I HATE LOSING MONEY
"Rule No. 1: Never Lose Money. Rule No. 2: Never Forget Rule No. 1." - Warren Buffett
This famous quote took me a long time to understand but now I finally do. Wealth is defined as the accumulation of human labor and time and that accumulation is painfully slow. Why then would I let it go away so quickly? I was being impatient and want a “quick win” but I was going about it all the wrong way.
I started looking at how the wealthy managed their money and once again turned to my friend who was now successfully running his family office, getting access to the best deals in town that no one ever heard about. Every time I brought what seemed like a no-brainer deal with ridiculous potential to the table he would simply say he wasn’t interested. I was always curious as to why he turned these down.
Instead, my friend would participate in very low key, under the radar type investments and most intriguing of all - he never talked about them. I had to pry and pry to get answers from him and it was then that I discovered the secret to successfully investing in Asia.
YOUR NETWORK IS YOUR NET WORTH
I know this saying is a cliche. But the one thing I learned having lived over in Asia for the last 12 years is that the only way to stack the odds in your favor out here is by “who you know”. I’ve been an investor for my entire career. I spent over a decade on Wall Street advising clients on what to buy and sell before moving over to the buy side to manage a hedge fund, doing the same for myself. Investing in stocks is fun and the returns can be great. But the true out-sized returns in my portfolio have always come from private investments. Whether it be exclusive real estate transactions, one off private placements, or “club deals” that I went into under an exclusive family office structure, there’s been one common theme in every one of my winning trades and it’s who you know.
With capital preservation at the forefront of my investing process I decided to emulate Asia’s wealthiest family offices in how they managed their capital. At the base level, they would park their cash in the “holy grail” of family office investing: liquid investments yielding steady double digit returns in non market correlated asset classes. On top of that they would add a layer of ad hoc deals with out-sized returns which they only had to access to due to their insiders connections. This stacked the odds massively in their favor.
MY PORTFOLIO SETUP
Let me give you an example of some of my best investments to date. The first was an investment I made in a private series A extension round into China’s largest domain registry service known to be the“GoDaddy of China". The company was the single largest Chinese gTLD applicant in ICANN's New gTLD Program. They created somewhat of a monopoly during the gTLD application process due to the company’s deep connections within the system. At the time, there were only a handful of institutional investors participating in the round plus myself. So how did I get it? I was shown the opportunity through a member of my network who was participating in the round on an institutional level. There was a small $250k funding gap (that he could have easily filled) and when the company came back for it he kindly asked if I wanted to get in. I spent a few days analyzing the risk/reward and decided it was worth investing in (these opportunities usually close very quickly) so I made the investment. Four years later I am now up over 800% in the investment.
Another out sized home run I experienced was in real estate. The real estate market in Hong Kong is comprised of a number of peculiar nuances. On the one hand you have a very tight land supply that is fully controlled by the government and a handful of real estate tycoons. Supply is so limited that there is seemingly only one direction that housing prices will go -- up. On the other hand Hong Kong, via its peg mechanism to the US dollar, has enjoyed a long period of ridiculously low interest rates for over a decade. After studying the landscape I realized that the low cost of funding and scarce supply made for a very attractive trade...but only if I could ever get in. With property prices always on the uptrend there were rarely any dips that one could take advantage of to enter. As I sat on the sidelines waiting for a chance to invest, I prepared myself by dedicating all my free time scouring neighborhoods and doing deep dive market research. I singled out my target neighborhood which was in an up-and-coming part of town, just west of the central business district and within a 5 minute walk from a newly announced MTR subway stop. In early 2009 the market saw a short 3 month correction and I knew the timing was right. I had spent 4 years developing a strong network of real estate agents that would be able to show me exactly the type of unit I wanted, on a moment's notice. When one of my trusted agents called me telling me that he had found a seller in our target neighborhood that was “panicking” at the correction and who could be convinced to sell below the bank valuation of the unit, I leaped at the opportunity without even seeing the actual unit. I had developed such a good relationship with my realtor and he knew exactly what I was looking for that the decision was easy. I was able to secure a great piece of property in an area of high demand at a reasonable price with my cost of funding at less than 1%. My total mark to market gain on this trade to date is +292% and that's not including the steady 5% rental yield that I've been collecting consistently over the years.
As I continue to selectively participate in these “home-run” type deals, I’ve also been able to set up my own family office structure and put my savings to work for me by finding the holy grail of investing: liquid investments yielding steady double digit returns in non market correlated asset classes, providing my overall portfolio with ultimate risk diversification and consistent steady returns.
These are just a few examples of the number of opportunities that have come up as a result of “who you know”. After living here for over 12 years, researching on the ground, building a strong network and interviewing hundreds of world class entrepreneurs and startup founders these private deals come up selectively and very intermittently. From time to time I see exclusive opportunities to put my hard earned capital to work and generate out sized returns due to the deal dynamics being stacked in my favor. While I’m waiting for these to come up I sleep well at night knowing that I’m earning consistent double digits on my savings. It is a true win/win situation in the wild world of investing and I finally understand why all of the wealthiest family offices in Asia employ this same investing style.
INVEST WITH ASIA'S WEALTHIEST
It took me 12 years and thousands of meetings to build up this network. For the first time ever I am offering you an opportunity to skip the line and join my elite group of private investors, entrepreneurs & adventurers to learn how to invest like Asia’s wealthiest families. Why? Nothing in life is free. But for the same reasons I started flipping American candy as a child, I’m going to open up my network to you because the bottom line is I like making money. I like looking at deals. I like exploring hard to find opportunities. And I like getting paid for my work. If you share the same desire for financial freedom that I do, join my yield hunt today.