Advertisements

Mini Workshop | 100X: Be Exponential, Be Exceptional Like a H.E.R.O.! Business Model Innovation & Investment Insights to Transform SMEs Into Exponential Enterprises from $10 Million to $1 Billion

Mini Workshop | 100X: Be Exponential, Be Exceptional Like a H.E.R.O.! Business Model Innovation & Investment Insights to Transform SMEs Into Exponential Enterprises from $10 Million to $1 Billion

We are planning mini-workshops in partnership with a quality audit & consultancy firm for their clientele base of SME business owners to share about H.E.R.O. – below is a brief synopsis. If there is available space, we will open up the workshop to interested qualified investors who are lifelong learners. More details on the dates and venue to be shared at a later date. If you are interested to find out more or reserve a seat, please contact KB, thank you.

Synopsis:

Disruptive innovation is accelerating exponentially across many industries, upending passive companies and benefiting selective innovators whom we call H.E.R.O., which stands for “Honorable. Exponential. Resilient. Organization.”

Always feel that the insights from the usual case studies of big giants from Apple to Alibaba may not be relevant and applicable to your SME? H.E.R.O. Innovators are not your usual SMEs – they are exceptional market leaders in their respective fields and are 10X exponential compounders in profits and market value. What does it take to be exponential and exceptional like a H.E.R.O. and scale a SME 10 times or even 100X from $10 million to $1 billion in market value?

What are the business model innovation and investment insights that business owners, CEOs, managers and investors can learn and discover from the real-world case studies of H.E.R.O. Innovators that can be transformed into growth and positive change for yourselves?

Are we willing to commit ourselves and our companies to a process of mobilization, learning and discovery that progressively unlocked more of the company’s and personal full potential?

Part 1: Be Exponential! 天时

  • Stay ahead of the curve and keep your head when all others are losing theirs in an exponential world by acquiring the ability to tap on the technological insights of H.E.R.O. Innovators as a source of endless innovation for you and your team.

Part 2: Be Exceptional! Business Model Innovation Insights 地利

  • Discover why Asian H.E.R.O. Innovators outperform to create value regardless of macroeconomic potholes and bumps and the innovations they introduce to make the bumps work for them – and how you can acquire the ability to adapt them to work for you and your team.
  • Learn why do two companies in similar industry with each earning the same absolute profit size differ vastly in their market value in the stock market.
  • Understand the surprising insight why sales, profit and tangible asset growth may not translate to market cap growth and the secrets to unlocking business valuation.

Part 3: Be a H.E.R.O.! CEO 2.0 人和

  • Master lessons in overcoming challenges, hardships and adversities from the leaders helming Asian H.E.R.O. Innovators who propelled some of today’s innovative next-generation companies to success. Avoid business mistakes of the decisions of H.E.R.O. Innovators.

Participants Profile:

JOIN US in this thriving community of serious entrepreneurs and value investors where we come together and profit from sharing ideas.

  • Business Owners, CEOsCFOs and company executives aspiring to scale new heights for their businesses and last the distance to lead a meaningful and successful life;
  • Finance professionalsaccountants, and non-financial professionals who are keen to enhance their understanding of business building and value investing principles for professional and personal use;
  • Scions of business owners who desire to sharpen their business and investment acumen, manage challenges in family business, wealth preservation and creation, and network with other entrepreneurs and senior managers.

About KB:

Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized investment management, investment advisory & research services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian equity fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Detecting Accounting Fraud in Asia as an official module at SMU. KB remains grateful to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community.

