“My continual objective in managing partnership funds is to achieve a long-term performance record superior to the Industrial Average.

I believe this Average, over a period of years, will more or less parallel the results of leading investment companies. Unless we do achieve this superior performance there is no reason for existence of the partnerships.

However, I have pointed out that any superior record which we might accomplish should not be expected to be evidenced by a relatively constant advantage in performance compared to the Average.

Rather it is likely that if such an advantage is achieved, it will be through better than average performance in stable or declining markets and average, or perhaps even poorer than average performance in rising markets.

I would consider a year in which we declined 15% and the Average 30% to be much superior to a year when both we and the Average advanced 20%. Over a period of time there are going to be good and bad years; there is nothing to be gained by getting enthused or depressed about the sequence in which they occur.

The important thing is to be beating par; a four on a par three hole is not as good as a five on a par five hole and it is unrealistic to assume we are not going to have our share of both par three’s and par five’s.”


Buffett Partnership 1960 Letter – Warren E. Buffett

“I want to make clear the important distinction between risk control and risk avoidance. Risk control is the best route to loss avoidance. Risk avoidance, on the other hand, is likely to lead to return avoidance as well. Risk control has nothing to do with risk avoidance.

The road to long-term investment success runs through risk control more than through aggressiveness. Over a full career, most investors’ results will be determined by how many losers they have, and how bad they are, than by the greatness of their winners.

Skillful risk control is the mark of the superior investor”


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

“Value investing is an intellectual discipline, but it may be that the qualities essential for success are less mental than temperamental. First, a value investor has to be aware of the limits of his or her competence. You have to know what you know and be able to distinguish genuine understanding from mere general competence.

Second, value investing demands patience. You are not compelled to act until that bargain is available. In Warren Buffett’s useful analogy, investing is like batting without called strikes. You can take as many pitches as you want until you spot the one you like. Then you swing, and if you have done the analysis intelligently, your chances of success are high.

Patience is also necessary after the securities are bought. Even if you are correct about the intrinsic value, it generally takes time for the rest of the market to come around. After all, you bought it because it was out of favor. The market’s estimate of its worth does not change overnight.

A value investor needs to be able to sit still. Sitting still need not mean doing nothing”


Value Investing: From Graham to Buffett and Beyond – by Bruce Greenwald, Judd Kahn, Paul Sonkin and Michael Biema

“Since the whole subject of compounding has such a crass ring to it, I will attempt to introduce a little class into this discussion by turning to the art world. Francis I of France paid 4,000 ecus in 1540 for Leonardo da Vinci’s Mona Lisa. On the off chance that a few of you have not kept track of the fluctuations of the ecu 4,000 converted out to about $20,000.

If Francis had kept his feet on the ground and he (and his trustees) had been able to find a 6% after-tax investment, the estate now would be worth something over $1,000,000,000,000,000.00. That’s $1 quadrillion or over 3,000 times the present national debt, all from 6%. I trust this will end all discussion in our household about any purchase or paintings qualifying as an investment.”


Buffett Partnership, Ltd. 1964 Letter – Warren E. Buffett

“Perseverance at even relatively modest rates of return is of the utmost importance in compounding your net worth. A corollary to the importance of compounding is that it is very difficult to recover from even one large loss, which could literally destroy all at once the beneficial effects of many years of investment success.

In other words, an investor is more likely to do well by achieving consistently good returns with limited downside risk than by achieving volatile and sometimes even spectacular gains but with considerable risk of principal.

An investor who earns 16 percent annual returns over a decade, for example, will, perhaps surprisingly, end up with more money than an investor who earns 20 percent a year for nine years and then loses 15 percent the tenth year.

One of the recurrent themes of this book is that the future is unpredictable. No one knows whether the economy will shrink or grow (or how fast), what the rate of inflation will be, and whether interest rates and share prices will rise or fall.

Investors intent on avoiding loss consequently must position themselves to survive and even prosper under any circumstances.”


Margin of Safety: Risk Averse Value Investing Strategies for the Thoughtful Investor by Seth A. Klarman

“The big question about how people behave is whether they’ve got an Inner Scorecard or an Outer Scorecard. It helps if you can be satisfied with an Inner Scorecard. I always pose it this way. I say:

“Lookit. Would you rather be the world’s greatest lover, but have everyone think you’re the world’s worst lover? Or would you rather be the world’s worst lover but have everyone think you’re the world’s greatest lover?”

Now, that’s an interesting question. Here’s another one:

“If the world couldn’t see your results, would you rather be thought of as the world’s greatest investor but in reality have the world’s worst record? Or be thought of as the world’s worst investor when you were actually the best?”

In teaching your kids, I think the lesson they’re learning at a very, very early age is what their parents put the emphasis on. If all the emphasis is on what the world’s going to think about you, forgetting about how you really behave, you’ll wind up with an Outer Scorecard. Now my dad: He was a hundred percent Inner Scorecard guy.

He was really a maverick. But he wasn’t a maverick for the sake of being a maverick. He just didn’t care what other people thought. My dad taught me how life should be lived. I’ve never seen anybody quite like him”

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

“When Benjamin Graham wrote his investment classic “Security Analysis” in 1934, it was during the depths of the 1929 Great Depression, when US unemployment rate hit 25% and when so many business and banking enterprises were closing down so rapidly the economic landscape resembled a cascade of dominoes.

However, the Great Depression was not just a remote abstraction to Graham. Few people know that Graham was financially ruined by the 1929 stock market crash. One of the key lessons from “Security Analysis” is Graham’s subsequent near obsession with the financial and balance sheet strength of a company.

His very hard-earned lessons from the Great Depression are so timely in the current Covid-19 collapse. Witness the woes faced by stalwarts like Singapore Airlines, Boeing and many more.“


icapital.biz berhad 3Q20 report – commentary by fund manager

“This is an amazingly sound place. We are more disaster-resistant than most other places. We haven’t pushed it as hard as other people would have pushed it.

I don’t want to go back to Go.

I have been to Go. A lot of our shareholders have a majority of their net worth in Berkshire, and they don’t want to go back to Go either”


Wesco Financial Corporation 2001 Annual Shareholders Meeting – Charlie Munger

“There is a deep-seated part of me that can never quite let go of the idea that money is a matter of survival. This is simply part of my wiring. Intellectually, I see the abundant benefits of viewing the stock market as a game – and I have no doubt improved as an investor by taking this more playful approach.

But I also know that my shareholders’ life savings are on the line.

So investing may be a game, but for me, it’s a deadly serious game.”


The Education of a Value Investor: My Transformative Quest for Wealth, Wisdom and Enlightenment – Guy Spier

“I’m not recommending that people buy stocks today or tomorrow or next week or next month. I think it all depends on your circumstances, but you shouldn’t buy stocks unless you expect, in my view, you expect to hold them for a very extended period and you are prepared financially and psychologically to hold them, the same way you would hold a farm and never look at a quote.

You’ve got to be prepared when you buy a stock to have it go down 50% or more and be comfortable with it, as long as you’re comfortable with the holding. There had been three times in Berkshire’s history when the price of Berkshire stock went down 50%. Three different times. Now if you hold it on borrowed money, you could have been cleaned out. There wasn’t anything wrong with Berkshire when those three times occurred.

But if you’re going to look at the price of the stock and think that you have to act because it’s doing this or that, or somebody else tells you, “How can you stay with that,” when something else is going up or anything, you’ve got to be in the right psychological position, and frankly, some people are not really careful. Some people are more subject to fear than others.

If they can’t handle it psychologically, then you really shouldn’t own stocks, because you’re going to buy and sell them at the wrong time. And you should not count on somebody else telling you this. You should do something you understand yourself. If you don’t understand it yourself, you’re going to be affected by the next person you talk to.

And so you should be in a position to hold, and I don’t know whether today is a great day to buy stocks. I know it will work out over 20 or 30 years. I don’t know whether it’ll work out over two years at all. I have no idea whether you’ll be ahead or behind on a stock you buy on Monday morning, or the market.”

