Partial Checklist


  September 2014


-Market Leader
-Humongous market size
-High ROCE
-No close substitute
-Within circle of understanding
-Simple business
-Passionate entrepreneur
-Multi billion MNC
-High Dividend Payout
-Low Capex
-High book depreciation vs actual
-Low MCap/Sales
-Large island of MOAT
-100+ year old group
-Classy brands
-Over 70% market share
-Developing economy
-High promoter holding
-Low Price to Earnings
-High Growth
-High Free Cash Flow
-Ethical Management
-Healthy Lifestyle product
-Life enhancing product
-Excess intrinsic value vs price
-Labour arbitrage
-Premium offering
-Lowest cost producer
-Network effect
-Ugly product
-Boring industry
-Dirty business
-No growth industry
-Niche product
-Small market
-Locational advantage
-Low management compensation
-No stock options
-No equity dilution
-Catalyst for recognition
-Sound business strategy
-Positive earnings momentum
-Economies of Scale
-Price to Book
-Profit Margins
-Insider trend
-Professional management
-Stock buyback
-Increasing dividends
-Capital allocation record
-Buy more when stock halves?
-Hidden value?
-Low institutional holding
-Lousy geography
-When will stock double/triple/quadruple?
-Ineslatic demand
-Sticky product
-Aspirational brand
-Corporate Governance
-Competitive forces
-Client Bargaining
-Impact on society
-Impact on individual
-Vendor bargaining
-Concentration risk
-Behavioural Finance
-Confirmation bias
-Optimism bias
-Self-serving bias
-The planning fallacy
-Optimism bias
-Social proof
-Recency effect
-Capex cycle
-Bias blind spot
-Ambiguity effect
-Risk vs uncertainty
-Availability heuristic
-Bandwagon effect
-Choice supportive bias
-Congruence bias
-Contrast effect
-Curse of knowledge
-Oligopolistic market
-Price maker
-Debt covenants
-Pension liabilities
-Pretax margins
-Low margins for fixable causes
-Altman Z score > 3
-Piotroski F-score > 7
-Low risk business
-How capital intensive
-Hard-easy effect
-Hindsight bias
-Gambler's fallacy
-Illusion of control
-Information bias
-Sunk cost bias
-Money illusion
-Normalcy bias
-Ommision bias
-Ostrich effect
-Post purchase rationalization
-Semmelweis reflex
-Survivorship bias
-Zero risk bias


What will be the focus of Global Fund?

The fund will invest in growth stocks, established market leaders in emerging countries primarily to preserve wealth by beating inflation and compound moderately. Our focus over the past couple of years has morphed to include very high quality small caps with above 30% return on equity, which are market leaders in developed countries in the portfolio including US, UK, Canada, Australia, and New Zealand markets.

Will it be an exciting experience to invest in Global Fund?

It is going to be opposite of exciting. How astonishing was it to hear one’s father invest in a house where one grew up in from toddling years to let us say twenty year old youth? Zilch. You hardly noticed or were concerned with the price appreciation. We aim to sit tight for years to decades on the investment opportunities, hardly a matter of excitement.

How have your past picks performed / or what is the past track record?

In the past we have made long calls in 40 equities over the past 5 years in India. There were three bad calls with a less than 3% portfolio loss in each case.

~37 calls returned over 40% compounding per annum. Over 25+ of them have turned out to be 5 baggers or more. TTK Prestige – 30 bagger, Hawkins Cookers – 5 bagger, Symphony 20+ bagger, Gulshan Polyols – 4 bagger, Atul Auto – 9 bagger, Cera Sanitaryware – 25 bagger, Wim Plast – 22 bagger, RS Software – 10 bagger, Astral Poly Technik – 14 bagger, Relaxo Footwear – 7 times. (Contract/Trade notes and reference available on request) We are quite happy to miss a 40% compounder at sky high multiples for a certain 20% growth. 15-20% will be what we will endeavour for. Additionally, if that growth comes with Unilever / Nestle tag in Timbuktu or Somalia we will not hesitate to research the idea. Human potential is similar; and future is bright and sunny for these organisations in emerging markets.

