz to have funds available for general corporate purposes, defensive purposes and/or to enable it to take advantage of buying opportunities”


icapital.biz Berhad Prospectus

“Outstanding investors, in my opinion, are distinguished at least as much for their ability to control risk as they are for generating return.

High absolute return is much more recognizable and titillating than superior risk adjusted performance. That’s why it’s high-returning investors who get their pictures in the papers.

Since it’s hard to gauge risk and risk-adjusted performance (even after the fact), and since the importance of managing risk is widely underappreciated, investors rarely gain recognition for having done a great job in this regard.

That’s especially true in good times.

But in my opinion, great investors are those who take risks that are less than commensurate with the returns they earn. They may produce moderate returns with low risk, or high returns with moderate risk.

But achieving high returns with high risk means very little – unless you can do it for many years, in which case that perceived “high risk” either wasn’t really high or was exceptionally well managed.

Consider the investors who are recognized for doing a great job, people such as Warren Buffett, Peter Lynch, Bill Miller and Julian Robertson.

In general their records are remarkable because of their decades of consistency and absence of disasters, not just their high returns. Each may have had a bad year or two, but in general they dealt as well with risk as with return.”


The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor – by Howard Marks

“It is unquestionably true that the investment companies have their money more conventionally invested than we do. To many people conventionality is indistinguishable from conservatism. In my view, this represents erroneous thinking. Neither a conventional nor an unconventional approach, per se, is conservative.

Truly conservative actions arise from intelligent hypotheses, correct facts and sound reasoning. These qualities may lead to conventional acts, but there have been many times when they have led to unorthodoxy. In some corner of the world they are probably still holding regular meetings of the Flat Earth Society.

We derive no comfort because important people, vocal people, or great numbers of people agree with us. Nor do we derive comfort if they don’t. A public opinion poll is not substitute for thought.

When we really sit back with a smile on our face is when we run into a situation we can understand, where the facts are ascertainable and clear, and the course of action obvious. In that case – whether conventional or unconventional – whether others agree or disagree – we feel – we are progressing in a conservative manner.”


Buffett Partnership 1965 Letter – Warren E. Buffett

“I never want to pay above intrinsic value for stock – with very rare exceptions where someone like Warren Buffett is in charge.

There are people – very few – worth paying up a bit to get in with for a long-term advantage.

The investment game always involves considering both quality and price, and the trick is to get more quality than you pay for in price. It's just that simple.”


Damn Right! Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger – by Janet Lowe

“At all times, you have to be asking yourself the question “What is the business worth?” and “What is the intrinsic value of the business?”

Charlie Munger expressed it really well when he said that they made most of their money going long on a few great businesses.

Buffett has ventured into all kinds of derivatives or pair trades, or shorting etc. but clearly he has made most of his money by being long on great businesses.

It is so much easier temperamentally to go long on a business. I generally don’t look at the market until several hours of the trading day have passed.

The temperament or patience comes in part from the way we are wired or the way we can learn, or not learn, from Ben Graham, Warren Buffett, etc.

Warren Buffett has said many times that people either get value investing in five minutes or they won’t get it in five years.

There is something in the human wiring of our brain that, for some of us, makes all the difference in the world right away and the patience that it requires is part of that wiring process.

For others, they may buy into the concept completely, but they temperamentally just don’t have the patience.”


Columbia Business School, Graham and Doddsville Investment Newsletter, Volume II, Issue 2, Summer/Fall 2008 – Mohnish Pabrai

“In good times, far too many people can be overheard saying, “Riskier investments provide higher returns. If you want to make more money, the answer is to take more risk.”

But riskier investments absolutely cannot be counted on to deliver higher returns. Why not? It’s simple: if riskier investments reliably produced higher returns, they wouldn’t be riskier!

No, I’m sure “risk” is – first and foremost – the likelihood of losing money.

The intelligent acceptance of recognized risk for profit underlies some of the wisest, most profitable investments. When you boil it down, it’s the investor’s job to intelligently bear risk for profit.

That’s it: the intelligent bearing of risk for profit, the best test for which is a record of repeated success over a long period of time.”


Oaktree Capital January 2006 Memo – by Howard Marks

“Based on Capital Dynamics’ time-tested bamboo value investing, we have successfully managed icapital.biz Berhad through this sudden and unprecedented crisis. While many businesses and investors have suffered severe or complete losses, icapital.biz Berhad is in excellent condition.

Since the pandemic broke out, we have been gradually increasing your Fund’s investment to position it for the longer term. While the KLCI has rebounded nearly 400 points from its low in March 2020, a substantial portion of this came from just 2 glove stocks. Most importantly we need to be mindful of what we are dealing with.

As this year’s AGM approaches, shareowners should watch out for a new round of negative comments on your Fund in the social media.

Please be aware of this and not be misled. “Lies, damned lies, and statistics” is a phrase describing the persuasive power of numbers, particularly the use of statistics to bolster weak or false arguments.

In the case of icapital.biz Berhad, a listed closed end fund, it is important that shareowners should be able to distinguish a “stock” concept from a “flow” concept. Items in a profit and loss statement are flow concepts while those in a balance sheet are stock concepts.

For example, an editor of a local financial publication was sued by me for defamation, when the said person misleadingly compared an item in your Fund’s profit and loss statement with another item in the said profit and loss statement when it should have been compared with items in your Fund’s balance sheet.

If you want more information, please email me at enquiries@cdam.biz”

icapital.biz berhad 4Q20 report – commentary by fund manager