Berkshire Hathaway 2020 Annual Shareholders Meeting – Warren Buffett

To be successful, one needs to recognize that mistakes will be made. Investors are after all only human. The strategy then should be to reduce the mistakes or at least reduce the impact these mistakes would have on one’s investments. Another way a value investor expresses their humility is by holding cash – lots of it in fact – when there is nothing attractive to invest in.

If there are not enough securities to fill out a portfolio that meet value investing criteria, the answer is simply to hold cash until such securities can be found. To be sure, holding cash is not the ultimate aim of a value investors; it is a byproduct of the value investing process where humility is a huge part of its risk management. Cash is the heart and blood of businesses.

Cash and liquidity are much more important to a firm’s survival than earnings or profitability. Cash serves a similar purpose from an investor’s or a portfolio manager’s standpoint. Cash is the most vital raw material for an investor. As Tan Teng Boo has previously shared, holding cash is like holding a very valuable option, except that it is one with no expiry date. The value of an option depends on its expiry date, amongst other factors. The longer the expiry date, the more valuable the option becomes.

An option has a fixed conversion price. With cash, it is the investor or the fund manager who decides what the conversion price will be. Since a value investor will buy only at an attractive price, the value of the option or cash goes up. In summary, whether one is managing a business or managing a portfolio, it is a privilege to have a strong balance sheet now, one that is especially filled with cash.

Although icapital.biz Berhad has been buying more shares since its last quarterly report for 30th Nov 2019, it still has plenty of cash or balance sheet strength. Meanwhile, many investors have lost money in the Covid-19 market crash.

This is why we have intentionally written on icapital.biz Berhad in a different way so that its true intrinsic value can be appreciated. In the above pages, we have written on the Covid-19 pandemic, humility, cash, value investing and more in relation to icapital.biz Berhad.

If after reading these pages, you understand and agree with the key investing messages, then, icapital.biz Berhad is most suitable for you.”


icapital.biz stock selection – icapital Volume 31 Number 36, 14 May – 20 May 2020

“The popular market adage buy low, sell high refers to buying a stock when its share price is low and selling when its share price is high. The ability to buy low and sell high defined in this manner demands that an investor be able to identify or predict when the share price will hit bottom and when the share price will reach its peak.

Such a method is commonly called market timing: that is, investors time the stock market by aiming to buy low (when the index or stock price is low in absolute terms) and aiming to sell high (also in absolute terms). Instead of buying low and selling high, investors often end up doing the precise opposite and losing their hard earned savings. Why?

The most dangerous time to invest is when the stock market is crowded with investors, when investors chase stock prices or buy high, hoping to sell higher. Why do they do this? Because they feel safe in doing so. There is this strange comfort in the fact that everyone else is doing the same and they do not want to miss the boat.

Buy low sell high does not work consistently because it is very difficult to predict a market trend, a company’s earnings or a country’s GDP accurately on a consistent basis. If timing the stock or market could be done accurately on a consistent basis, people like the CEO of Capital Dynamics would be free to sit in front of the monitor and trade profitably; there would be no need to work so hard and conduct all that research and analysis.

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

Those who think that investing successfully is all about buying low and selling high are deeply ignorant about what it takes to be a successful long-term investor. In contrast, value investing succeeds mainly because it demands the humble acceptance of human fallibility.

The problem with trying to time the market is that one needs to right twice – to buy and sell correctly. If the probability of buying correctly is 70% (a very high chance) and the probability of selling correctly is also 70% then the probability of your investment being profitable is only 49%. These are odds worse than when you toss a coin.

What many investors do no grasp when timing the market and what many successful value investors appreciate about investing is the simple arithmetic of investing/trading. The simple arithmetic of investing or trading means that a 50% loss can totally wipe out a 100% gain and a slightly higher 67% loss can devastate a whopping 200% gain. The chances of a 50% loss are much higher than the chances of a 100% profit. Investing is unfair, just like life is unfair.

This asymmetrical nature of investing or trading is often overlooked or not well understood by investors who buy low sell high and time stocks or the market. Warren Buffett expressed it more humorously: ”We continue to make more money when snoring than when active”. To be sure, value investors are not lazy investors; they actually work pretty damn hard. They are critically self honest and humbly admit that it is impossible to time the market to perfection.

The humble philosophy underlying value investing is that investors need to have a margin of safety in order to deal with unexpected events and one’s own human errors. This is why a value investor will buy a stock or business only when its market price is below its intrinsic value, the difference being the margin of safety created. (continued below)

“People bring the attitude to them too often that because stocks are liquid and quoted minute by minute that it’s important that you develop an opinion on them minute by minute. Now, that’s really foolish when you think about it. And that’s something Graham taught me in 1949, I mean, that single thought, that stocks were parts of businesses and not just little things that moved around on charts.

If you really had a farm, and you had this neighbor, and one day he offered you $2,000 an acre, and the next day he offers you $1,200 an acre, and maybe the day after that he offers you $800 an acre, are you really going to feel that at $2,000 an acre when you had evaluated what the farm would produce, are you going to let this guy drive you into thinking, “I better sell because this number keeps coming in lower all the time”?

It’s a very, very, very important matter to bring the right psychological approach to owning common stocks.

If you bought into a business, it’s going to deliver what the business produces. And the idea that you’re going to outsmart the person next to you, or the person advising you can outsmart the person sitting next to you is, well, it’s really the wrong approach”

Berkshire Hathaway 2020 Annual Shareholders Meeting – Warren Buffett

“One of the greatest stock market writers and thinkers, Benjamin Graham, put it this way. Imagine that you are partners in the ownership of a business with a crazy guy named Mr. Market. Mr. Market is subject to wild mood swings.

Each day he offers to buy your share of the business or sell you his share of the business at a particular price. Mr. Market always leaves the decision completely to you, and every day you have three choices.

You can sell yours shares to Mr. Market at his stated price,

You buy Mr. Market’s shares at that same price,

Or you can do nothing.

Sometimes Mr. Market is in such a good mood that he names a price that is much higher than the true worth of the business. On those days, it would probably make sense for you to sell Mr. Market your share of the business.

On other days, he is in such a poor mood that he names a very low price for the business. On those days, you might want to take advantage of Mr. Market’s crazy offer to sell you shares at such a low price and to buy Mr. Market’s share of the business.

If the price named by Mr. Market is neither very high nor extraordinarily low relative to the value of the business, you might very logically choose to do nothing.

In the world of the stock market, that’s exactly how it works.”


The Little Book That Beats The Market by Joel Greenblatt

“Over the past six years we have always maintained a strong financial position. Our experience in 1990/91, when our financial position was less strong, has only underlined the importance of this objective.

We will always sacrifice return if it endangers our financial health.

It is interesting to observe the dramatic collapses of Campeau and First City Financial – both companies with track records extending over 20 years.

Campeau’s common shareholders’ equity, built over 19 years to $141 million in 1986, turned negative in only 12 months due to losses of $254 million in 1987.

First City’s demise was much less predictable although equally dramatic. Shareholders’ equity, again built over 21 years to $465 million in 1989, turned negative in only 18 months due to cumulative losses of $549 million.

While we are very conscious of these failures and others like them that stem from financial excess, please remember that as Warren Buffett commented about Noah, building arks counts, not predicting rain”

Fairfax Financial Holdings 1991 Annual Report – Annual Letter by Chairman and CEO V. Prem Watsa

“The investor with a portfolio of sound stocks should expect their prices to fluctuate and should neither be concerned by sizeable declines nor become excited by sizeable advances.

He should always remember that market quotations are there for his convenience, either to be taken advantage of or to be ignored. He should never buy a stock because it has gone up or sell because it has gone down.

He would not be far wrong if this motto read more simply: “Never buy a stock immediately after a substantial rise of sell one immediately after a substantial drop””

The Intelligent Investor by Benjamin Graham

“Graham and Dodd have been ignored by those who suffer from the misconception that trying to make serious money requires that one take serious risks. In fact, the converse is true.