Given that equity investment does not contribute to society as a collective industry, it is preferable to abstain from lauding it as a role model profession. Real wealth, human wealth is created by the actual organisations behind the stock; we happen to be mere opportunistic wolves and foxes picking up parts of ownership of those organisations, sometimes trying to justify our existence and worth in the society as investment professionals by slippery logic of providing risk capital to entrepreneurs. Can you imagine condition of society in which 60% people in a country have the sole profession of holding on to share certificates?

However, we believe that there are a number of Symphony Ltd., TTK Prestige that show up every couple of years in other emerging markets, which will generate superior risk adjusted returns.

We have made very timely calls in Crown Berger Paints Kenya, Glaxo Bangladesh, Bata Bangladesh, Unilever Nepal etc which have compounded well over 30% CAGR in the past two-three years. We are invested in companies are growing 15-18%. The currency depreciation tempers the returns to some extent.

Our Fund invested in small caps in UK, India ahead of the markets and retail investors or institutions which compounded rapidly like Manappuram, MRSS and Taptical International in 2017. A number of African companies have the potential to go up 50X or 100X but the countries in the continent are dependent on one or two commodities, so its a bit early to bet big on them until the industries in the continent are somewhat more diversified.

What is your investment process?

Our investing process is based on value investing principles.

- We will buy simple businesses that we understand fairly well
- Preferably with strong cash flows and low debt levels
- Having bright growth prospects to stay away from value traps
- Depicting consistent performance
- Run by honest owners and managers
- At a reasonable price tag
- We will solely target at strategic ideas, by ignoring tactical and trading ideas
- In wider-than-MOAT aka ‘Island Investment’ opportunities

We will not mind missing out on many stocks outside our grip of comprehension. Once we have bought into a business, we will exhibit patience as a gentle turtle and play dead to allow growth to be reflected into price.

What is the objective of Global Fund?

Our goal is to preserve capital and surpass rate of inflation. Idea is to capture corporate growth which outperforms bank deposits over long run. Inactive investors as a majority underperform index by exiting and entering at inappropriate moment. Our Global Fund will be maintained in a conservative manner with an objective to outperform indices and inflation adjusted returns.

Who should be interested in invesment in a Fund such as this?

Individuals or organisations that want results without detailed research reports would like the idea of Global Fund.
Clients that do not have time to track stock market actively and do not needs funds for next ten years should invest part of their funds every year or one-off in a Mutual Fund or Global Fund such as this.

Who should NOT invest in the Fund?

If one is looking for detailed, daily, weekly or monthly stock research reports. If one needs to learn about investing or needs guidance related to stocks that one is researching on, then one should not invest in this fund. This fund is suitable for only passive investors who would like to have the same attitude as one would towards a 9 year Fixed Term Deposit with higher expecations of return than Government Deposit / Fixed Deposits.

What will be the mode and frequency of communication?

One update will be provided to the shareholders of the fund every quarter. Four in a financial year. More frequent update will be provided only if there is an opportunity that cannot wait, that is worthy of investment or one that needs to be pruned. This is slightly high frequency than a fixed deposit maturity letter. Ideally we would like to communicate only once a year.

However, if you choose to change your mind about any investment you can get in touch and we will be swift in addresing your concerns.

Why is Global Fund better than a Mutual Fund?

We are not certain how Global Fund is going to score against Mutual Funds but only the sands of time will tell a story when we look backwards.

For a start, there are following benefits:
- No Management Fee
- No entry load
- No exit load
- Our skin is in the game as our managing partners personal money is invested in same investment opportunities.
- Warren Buffett / Mohnish Pabrai et al charge/d no management fees and 1/4th of the returns over 6% annually with high water marks, i.e. 25% of gains above 6%.

Our fee is 10% share of gains with a high water mark without any fixed management fee.

