1. First things first – My “Mandates”

If you have worked in the financial services industry, chances are you would have heard about the term “investment mandate” from time to time. It means that as an investor / buyer, you are generally bounded by a certain type of investments you only look at. Industry participants would prefer to be able to categorize you, in order to make it easier for them to deal with you.

This categorization is a result of how the modern financial market has evolved. Money managers must have a specialization to distinguish themselves in an increasingly crowded world of “advisors”. Public market products have been made accessible to almost everyone – just open an account with a broker and you can start investing. With the rise of passive investing through indexing, it has become harder for the “Street” to make fees from it. As such, private investment products have proliferated. Private equity, venture capital or (these days) private credit are seen as more complex and are only marketed exclusively to a select group of wealthy and sophisticated investors. After all, wouldn’t everyone want to be part of an exclusive club and have access to things the mass doesn’t?

As for performance, public market benchmarks such as the MSCI World index has delivered an annual return of 9.45% over the past decade; the S&P 500 (US market) 12.4% p.a.; VN Index (Vietnam) 8.8% p.a.. Now I have not seen any consistent statistics for performance of private market products such as private equity, venture capital or private credit over time (though I’m sure you would see some data off the internet without any further info on how those are calculated). After all, it is nearly impossible to produce this data anyway when prices of private assets are not easily calculated nor publicly available. Most of the time, the value for private assets being held is even provided by their very current owners! Even if there was ever a correct statistic on private investment returns, I very much doubt it would be any better than the public market. Just wait until past this interest rate hike cycle and you will see.

Personally, after experiencing both public and private markets in Vietnam and Southeast Asia (SEA), I now gravitate towards public market investments whilst being extremely selective on private investments in these markets. And here’s why..

You must have all been familiar with the concept of a Mr. Market by the father of value investing – Ben Graham. When investing in the stock market, you get to deal with this Mr. Market, a bipolar and incredibly volatile individual, buying and selling irrationally from time to time. So long as you do not let yourself get drawn to his craziness and act in the same way, you should have plenty of opportunities to benefit off Mr. Market’s irrationality. Pick any stock, even blue-chip or large-cap ones, and look at the range between its 52-week high and low from time to time, you should see a gap that is big enough for an investor to achieve phenomenal returns. In public market investing, one should always feel delighted to have Mr. Market as a counterpart!

In private market transactions, there is an intelligent and informed buyer dealing with an intelligent and informed seller (for the most parts). Do not get me wrong – while I shall never try to take advantage of a seller, I believe the current state of the private market in Vietnam (and most parts in SEA) makes it very hard for a buyer to strike a good deal and walk away happy. Most business owners would want to maximize price (understandably) but think very little about how a wrong partnership could destroy value greatly in the longer run. The price gap between buyers and sellers has widened even further these last several years with the flood of private capital into the region (thanks to a low-interest rate environment, and after China has recently become hated as a market), accentuated by the proliferation of more “boutique” financial advisors and investment bankers. Meanwhile, these SEA markets are still quite premature and have a very limited supply of high-quality businesses. “Growth” is the name of their game to justify the price tag.

I have seen a lot of private deals done in Vietnam this past decade but am myself still not able to say private capital, as a product, is clearly proven in a consistent manner. The growth of high-quality businesses is simply not catching up with the growth in capital supply, leading to very poor economics for private capital as a business model. Most “investors”, when I ask them about a recent investment they have made, would talk more about Vietnam as an exciting market and then the sector; and way less about what specifically so good about the business / company. They are mostly taking a bet on “the tide lifting all boats”.

After all, even when the investment fails, the fund manager will still walk away with a 2% p.a. management fee, almost no “skin off their back”. So next time, when you are approached by a fund manager for a “private deal”, don’t feel privileged just yet..

The revelation I learned from my career so far – there is not much of a distinction between public and private market investing. At its core, public or private, investing is to buy and own a proportional share of a business. There are three things that are important to me when looking at every investment opportunity:

(i) Quality of the business;

(ii) Quality and integrity of the management team; and

(iii) the price that the business is being sold for

I look at a publicly traded stock the same way as I would if I were to own the business privately. Buffet has put it eloquently – if you can’t own a business for at least 10 years, don’t even think about buying the stock for 10 seconds. Whether or not the company is listed, on which exchange and how much the trading liquidity is have little bearing on my investment decision (I, in fact, would prefer small cap stocks that have less liquidity and are not being extensively covered by sell-side analysts as these are the potential multi-baggers).

I aspire to own wonderful businesses, public and private, and never have to exit. This is my investment mandate.

“If you are an investor, you are looking at what the asset is going to do. If you are a speculator, you are commonly focusing on what the price of the object is going to do, and that is not our game” – Charlie Munger

I thought the first thing to do when we get acquainted is to let you all be aware of my personal investment preferences, as that would determine whether or not you should continue to waste your time reading the stuff I shall share here. If you are looking for quick stock tips, technical analysis, macro views, or venture investing, this page is definitely not for you. Those are outside my “circle of competence”, and I doubt they actually work consistently in practice.

As you could have told by now, I am influenced a lot by Warren Buffet, Charlie Munger, amongst other great value investors such as Howard Marks, Mohnish Pabrai so I will, very often, knowingly and unknowingly quote them in my writings. I am a shameless copycat (and I consider myself lucky if I could just copy a bit of these geniuses). I, however, have differed greatly from them by holding bitcoin in my investment portfolio…

While this page is highly personal – my self-indulgence in the pleasure of reading, writing and finding wonderful investments, I do have an ulterior motive. I realized that I think much better when I write, and so this is a way for me to practise my writing. Knowing how to structure and put your thoughts into concise and clear writing is the best way to learn. Please do reach out when you feel the need to challenge, to support or to discuss any topics, or simply to connect over an espresso. I very much welcome all feedback, and in exchange for your kind input, I shall be better with my writing here over time. After all, I want to be useful.

So here it goes – first thing first, my investment and also “blogging” mandates.

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