Avoiding serious loss is a precondition for sustaining high compounded rate of growth.

In 25 years as a financial journalist, virtually all of the investors of this writer’s acquaintance who have consistently earned superior profits have been Graham-and-Dodders. The most famous, of course, is Warren Buffett.

Security Analysis is the bible for avoiding icy patches and an instruction manual for identifying investments that are superior as well as safe.

It took Graham 20 years – which is to say, a complete cycle from the bull market of the Roaring Twenties through the dark, nearly ruinous days of the early 1930s – to refine his investment philosophy into a discipline that was as rigorous as the Euclidean theorems he had studied in college.”

Security Analysis (6th edition) by Benjamin Graham and David Dodd: Introduction to Pat 1 “The Essential Lessons” by Roger Lowenstein.

“Value investing, today as in the era of Graham and Dodd, is the practice of purchasing securities or assets for less than they are worth – the proverbial dollar for 50 cents. Investing in bargain-priced securities provides a “margin of safety” – room for error, imprecision, bad luck, or the vicissitudes of the economy and stock market.

While some might mistakenly consider value investing a mechanical tool for identifying bargains, it is actually a comprehensive investment philosophy that emphasizes the need to perform in-depth fundamental analysis, pursue long-term results, limit risk, and resist crowd psychology.

Far too many people approach the stock market with a focus on making money quickly.

Such an orientation involves speculation rather than investment and is based on the hope that share prices will rise irrespective of valuation. Speculators generally regard stocks as pieces of paper to be quickly traded back and forth, foolishly decoupling them from business reality and valuation criteria.

Speculative approaches – which pay little or no attention to downside risk – are especially popular in rising markets. In heady times, few are sufficiently disciplined to maintain strict standards of valuation and risk aversion, especially when most of those abandoning such standards are quickly getting rich.

After all, it is easy to confuse genius with a bull market”

Security Analysis (Sixth Edition) by Benjamin Graham and David Dodd: Preface to Sixth Edition “The Timeless Wisdom of Graham and Dodd” by Seth Klarman.

“Warren Buffett’s business partner and vice chairman of Berkshire Hathaway, Charlie Munger, uses horse racing’s pari mutuel betting system as one of his mental models when approaching investing in the stock market. Unlike a casino, in horse racing you are betting against other bettors. The house takes a flat 17% of the total amount wagered. Frictional costs, relative to the stock market, are very high. According to Munger:

To us, investing is equivalent of going out and betting against the pari-mutuel system. We look for the horse with one chance in two of winning which pays you three to one. You’re looking for a mispriced gamble. That’s what investing is. And you have to know enough to know whether the gamble is mispriced. That’s value investing (Charlie Munger)

To be a consistent winner at the race track, a person has to overcome the staggering 17% frictional cost of placing a bet. According to Munger, there are actually a few people who are able to make a living by betting at the race track after paying the full 17%. These folks watch all the horses and races, yet place no bets. Then, when they encounter widely misplaced odds (in their favor) on a horse about which they know a great deal, they bet heavily on that one horse in that one race. After that, they go back to watching the horses and races indefinitely with no bets placed until another good opportunity shows up”

Source: The Dhando Investor – The Low Risk Value Method to High Returns (2007) by Mohnish Pabrai

“In large part, companies obtain the shareholder constituency that they seek and deserve. If they focus their thinking and communications on short-term results or short-term stock market consequences they will, in large part, attract shareholders who focus on the same factors. And if they are cynical in their treatment of investors, eventually that cynicism is highly likely to be returned by the investment community.

Phil Fisher, a respected investor and author, once likened the policies of the corporation in attracting shareholders to those of a restaurant attracting potential customers. A restaurant could seek a given clientele - patrons of fast foods, elegant dining, Oriental food, etc. - and eventually obtain an appropriate group of devotees. If the job were expertly done, that clientele, pleased with the service, menu, and price level offered, would return consistently.

But the restaurant could not change its character constantly and end up with a happy and stable clientele. If the business vacillated between French cuisine and take-out chicken, the result would be a revolving door of confused and dissatisfied customers.

So it is with corporations and the shareholder constituency they seek. You can’t be all things to all men, simultaneously seeking different owners whose primary interests run from high current yield to long-term capital growth to stock market pyrotechnics, etc.

The reasoning of managements that seek large trading activity in their shares puzzles us. In effect, such managements are saying that they want a good many of the existing clientele continually to desert them in favor of new ones - because you can’t add lots of new owners (with new expectations) without losing lots of former owners. We much prefer owners who like our service and menu and who return year after year.

It would be hard to find a better group to sit in the Berkshire Hathaway shareholder “seats” than those already occupying them. So we hope to continue to have a very low turnover among our owners, reflecting a constituency that understands our operation, approves of our policies, and shares our expectations. And we hope to deliver on those expectations.”

Source: Berkshire Hathaway Annual Letter (1979) by Warren Buffett

“Our goal is to attract long-term owners who, at the time of purchase, have no timetable or price target for sale but plan instead to stay with us indefinitely. We don’t understand the CEO who wants lots of stock activity, for that can be achieved only if many of his owners are constantly exiting. At what other organization - school, club, church, etc. - do leaders cheer when members leave? (However, if there were a broker whose livelihood depended upon the membership turnover in such organizations, you could be sure that there would be at least one proponent of activity, as in: “There hasn’t been much going on in Christianity for a while; maybe we should switch to Buddhism next week.“)”

Source: Berkshire Hathaway Annual Letter (1988) by Warren Buffett

“Dangerous lessons are being learned by many investors. Warren Buffett has pointed out that legitimate theories frequently lie at the root of financial excesses; good ideas are simply carried too far. Today, virtually everyone knows that over the long-run, stocks will outperform other investment alternatives. Of course, almost no one thought of this as the market made cyclical lows in 1974 and 1982.

So after a record-setting thirteen year bull market, proponents of this viewpoint are ignoring the high price they must now pay to purchase equities. Another dangerous notions is that dips in the market always represent buying opportunities. The true investment challenge is to perform well in difficult times. It is unfortunately not possible to reliably predict when those times might be.

The cost of performing well in bad times can be relative underperformance in good times. We have always judged that a worthwhile price to pay.”

Source: The Baupost Group Inc. December 1995 Letter – Seth Klarman

“Our equity-investing strategy remains little changed from what it was fifteen years ago, when we said in the 1977 annual report: "We select our marketable equity securities in much the way we would evaluate a business for acquisition in its entirety. We want the business to be one (a) that we can understand; (b) with favorable long-term prospects; (c) operated by honest and competent people; and (d) available at a very attractive price." We have seen cause to make only one change in this creed: Because of both market conditions and our size, we now substitute "an attractive price" for "a very attractive price."

But how, you will ask, does one decide what's "attractive"? In answering this question, most analysts feel they must choose between two approaches customarily thought to be in opposition: "value" and "growth." Indeed, many investment professionals see any mixing of the two terms as a form of intellectual cross-dressing.

We view that as fuzzy thinking (in which, it must be confessed, I myself engaged some years ago). In our opinion, the two approaches are joined at the hip: Growth is always a component in the calculation of value, constituting a variable whose importance can range from negligible to enormous and whose impact can be negative as well as positive.

In addition, we think the very term "value investing" is redundant. What is "investing" if it is not the act of seeking value at least sufficient to justify the amount paid? Consciously paying more for a stock than its calculated value - in the hope that it can soon be sold for a still-higher price - should be labeled speculation (which is neither illegal, immoral nor - in our view - financially fattening).”

Source: Berkshire Hathaway Annual Letter (1992) by Warren Buffett

“My final lesson was perhaps the most important one, because it has applied again and again throughout my life. At first, it seemed to me that I faced an all or nothing choice: I could either take on a lot of risk in pursuit of high returns (and occasionally find myself ruined) or I could lower my risk and settle for lower returns.