To see how this stacks up again Mohnish Pabria and erstwhile Warren Buffett partnership

Annual Gain %  BuffettEDF
0%Buffett gets 0%Eleven Dimension gets 0%
10%Buffett gets 1%Eleven Dimension gets 1%
20%Buffett gets 3.5%Eleven Dimension gets 2%
30%Buffett gets 6.0%Eleven Dimension gets 3%
40%Buffett gets 8.5%   Eleven Dimension gets 4%
50%Buffett gets 11%Eleven Dimension gets 5%

What is the difference between PMS and this Fund?

It is similar to PMS (Portfolio Management Service). Nearly all PMS plans charge a fixed Management Fee from 1 - 2% regardless of fact, whether they would grow your funds or reduce them. This 2% compounding cut makes a huge difference to the returns over long periods. PMS are registered with Securities and Exchange Board of India. Our fund will be registered in tax efficient geographies like British Virgin Islands, Cayman Islands, RAK – UAE, New Zealand etc.

We will launch Investment Advisory and Portfolio Management in 2018 for the retail investors after securing SEBI registration, which is underway.

Why are you starting Global Fund?

One of our promoters managed a small India focussed partnership as a trial until June 2014 after over couple of years of 40-45%+ compounding in each of the three years financial years, (50% return with buy and hold in April 2014 through June 2014) This return was more than envisaged and too good to sustain. Opportunities globally are quite compelling and the pendulum sways away from intrinsic value of an organisation on each side. We believe certain countries are offering significantly attractive bargains. As a group developing countries offer higher rates of growth than developed world. Developing countries offer a spectrum of no-brainer opportunities that match the models we have built over time. We aim to spot them early for multi-fold returns. We believe we can outperform most of the buy-and-hold ‘professional money managers’.
Global investing provides stability to equity investors who like to stay fully invested. The correlation between Indian and Bangladesh markets, which are so close geographically, for example, is very low. Since we like to stay close to fully invested we prefer diversification across countries to reduce the risk to the portfolio that is diversifiable. We notes that any market can fally by 30-40%, hence diversifying across 3-4 countries provides an automatic gun powder to re allocate to the market that has fallen. We applied this strategy to Bangladesh and the UK in 2016 and 2017 which positive outcomes.

What returns can be expected from Global Fund for emerging markets?

There isn't any guaranteed return promised by the Fund. Our performance is linked to a bunch of companies we own. Best quality stocks can fall by half from time to time. Dow Jones itself has collapsed over 30% on more than 13 occasions, and slid greater than 10% on more than 39 counts in the past century, therefore in any given year returns can be negative, infact they will most likely be, given buy-and-hold style of investing that is practiced. Returns can be positive or negative in any given year but the efforts and expectation are that over long term we can grow in vicinity of 18% compounded per annum.

Sensex was flat at 3000 level from 1997 to 2003. Between 1992 to 2003 (during these 11 years) Sensex experienced a degrowth from 4500 to 3000, therefore returns are not guaranteed in stock market.

However, over the last 30 years blue chips have compounded at 15-18% per annum. Similar growth is assumed over the coming decades.

What is required to join the fund?

We are highly selective in choosing shareholders for the Fund. In our partnership, for instance, we only selected nine people out of one hundred and fifteen who wanted to join.

Our objective is to compound at moderate rate of 15-17% for long periods of time. It is imperative for expectations of the fund to match with those of its shareholders.

Regarding investment amount, investors with surplus between 15,000 USD to 150,000 USD which is not required for the next ten years, need consider investment in a fund such as this. Monthly contributions are not allowed at this stage.

Why should I choose a Global Fund run by a small team rather than an established organisation?

While financial organisations are performing their role in society; bringing financial products to the masses, which otherwise may not have time, inclination or access to such products.

Investment managers are in the game of making decisions, all day, every day. Our process is exactly the opposite. We make as few decisions as possible. We want to be right in each decision, however infrequent. We are all about a sure thing. Statistical law runs against daily decision makers.

We are a vocal critic of shoddy practices of investment management business, so we have chosen to run our own investment management business to the highest standards.

To us this means:
To be upfront with you regarding investing rules.
Our investors get answers promptly in plain English.
To be accountable to investors.
We work for you, not for product providers.

They are not industry standards, but our standards - and that's what investors deserve.