About me
I am a stock market investor who was fortunate enough to stumble upon the investment and life wisdoms of both Warren Buffett and Charlie Munger in my early 30s (I wish I had started earlier on my snowball journey but as the saying goes “it’s better late than never”).
As I delve deeper into the intellectual village helmed by the two great men and occupied by numerous disciples across the world, I knew I have found my passion in life.
I am incredibly thankful to the many great investors who have openly shared their ideas and mental models, which continue to shape my investment philosophy over the years.
I have no intention to make money from this newsletter, and anyone will have full access to this newsletter.
The primary purpose of this newsletter is to chronicle my investment journey, pen down my investment theses, record my performance and organise my thoughts as I continue to learn and grow as an investor.
Just as pictures and videos help recreate visual memories, writing helps to fossilize ideas and thoughts. I am not a good writer and definitely do not enjoy writing as much as most bloggers, but I believe this is a critical step to improve my investing, because it helps me to prevent falling into the trap of fooling myself as ideas, thoughts and jusitifications for behaviours get easily distorted over time. Writing helps me to reflect and refine my thinking process.
I hope to connect with like-minded people to share and learn from one another, so any replies or comments are most welcomed. Disclaimer: this newsletter is not investment advice.
About Hillope Capital
I currently invest a large proportion of my family’s net worth into stocks and Hillope Capital represents my aspiration to have a formal investment fund to compound wealth over a long period of time both for myself and others (after I am convinced that I am capable of managing other people’s money). If Hillope Capital ever opens up for subscription, it will follow the original Buffett partnerships, on a 0-6-25 fee model (i.e. zero management fee with 25% performance allocation on profits that exceed a 6% compounding hurdle).
My Investment Philosophy
Warren Buffett once said: “Investing is simple but not easy.” If we think about it, there are essentially two binary options — for those stocks you haven’t owned, to buy or not; and for stocks already in your portfolio, to sell or hold (and to imagine such a simple decision tree can ever lead to such an accumulation of wealth as to propel Buffett to the richest person still often amazes me). My investment philosophy can be summarized in the five general rules as follows:
1. Invest with a business owner mindset
Invest only in businesses I can understand (within my circle of competence).
If I am not willing to own 100% of the business, it doesn’t deserve to be 1%.
A stock’s performance is not judged by its share price, but operational and financial metrics, and critically its direction of competitive moats.
2. Concentrated portfolio with ~8-12 stocks
Quality businesses run by good managers are rare
Critically evaluate every new investment against opportunity costs in existing portfolio (I can’t see how anyone could own more than 15 stocks applying this principle)
3. Invest in businesses that have a high probability of achieving materially higher earnings power in 5-10 years’ time
Identify durable moats that widen over time
Invest in businesses with high cash returns on capital employed
4. Invest in shareholder-oriented management teams
Management’s incentives are aligned (ideally owns a significant stake in the business)
Management is open, transparent and honest
Management demonstrates good capital allocation skills
5. Invest with margin of safety based on conservative estimates of intrinsic value
No fancy spreadsheet modelling, just common sense arithmetics
Market timing or macro-economic forecasts have zero influence on my investment decisions
Besides language and cultural constraints, I have been open to stocks listed in any exchanges. Over the years I tend to focus my hunting ground among Chinese companies listed in Hong Kong or U.S., as well as companies listed in U.S. exchanges.