But I needed to have both low risk and high returns, and by setting out on a mission to discover how I could, I learned to go slowly when faced with the choice between two things that you need that are seemingly at odds.

That way you can figure out how to have as much of both as possible. There is almost always a good path that you just haven’t discovered yet, so look for it until you find it rather than settle for the choice that is then apparent to you”

Source: Principles (2017) by Ray Dalio

“Yellowstone represents just one of the many ugly outlying events that have an extremely low probability of occurring, but that does not mean that the odds are zero or that they can be ignored. Even the most seemingly resilient businesses, by their very nature, are very fragile temporary creations.

Minimising downside risk is the first step toward becoming a successful investor. As Warren Buffett succinctly puts it: “Rule Number 1, Never Lose Money. Rule Number 2, Never Forget Rule Number 1”.

Whenever I look at any investment opportunity, I first fixate on what factors can cause the investment to result in a significant permanent lost of capital”

Source: Mosaic: Perspectives on Investing (2004) by Mohnish Pabrai

“There is nothing esoteric about value investing. It is simply the process of determining the value underlying a security and then buying it at a considerable discount from that value. It is really that simple. The greatest challenge is maintaining the requisite patience and discipline to buy only when prices are attractive and to sell when they are not, avoiding the short-term performance frenzy that engulfs most market participants.

The focus of most investors differs that from value investors. Most investors are primarily oriented towards return, how much they can make, and pay little attention to risk, how much they can lose.

Value investors have as a primary goal the preservation of their capital. It follows that value investors seek a margin of safety, allowing room for imprecision, bad luck, or analytical error in order to avoid sizable losses over time. A margin of safety is necessary because valuation is an imprecise art, the future is unpredictable, and investors are human and do make mistakes. It is adherence to the concept of margin of safety that best distinguishes value investors from all others, who are not as concerned about loss.

The most beneficial time to be a value investor is when the market is falling. This is when downside risk matters and when investors who worried only about what could go right suffer the consequences of undue optimism. Value investors invest with a margin of safety that protects them form large losses in declining markets.

The value discipline seems simple enough but is apparently a difficult one for most investors to grasp or adhere to. As Buffett has often observed, value investing is not a concept that can be learned and applied gradually over time. It is either absorbed and adopted at once, or it is never truly learned”

Source: Page 11-12 of “Margin of Safety: Risk-averse Value Investing Strategies for the Thoughtful Investor” by Seth Klarman

“Intelligent investing is not complex, though that is far from saying that it is easy. What an investor needs is the ability to correctly evaluate selected businesses. Note that word "selected": You don't have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.

To invest successfully, you need not understand beta, efficient markets, modern portfolio theory, option pricing or emerging markets. You may, in fact, be better off knowing nothing of these. That, of course, is not the prevailing view at most business schools, whose finance curriculum tends to be dominated by such subjects. In our view, though, investment students need only two well-taught courses - How to Value a Business, and How to Think About Market Prices.

Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily-understandable business whose earnings are virtually certain to be materially higher five, ten and twenty years from now. Over time, you will find only a few companies that meet these standards - so when you see one that qualifies, you should buy a meaningful amount of stock.

You must also resist the temptation to stray from your guidelines: If you aren't willing to own a stock for ten years, don't even think about owning it for ten minutes” - Warren Buffett

Source: https://www.berkshirehathaway.com (1996 Annual Report)

On page 52 of Poor Charlie’s Almanack – The Wit and Wisdom of Charles T. Munger (Expanded Third Edition): “Our experience tends to confirm a long-held notion that being prepared, on a few occasions in a lifetime, to act promptly in scale, in doing some simple and logical things, will often dramatically improve the financial results of that lifetime… a few major opportunities, clearly recognizable as such, will usually come to one who continuously searches and waits, with a curious mind that loves diagnosis involving multiple variables… and then all that is required is a willingness to bet heavily when the odds are extremely favorable, using resources available as a result of prudence and patience in the past”

“A wise man told me not to argue with fools, because people from a distance don’t know who is who”. As per iCAP’s 2Q20 Note Commentary (Note B3):

“Linked to value investing is some simple arithmetic of investing principles. Probability is about chances. What are the chances of you getting a head when you toss a coin? What are the chances of you making a right or wrong investment when you buy ABC Berhad? Investing is about earning a superior rate of compound return. If you invest RM1 mln now and earned a compound return of 20% per annum, you would have RM15.4 mln after 15 years. If you aim at a 30% compound return, you would get RM51.18 mln after 15 years. And if you are a bit greedier and aim at a 99% annual compound return, you would be worth RM30.39 bln after 15 years.

If you think you can achieve a compound return of 99% or just 20%, ask yourself this simple but vital question: what is the probability of you getting that rate of return? Compound return has a twin brother that people always ignore – compound loss. Sadly, many investors actually experience compound loss instead of compound return. At a compound loss of 20% each time, your RM1 mln will be worth only RM209K after 8 times of such losses. In recent time, there are many counters on KLSE that have lost more than 20%. What is the probability or chance that you will get hit by these stocks?

That is why many investors have lost money in the last 5 years or so. Say you read some blogs or analyst’s report and invested in Inari on 8 Jan 2018 at RM2.53. By 4 Jan 2019, Inari plunged 51.38% to RM1.23. For you to recover your losses, you have to earn a return of more than 105%. Even then, you have only recovered your losses; you have not earned any positive return. It only takes a 50% loss to wipe out your 100% gain. It only takes a 67% loss to wipe out your entire 200% gain. Think about this – what are the chances of you making a 50% loss versus making a 100% gain?

Investing is not symmetrical, and that is why it can be very unfair and why over a long period, most investors do not make any money from the stock market. Thanks to finance textbooks, investors are convinced that they need to take high risk to earn high return. Capital Dynamics looks for low risk, high return – why? Whenever an investor follows the high risk high return principle, the investor ends up getting no return; or worse, negative return. An investor does not get higher reward for taking higher risk. This brings us back to Warren Buffett’s two rules. The first rule is not to lose money. Why?

Because if an investor really understands probability, grasps the difficulties in getting a sustained rate of compound return and accepts the unfairness of the stock market, not losing money in the stock market is already an achievement. With the above, 2019 was another year of significant achievement for icapital.biz Berhad. In 2019, the NAV of icaptial.biz Berhad fell 1.26% and its share price fell 2.63%. In the same period, the KLCI dived 6.02%. Investors may not be aware that since 2014, the NAV and share price of icapital.biz Berhad have significant outperformed the KLCI except in 2018” - end.

It is true, what the wise do in the beginning, fools do in the end.

Funny that you quoted Munger and sit on your ass investing in the same sentence, because Munger is the ultimate practitioner of sit on your ass investing. As I have said in a previous post, Munger’s approach to investing makes ICAP look like it engages in one night stands. Munger goes for years without buying anything, only striking when the odds are overwhelmingly in his favor. This is why he is a billionaire. Read Poor Charlie’s Almanack (highly recommended!) and you’ll know what I am talking about.

A conventional fund manager will be under pressure to remain fully invested in the stock market in fear of falling behind, and if he/she fails, its okay, because everyone else was fully invested too. It takes a gutsy fund manager to look after the clients’ interests first. After all, behaving like everyone else is easy but standing out in doing the right thing is hard. This is what integrity is all about. You need to stick to your objective, which at the end of the day, is the most important rule to building long-term sustainable wealth: avoiding capital loss.

First, Buffett has two “t’s” i.e. Buffett. Second, ICAP beats the KLCI hands down whether in NAV or share price terms (http://www.icapital.my/track-record/nav-price-performance/). Third, if you think you can invest sustainably and grow wealth by going on this forum then there should be a lot more millionaires than millionhairs in Malaysia and the world – this is certainly not the case.

Fourth, again, ICAP’s prospectus clearly states that the cash can be 0 to 100% and as Warren Buffett said, cash is like a call option with no exercise date – meaning it is priceless. Added with what I have explained in previous post about what ICAP investors want, if you still don’t get it, then nevermind. Fifth, Warren Buffett dissolved his fund not because it didn’t perform. This was in the 1960s when he used the fund, including his own wealth, to acquire majority shares in Berkshire Hathaway – this is genesis.

Sixth, as I have said, Parkson and Boustead were sold for huge profits in the past – I will repeat what I wrote: “Whilst people point out Boustead and Parkson, they forget that in 2012/13 both were up by 50-100%+ (see ICAP’s 2013 annual report). Seem to also forget that the fund grew to RM450 mln because great returns were made over the years – Petdag, VADS, Lion Diversified, PIE, UMW, F&N, Integrax, Hai-O, Astro, United Malacca, PIE, Vitrox etc. were all sold at multiples over time. Selangor Properties is the most recent example“. Seventh, the fund is a capital appreciation fund – never has it said it would pay out dividend. Again, if you do not like it, there are other products out there.

Lastly, as I have said, why is ICAP the only CEF on the market for this long? Because it is not a product you would launch if you want to make lots and lots of money. Your management fee only goes up if your fund performs i.e. the wealth grows. In an open end, you can keep raising funds from people and not necessarily need to perform – make the fund bigger by marketing, and take the clip from loading fees when new money goes in and old money goes out. ICAP doesn’t charge performance fee and it doesn’t even make money from buying in and selling out. Malaysia is lucky to have a product such as this – those wise enough keep buying. What the wise do in the beginning, the fools do in the end.

As I have said many times before, you can always DIY. But if you want professional management, one that is consistent, transparent and performs – then ICAP is a fantastic hard to beat product – low management fee, no performance fee, no load buy in and selling out. As I have said before, if you think ICAP fees are terrible, then think about all the billions invested in mutual funds. If you think ICAP performance is terrible, then again, think about all the billions invested in mutual funds.

If you know Public Bank so well and want to put 100% of your assets into it – great. But not everyone does, and many have different requirements for their Fund Manager. What the majority of investors in ICAP want is a manager that is trust worthy, thinks long-term and is safe and consistent in his/her actions.

As I have said many times before, this is why London keeps losing every year at AGM and the majority vote for TTB. Furthermore, long-term investors keep adding to their holdings – as I mentioned, just look at the top 30 – most have been there since the beginning.

It is also not true that CEF always trade at a discount, evidenced by the thousands of CEFs that are available in UK, US and Australia. For ICAP, I have said also many times – why is it that the discount has persisted since London bought in?

It is true that TTB has kept a large amount of cash for some time – but if I was running a business and I do not have productive use for my cash, do I keep expanding my plant or do I wait for a low-risk high return opportunity?I would wait – and so would many shareholders in ICAP.

This may be difficult to understand, but it is why there are so few billionaires around that can keep it that way for a long time. It is why Warren Buffett has over US$120 bln in cash and keeps growing. Rule number one, don’t lose money – rule number two, remember rule number one. I am sure you know of at least one person who had it all and then lost everything overnight.

This is what ICAP is all about – long-term, sustainable wealth. If it is not for you, then that is okay. But it is for many others. By the way, now that a lot of counters have plunged, ICAP is buying – TTB spoke about this at the last AGM. So if you are not salty, then come to the next AGM, check out what’s in the portfolio, and watch London get beaten again.

Ahbah, no, I do not believe you give fair comments based on facts – it is only 2 post up of mine that I pointed out how the link you were referring to is flawed (the poster in the link can’t even count). Don’t misunderstand my thanking you as any form of endorsement of what you are posting – which in my view, is of low quality, not dissimilar to what Stockraider typically posts. In other words, no credibility.

Analysis I respect is one of high quality, well-reasoned and intelligent. This is why I said I read www.icapital.biz. This week’s main write-up is a great example, explaining in detail the most important rule of investing as espoused by Buffett – rule number 1, don’t lose money, rule number 2, remember rule number 1, and strong and sustainable performance of ICAP's fund manager over the long-term.

So many talk about compound gains, not many remember compound loss. As I said in my previous post, not many appreciate how hard it is to invest. This is due to unfair odds – it is hard to get 100% gain, but easy to get 50% loss. Most important of all is the consistency and integrity of the fund manager – it is not just about the performance, it is also about the sustainability of the performance.

So bearing all of this in mind, and to add to the fact of the open-end buy-in/exit business model which set the odds against investors even before the fund invests your money – is why ICAP is held and bought more and more by those with the long-term in mind.

The intention of London and many posters’ here are short-term. They are not the majority. If you follow and look closely at the Top 30 shareholder list in ICAP’s annual report, you will see that many investors that were there in the beginning (IPO) are still there today. They have, in fact, bought more over the years. This is why every year London votes lose, and will lose again in 2020.

ICAP is a product for those that believe has a very long-term view in building wealth. As I have said, intergenerational.

Ahbah, thanks for the compliment. Over the years, reading icapital.biz and learning how to do thorough research (learning how to learn) have taught me how to reduce exploration expenses. No short cuts in life. Not many appreciate how difficult it really is to invest successfully and sustainably over the longer-term. It doesn't have to be overly complicated either. https://www.youtube.com/watch?v=Kax8XnBU1ik

Ahbah your post talking about fees (https://klse.i3investor.com/blogs/general/134913.jsp) – that guy can’t even count “The size is $USD1.3b = RM5.5b. Note the Front load Fee is 5.5%, If you invest RM1m, you only get 94.5% of 1m = RM945000, RM5500 is the "entry fee”. Well, it is actually RM55,000 lol... it explains the quality of your arguments. Nevertheless, it supports my whole point about iCAP and closed end funds – there are no buy in or exit fees and in ICAP’s case, zero performance fee. So if you think ICAP’s 1.5% with no entry/exit fee and no performance fee is “bad”, then think about all the mutual funds out there.

I will repeat: this is why ICAP remains the only closed end fund on Bursa, because fund managers make way more from open-end funds, they don’t even have to perform, they just need the sales team to continue churn clients’ money – that is the business model. I and many others (that is, shareholders who continue to vote against London every year) am thankful that there is a product like ICAP on the market. As I said, if ICAP doesn’t suit you, then can DIY, or can go and buy other funds. It’s a free market.

Padini aside, don’t forget Petronas Dagangan, F&N, Integrax, P.I.E, Astro, VADS , Hai-O, KLK, and more that were sold for handsome profits. How else did RM140 mln grow to RM450 mln? And don’t forget, both Boustead and Parkson were multiples of its value in the past, for instance, in FY13, partial shares of Boustead and Parkson were sold for 106% and 260% gains respectively. See what I mean about transparency?

Furthermore, “investing is most intelligent when it is most businesslike” – true value investors don’t think about cutting losses (am looking at you Stockraider – cut and paste other people’s thoughts? Scared now to put out your own after multiple blunders?) – this is a trader’s mindset. Nothing wrong with it, if you believe in this strategy – then go put your money with a trader or be a trader yourself.

However, time and again, in numerous studies and evidence itself (Charlie Munger, Mohnish Pabrai, Seth Klarman, Warren Buffett etc.) – by far value investing has been proven superior. There may be periods where it underperforms – like the tech boom in the late 90’s and in more recent times (which is why Warren Buffett’s cash is now more than US$120 bln) – but it is time tested because it is conservative, it thinks more about the downside than the upside. Value investors do not think in 5 year terms – they think in intergenerational terms. Capital preservation is paramount. If you don’t like it, its okay – again, can go DIY and/or there are other funds out there – take your pick. As Enigmatic correctly pointed out, to each its own. No need to be jelly beans.

Lol you guys go round and round but still haven’t addressed what I said?

I cannot find performance track record or information on Dynaquest? I already explained both Areca and Pangolin before – I can see what Areca invest in (top 5) and am not comfortable with their holdings, it is not transparent either. And Pangolin invests internationally. Most importantly, as I said, 9%, I am comparing to over 100 registered funds, it is amongst the crème de la crème – so if it is bad, then the unit trust funds industry should be shut down entirely. Argue properly ladies.

Ahbah – clearly you are cherry picking on Boustead – but nevertheless, this is what is great about ICAP – you can actually see which holdings are not performing or didn’t succeed. Super transparent. And you can trace everything, all the way back to IPO. When you do that, you will see there are hardly any losers, and way more multibaggers. This is how RM140 mln became RM450 mln. It is not true that I can do this with any other fund as you claim – I can see top 5 or maybe top 10 – but there is no way that I can trace everything. Most don’t even bother giving performance since inception, a critical criteria to consider. Conversely, I can access everything from www.icapital.my and the annual report.

When it is this transparent, and I can see what companies that TTB buys, how he buys and its track record – for myself and others that continue to vote against London in every AGM, this is why we invest with ICAP. As I have said before, if you are not happy – then DIY, or invest in other funds. No need to envy.

By the way, opening a closed end fund doesn’t get you Ferrari or Lambo – opening an open end mutual fund, which relies on large entry and exit fees, high management fees and high performance fees – does.

If opening a close end fund can easily buy you a Ferrari or Lambo, why is it that ICAP remains the only closed end fund on the Bursa? Think please.

My mouth is hardly open – I think more than I talk. Something that you should seriously consider too, judging by your weak arguments. Learn from Stockraider – he has now taken my advice and have gone on a sabbatical.

Lol, seems like it’s been another salty week for you all.

If I go to www.icapital.my, I can see everything I need to know as an investor – I can see the performance, I can see the benchmark, I can see what has transpired in the past.

In fact, when I go through ICAP’s annual reports, I can track every single stock that ICAP has ever bought, how much each stock gained and even the few that made losses.

I cannot find any of this anywhere else, at any fund, even the one cheoky is talking about (actually I can't find much information on this recommendation?)

And when you think about it this way, no one in Malaysia is able to provide this. Is this simple enough for you?

Again, I have said – no fund – 9% performance, safe, transparent and so accessible. It is unmatched, and none of you, despite so many repeatable posts, have been able to prove me wrong.

Lets look at from another angle. You say ICAP is a poor product. There's probably over 100 registered funds in Malaysia. The majority not only have poor transparency (zero is as transparent as ICAP), they are also performing very poorly and most charge stupid fees. This is why you all can’t hardly find any – it has been months since I started this challenge.

So are you suggesting that all funds in Malaysia should be gotten rid of? Another factor to consider is, if you can do better, you wouldn’t be posting here very often and would be much busier (…. and have a life)

I have said it before and I will say it again. Each investor has the prerogative to invest with whoever they want, can even DIY – up to you. But what I, and many investors that invest with TTB for many years want is very simple – someone we trust, can perform, safe and transparent. ICAP ticks all the boxes. This is why we stick with him.

And that is also why, every single year, despite salty people like yourselves talking nonsense but trying to sound smart, shareholders vote against London. And you will see, in 2020, it will repeat. When that happens, you will still probably be in this forum, repeating the same thing.

It kinds of remind me of the flat-earthers – they just can’t seem to accept reality. Quite sad really.

And stockraider, seem to be repeating about stock buyback. As I have said, if it were to work, why is it that London bought +20% and discount still there? Since we are repeating like parrots, I will repeat also – why is it that the discount persist since London bought in 2011? Also, how about you respond to me pointing out how you completely failed in both counting (“2.5% fee”) and comprehending (what Berkshire Hathaway actually is)? For ease of reference, I am referring to your post on 12th of November and my post on 15th of November.

Think more, talk less. It’s good for your health. The level of debate here is *yawn* so once a week is enough I think. Come up with something better and make it worth my time.

lol I thought I told you ladies to go out in the sun and smile more, looks like you have doubled down since the week I was here last, saltier than ever.

Anyways, still no one can come up with a fund that has delivered 9% CAGR since 2005 safely and transparently. As I have repeatedly said, if it is so bad, what are you comparing it against?

Even worse, stockraider (12 November comment) still can’t get his facts straight. “The fact is TTB for past 5 yrs put all your investable monies giving 3.5% pa to protect his management fees where he took 2.5% pa for management fees and giving shareholder residual 1% pa as return loh...!!” The fact is? Lol.. so not only you can’t read, you can't count either.

And you and your merry band are trying to advise others? As Trump would say, “Sad”. The fee is 1.5% honey, and remember, zero performance fee. Not surprising, since you don’t even understand the difference between Berkshire Hathaway and ICAP lol.

And wrt the discount, as I have said before, why is it that it has been persistent since London started accumulating?

Most important of all, the few here that have nothing much else to do don’t see (or cant stand… too salty and full of jelly beans) the reality which is this. The majority of investors in ICAP trust TTB, and the evidence is that every year London loses by a huge majority. Trust is the most important factor when you are giving someone else to manage your life savings. So in 2020, the same will repeat.

What the wise do in the beginning, fools do in the end.

See you next week <3

Round and round but still the same conclusion – 9% CAGR performance that beat the KLCI and did it safely, transparently since Oct 2005, from RM150 mln to RM450 mln – no one able to show me any other product that can do the same. Your own portfolio is not comparable to RM140 mln.

And still didn’t answer my question – why is it that London bought 20% and discount hasn’t closed? Remember also, the maximum share buyback a year is 10% under Bursa rules.

More importantly, why is it that since London bought, the gap never closed?

And you still didn’t differentiate between Berkshire and ICAP. Berkshire is an operating business, whereas ICAP is a fund – the only difference between ICAP and a mutual fund is that ICAP is listed on a stock market and hence, what is being traded is the right over the asset rather than inflow/outflow of the asset itself.

Berkshire on the other a collection of businesses, from confectionary to insurance to furniture to tooling etc. and then another arm where they purchase stocks. It is as if Sime Darby has an arm that buys and sells stocks. So comparing the amount of cash it has to its total assets is a clear reflection of your ignorance. I suggest you go to http://www.berkshirehathaway.com/ and educate yourself.

Furthermore, Warren Buffett’s cash pile went to a new record lately – as FlyHigh rightly pointed out.

So if you are calling TTB stupid for sitting on cash, then you are also calling Warren Buffett stupid – because he himself, and his partner Charlie Munger, has said many times, sitting still is often the right action if the risk/reward doesn’t stack up. Remember again – rule number 1 is not to lose money, rule number 2 remember rule number 1.

If you look at Charlie Munger’s portfolio, it would make ICAP look like it engages in one night stands. This is a guy who read Barron’s for 50 years and bought 1 stock from all their recommendations. This guy is a billionaire and you guys... well you know what you are.

As I have said and I will say again, thank goodness the majority of ICAP owners are wise and continue to vote wisely every year.

Don’t be salty babe. Go get some sun. Smile a little bit.

Again, despite all the nonsense talk, no one has still been able to show me a fund that has outperformed iCap until now – so 9% CAGR underperforming against what, still unproven. As I said, safe, transparent, perform. Proof is in the pudding.

Also again, what shareholders despite TTB when every year at AGM ICAP shareholders vote for TTB against London? Focus on the facts. The minority, fortunately, doesn’t rule.

Again, When you are placing your life savings with someone, trust in who you place your money matters a lot – in a way, it matters the most. Ahbah, stockraider, stkstudent, cheoky etc. do not understand this.

Also stockraider, please stop embarrassing yourself further. Berkshire Hathaway is not a fund, it is an operating business. So it can do share buybacks because it generates cash flow from its operating businesses. A simple 5 minute check would have sufficed to figure this out – and you are trying to convince people? Haha

Similarly, if share buy backs was to work, why is it that London has bought 20%+ and there is still a discount? Think more, talk less.

Again, as per my previous post, the fund recommended by cheoky charges 1.9% and 2-4% entry fee – how is iCap expensive? It doesn’t even charge a performance fee – and it is safe, and it performs. Hatred and jealousy is unhealthy ladies.

It is true, people from a distance really cannot tell who is who.

cheoky https://www.pangolinfund.com/news.php
Maybe an alternative to icap. Go study

27/10/2019 9:58 PM

Pangolin invests markets outside Malaysia hence not comparable to ICAP

cheoky http://www.arecacapital.com/Funds+Information_19_1.htm

Search for Areca equityTrust Fund fact sheet. And make comparison....

I personally am uncomfortable with the fund you recommended – look at what is in the top 5 holdings, this tells me how the FM thinks – it may suit some people, but it does not suit me. Also, it charges a bomb (1.9% mgmt. fee plus 2 to 4.5% entry fee) and the fund is a lot smaller (<RM100 mln) than ICAP.

As I said – safe, transparent, perform – the three needs to come together, and most important of all, integrity. To repeat – to make wealth, one must not lose it first. Those that have been with ICAP since inception has done well – 9% compound return, safe (value investing with no derivatives, borrowing etc), low mgmt. fee, zero entry/performance fee, transparent reporting.

When you are placing your life savings with someone, trust in who you place your money with matters a lot – in a way, it matters the most. This is perhaps what ahbah, stockraider, stkstudent, cheoky etc. do not understand.

Like 3iii said, the proof is in the pudding – every year at AGM London has failed, and support for TTB is huge. This is perhaps what you are all most salty with. Jealousy is unhealthy.

The minority, fortunately, doesn’t rule.

Same arguments again and again, so guess I will repeat same again too. The most important one is the first one, whereby no one – up until now – has been able to reply.

In terms of fund performance - “All this talk always comes back to iCap is under performing. But underperforming relative to what? Since inception it has returned 9% p.a. I have said it before and I will say it again – find me a comparable fund/product that is as transparent, safe with strong performance that and I can trust in Malaysia. No one has been able to do that”

In terms of 5 years: “I do not think about my investments in 1, 5 year terms. I think about it like owning a piece of land that I will keep for my future generations. ICAP is for those that have this mindset.”

Most importantly: “every year, shareowners overwhelmingly support TTB, evidenced by AGM votes and City of London’s repeated failed attempts to influence shareowners. Why does TTB have so many loyal followers? Because they trust that he is not going to make them lose money over the long-term, but sustainably grow and preserve their wealth. Again – rule number 1 is not to lose money, rule number 2, remember rule number 1. This is what they are paying for. Everyone talks about the capital gains, but no one thinks about the twin, capital loss. If you are down 50%, you need to gain 100% to make your money back. The odds are against you.

On fees, they look high in RM terms because the fund grew and the fund grew because it performed – in reality, the % fee is much lower than other funds due to low trading (PTR ratio <1), zero loading and no performance fees. Go and find me a lower active fund % in Malaysia with zero entry, zero exit, no performance fee and better performance please. Remember, it grew at 9% despite holding high levels of cash.

If you think its so easy then go DIY, or look for another product as good, as transparent and as safe. Because ICAP is so safe and superior that even the ang mo like it and can’t get enough of it including breaking the law – ICAP don’t even need an ang mo chop of approval. Its probably the only product in Malaysia now that the British is addicted to.”

And “if you think it is easy sitting on hundreds of millions when everyone is buying, then you are a true amateur. Being the same as everyone else is easy – being different is hard. But I guess it is a bit like telling a fish what its like to walk on land.”

1) could it be ICAP now is just resting on its laurels, of past high NTA growth in the early yrs ?

I disagree – it has invested (Selangor Properties) and continues to invest (as per recent AGM). Those in the know also knows how hard TTB actually works.

2) Based on your view, is there a high possibility the fund may incur negative NTA growth again for 2020, based on the declining NTA growth trend, past few yrs.

I don’t know what will happen next year, but I am confident over time it will perform. Most importantly, it is safe and transparent.

2) Is it noted in the AR that capital preservation is the primary goal of the fund now ?

Take care of the downside, and the upside takes care of itself. My point is to make money, you must not lose money first.

3) i read that ICAP invest in undervalue companies in Bursa for superior compounded performance.
If after more than 6 yrs, still cannot find any undervalue share to invest in, what could be the issue ?

See (1)

4) Could it be ICAP's defination of 'value investing' is now too rigid, of a past era that is losing relevant to the changing equity market today ?
ie the investing world of stks has changed but our view of stks has not changed
eg thematic stks vs undervalue stks

All intelligent investing is value investing – to get more than what you paid for. More commonly known as margin of safety.

5) Many of us here, viewed ICAP fund mgr as the Warren Buffet of Msia at one time.
Warren Buffet has seem to change his investing world view with time,
Has our Msia WB, still in his purist frame of mind ?

I don’t really see TTB as WB, I see him as TTB. With respect to Buffett (there are two tt’s to his last name), am not sure what you are referring to here. His cash pile is now >US$120 bln. If you study Berkshire properly, you will realise that their performance since Warren took over is by and large carried by 10 stocks.

There is actually a lecture that Buffett did some time ago. He explained to students that if you want to become really rich, draw up a punch card with 10 holes. Imagine that in your entire life, every time you invest, you will punch 1 hole. In other words, you only have 10 chances to allocate your capital until you die. When you think about it this way, your whole view of investing changes.

Warren and his partner, Charlie Munger, have repeatedly said that the key to them being very rich is by seemingly not doing very much at all. But when a fat pitch comes along, they go in very heavily. To do that, you need to be prepared. It seems to most people very easy, but it is actually the hardest thing to do because the human tendency is to do what others are doing.

6) If in all honesty, true to his investing philosophy, the fund mgr cannot find any stks worthy of risk,
is it fair to ask that, the mgr inform his customers, the holders, this and give the holders an option to decide, what to do with their investment ?

This is what the AGM is for, and every year, shareowners overwhelmingly support him, evidenced by AGM votes and City of London’s repeated failed attempts to influence shareowners. Why? Because of what I said in my previous post. Anyways, you can also refer to (1) again.


Finally, I will also reiterate my point again – there is no comparable fund/product that is as transparent, safe with strong performance that and I can trust in Malaysia. I do not think about my investments in 1, 5 year terms. I think about it like owning a piece of land that I will keep for my future generations. ICAP is for those that have this mindset. See (6).

All this talk always comes back to iCap is under performing. But underperforming relative to what? Since inception it has returned 9% p.a. I have said it before and I will say it again – find me a comparable fund/product that is as transparent, safe with strong performance that and I can trust in Malaysia. No one has been able to do that.

And I will also repeat yet again that value investing is not “theme investing”, which in itself is an oxymoron. Calling a speculator an investor is like calling a person engaging in one night stands a romantic.

There is a big difference between an investor and a speculator and too many on this forum confuse the two. Nothing wrong to be a speculator – just that it has been proven time and again to be inferior to value investing over the longer-term. Key to wealth is to not lose it in the first place.

When you are down 50%, you need to be up 100% to recover. This asymmetry is why there are far more millionhairs than millionaires. This is why value investing is superior, as it is more focused on the downside rather than the upside and seeks low risk high return opportunities.

The primary goal is capital preservation based on the golden rule of not losing money. This is why many people – including myself – place our money with TTB for him to manage – because we know we can trust him. That level of trust cannot be bought, but must be earned.

If you have been around long enough and pay attention, you learn to separate the wheat from the chaff. As I've said before, real recognize real. And for myself, I will take my safe compound return and enjoy my everyday life without having to worry about my hard earned money being wiped. That is priceless.

Since your name – stkstudent – suggest you are trying to learn, I suggest you read up on Warren Buffett’s letters (https://www.berkshirehathaway.com/letters/letters.html) – you will see this mindset very clearly. It makes sense to me to learn how a great investor thinks directly from one of the greats himself. But if you want to speculate, then continue on allocating more of your time on this forum.

Post removed.Why?

OTB, since you are managing RM100 mln (or more), that means my original arithmetic stands i.e. your clients and yourself should be billionaires by now with a CAGR of 77%? You should open your hectic track record for all to see, call Forbes so you get on an “ang mo tick of approval” and then COL can give you some of their pounds to manage.

Whilst people point out Boustead and Parkson, they forget that in 2012/13 both were up by 50-100%+. Seem to also forget that the fund grew to RM450 mln because great returns were made over the years – Petdag, VADS, Lion Diversified, PIE, UMW, F&N, Integrax, Hai-O, Astro, United Malacca, PIE, Vitrox etc. were all sold at multiples over time. Selangor Properties is the most recent example.

Also I just realized for some reason a post I made on the 13th of October at 7:30PM has disappeared. So I will repeat the core messages of what I wrote then because it is relevant to now:

Value investors focus on the downside rather than the upside. The ultimate aim is capital preservation – which is why so many investors place their hard-earned savings with TTB. There are other funds out there i.e. dividend funds for dividends or if want to gamble, can come on forum like this to gamble on stock market/hero worship or go to Genting/Singapore/Macau (close to the same thing). How you decide is up to you.

But ICAP is by far the safest product in the market and is the only transparent product with the best returns over a comparable period. Talking about returns over 5 years is foolish. Long-term investors think about it in inter-generational terms. Do you think about your land/house in 5-year terms? If you do, then ICAP is not for you.

Why does TTB have so many loyal followers? Because they trust that he is not going to make them lose money over the long-term, but sustainably grow and preserve their wealth. Again – rule number 1 is not to lose money, rule number 2, remember rule number 1. This is what they are paying for. Everyone talks about the capital gains, but no one thinks about the twin, capital loss. If you are down 50%, you need to gain 100% to make your money back. The odds are against you.

On fees, they look high in RM terms because the fund grew and the fund grew because it performed – in reality, the % fee is much lower than other funds due to low trading (PTR ratio <1), zero loading and no performance fees. Go and find me a lower active fund % in Malaysia with zero entry, zero exit, no performance fee and better performance please. Remember, it grew at 9% despite holding high levels of cash.

If you think its so easy then go DIY, or look for another product as good, as transparent and as safe. Because ICAP is so safe and superior that even the ang mo like it and can’t get enough of it including breaking the law – ICAP don’t even need an ang mo chop of approval. Its probaby the only product in Malaysia now that the British is addicted to.

Buying when the market is falling is comparable in difficulty to sitting on cash whilst others go gung-ho. If not, there would be a lot more millionaires instead of millionhairs. Market now down, funds are selling out and people asking on forums like this what the bottom is for so and so stock. Too many here don’t think enough but talk too much.

Lastly, ICAP’s mission, apart from making money for its investors and democratizing professional funds management, is to show that proper value investing can work on the Bursa. Its track record so far proves it is possible.

I am thankful that there is such a product for the masses, I don’t know any other product that is as transparent, safe with low fees and strong performance that I can trust in Malaysia. Do you?

CharlesT – why keep repeating about OTB? He even replied what I wrote and proved that it is miniscule compared to RM100 mln. Trying to mislead people again? Do not compare handling <RM1 mln vs. hundreds of millions. I have repasted the arithmetic below again since you seem to have amnesia. You can also refer to ipilot50’s post above. The rest of the repeats i.e. management fee etc. I have also addressed this in the past in the repasted comment below.

Moving over to this post:

Value investing is not theme playing nor speculating. It is thinking like a business owner and looking for low risk, high return opportunities aka having an adequate margin of safety. As Warren Buffett said, rule number 1 is to not lose money, rule number 2 is to remember rule number 1.

To be a better investor, I always suggest people read Warren’s letters – can start here https://www.berkshirehathaway.com/letters/letters.html - it has been extremely invaluable for me. It is easy to read, highly educational and super entertaining.

Because it is free, ingested properly, the rate of return is infinity. Needless to say it is also much better for your pockets in the longer-term than spending time on this forum looking for the “next hot stock”.

I can understand the attractiveness though, like a casino is attractive – talking which table/slot is hot, the rush, the adrenaline. Proper investing by comparison might look “boring”. But that is the reality – if you study the world’s greatest investors, the similarities are striking.

Finally, if you think it is easy sitting on hundreds of millions when everyone is buying, then you are a true amateur. Being the same as everyone else is easy – being different is hard. But I guess it is a bit like telling a fish what its like to walk on land.

Stock: [ICAP]: ICAPITAL.BIZ BERHAD UNIT

Oct 10, 2019 8:45 PM | Report Abuse

CharlesT, how much is otb managing based on those 5 year results? I take it you are referring to https://choivocapital.com/2018/12/24/a-conversation-with-mr-ooi-teik-b...

Assuming it was RM100 mln, then it means he is now a billionaire (CAGR of 76,56%), which means he should be in the Forbes list, and also makes me wonder why he would need groupies like you to worship him on some online forum.

If it is less than/not RM100 mln, then you need a reality check, because ICAP's NAV is RM448 mln as of today and RM140 mln at IPO.

Managing less than RM100K vs. RM1 mln vs RM10 mln vs. RM100 mln vs. managing RM448 mln is different - you need to think about a lot of things i.e. liquidity in both buying and selling etc.and just because stock picks move by 100% etc. it doesn't mean you could have bought enough to profit from it in full.

It is not about the times you get your picks right - it is about how much capital you were able to allocate when you did get it right.

TTB grew RM140 mln to RM448 mln at a CAGR of 9% per annum, soundly beating the KLCI, despite holding high amounts of cash - not many have thought about this. Now capital is being deployed as counters fall - you would know this if you attended the AGM.

It also needs to continue to be asked:

- if London thinks iCap is such a bad investment, then why keep buying?
- If share buy back were to work, why is it that London bought >20% of shares but the discount hasn't narrowed?
- Why is it that the discount is stuck at ~20% since London bought?
- why keep asking for a dividend when it clearly states that the fund is a capital appreciation fund?
- why complain about FM fees when it is already amongst the lowest in the market? I think people forget that TTB grew iCap for everyone without taking a cent in performance fees, which is the norm in the industry. Are you saying that if you grew a fund from RM140 mln to RM448 mln you shouldn't get paid? Don't be salty.

I bet the London guys and and many here, including yourself, do not understand why so many of iCap shareowners support TTB. Real recognise real.

CharlesT, how much is otb managing based on those 5 year results? I take it you are referring to https://choivocapital.com/2018/12/24/a-conversation-with-mr-ooi-teik-bee/

Assuming it was RM100 mln, then it means he is now a billionaire (CAGR of 76,56%), which means he should be in the Forbes list, and also makes me wonder why he would need groupies like you to worship him on some online forum.

If it is less than/not RM100 mln, then you need a reality check, because ICAP's NAV is RM448 mln as of today and RM140 mln at IPO.

Managing less than RM100K vs. RM1 mln vs RM10 mln vs. RM100 mln vs. managing RM448 mln is different - you need to think about a lot of things i.e. liquidity in both buying and selling etc.and just because stock picks move by 100% etc. it doesn't mean you could have bought enough to profit from it in full.

It is not about the times you get your picks right - it is about how much capital you were able to allocate when you did get it right.

TTB grew RM140 mln to RM448 mln at a CAGR of 9% per annum, soundly beating the KLCI, despite holding high amounts of cash - not many have thought about this. Now capital is being deployed as counters fall - you would know this if you attended the AGM.

It also needs to continue to be asked:

- if London thinks iCap is such a bad investment, then why keep buying?
- If share buy back were to work, why is it that London bought >20% of shares but the discount hasn't narrowed?
- Why is it that the discount is stuck at ~20% since London bought?
- why keep asking for a dividend when it clearly states that the fund is a capital appreciation fund?
- why complain about FM fees when it is already amongst the lowest in the market? I think people forget that TTB grew iCap for everyone without taking a cent in performance fees, which is the norm in the industry. Are you saying that if you grew a fund from RM140 mln to RM448 mln you shouldn't get paid? Don't be salty.

I bet the London guys and and many here, including yourself, do not understand why so many of iCap shareowners support TTB. Real recognise real.