Selected media archives:

Scouring Accounting Footnotes to Prevent Tunneling Fraud, Business Times, 19 Aug 2015 (PDF)

Reforming Corporate Governance, Business Times, 25 Nov 2000 (PDF)

The Secret to Business Resilience: Be Like the Bamboo, Not the Oak, TODAY, 8 April 2013 (PDF)

Creating Bamboo Innovators in Singapore, Straits Times, 1 April 2013 (PDF)

管理狮城的狮子企业家 The Power of Vision, Business Times, 15 May 2000 & Lianhe Zaobao, 9 Aug 2010 (PDF)

Why ‘Democracy’ and ‘Drifter’ Firms Can Have Abnormal Returns: The Joint Importance of Corporate Governance and Accounting Quality in Separating Winners from Losers, Review of Social, Economic and Administrative Studies, Vol. 25 no. 1 (2011): 3-55. (PDF)

Advertisements

Be Exponential with Commitment & Community: How H.E.R.O. Innovators Syuppin, Itokuro and Bandai Namco Build A Community of Enthusiasts to Power Growth – H.E.R.O. HeartWare: Weekly Asia Tech News – 18 June (Issue 6)

H.E.R.O. HeartWare: Weekly Asia Tech News – 18 June (Issue 6)

“Everything is a commodity unless it contains ‘commitment’. It will be the same for any business, but if you like that product and do not have deep knowledge, you will not be able to go beyond that, but I will beat the limit and barrier if I do it in detail. I realize that commitment and dedication are important properties of entrepreneurs. Commitment brings sticking connection with people.”

This insight was shared by Kei Suzuki, founder and Chairman of Syuppin (TSE: 3179, market cap US$344m), who forged a unique business model with operating profit jumping 4-fold over the past 5 years in building a community of over 360,000 enthusiasts buying and selling used products with long-lasting value in mid-to-higher-end cameras, watches, writing instruments, and sports bicycles. Innovations to foster an environment of integrity, authenticity, safety, trust, sense of curiosity, knowledge-discovery-and-sharing for the Syuppin members include the camera industry’s first unique after-sales service “forever safe warranty” in equipment inspection/cleaning; the ability for customers to view photos taken from the specific camera on the product page; a photo-sharing app for camera enthusiasts to connect users to the world and discover high-quality photos and photo-shooting spots in which maps and photos are linked, building strong relationships with the customers through multi-faceted information dissemination.

The capacity to develop and sustain a vibrant community of users and customers is the secret sauce that powers the success and non-linear exponential growth of a selected group of unique enterprises whom we call the H.E.R.O., the Honorable, Exponential, Resilient Organization. Commitment and dedication towards the shared purpose and the service are crucial ingredients to forge an emotional connection and foster a sense of belonging with the community of users.

Mitsuaki Taguchi, CEO of Bandai Namco (TSE: 7832, market cap US$9,173m), also shared the secret to why Gundam is still loved by its community of fans after nearly 40 years, and how Bandai Namco creates the capacity and capability to keep innovating, “There is a fan base and existing users who come back because they know goodness.” Manabu Yamaki, founder and CEO of Itokuro (TSE: 6049, market cap US$637m), also shared how the No. 1 dominant internet media services for private cram school navigation with its “Jyuku Navi” “word-of-mouth” portal site commands over 80% share of the users.

This week in H.E.R.O. HeartWare: Weekly Asia Tech News with brief highlights of the inspiring entrepreneurial stories of tech leaders in Asia whom we have been monitoring over the past decade in our broader watchlist of around 200 listed Asian tech companies and our focused portfolio of 40 HERO Innovators who reveal their problems and successes behind building the company, we have:

(1) Manabu Yamaki 山木学, founder and CEO of Itokuro イトクロ (TSE: 6049, market cap US$637m), the No. 1 dominant internet media services for private cram school navigation with its “Jyuku Navi” “word-of-mouth” portal site which commands over 80% share of the users according to Rakuten research;

(2) Kei Suzuki 小野尚彦, founder and Chairman & Naohiko Ono 鈴木慶, CEO of Syuppin シュッピ (TSE: 3179, market cap US$344m), which operates an integrated business model of e-commerce websites and retail stores for buying and selling used products in Japan, focusing on used digital cameras, lenses, and accessories (MapCamera.com); new and used watches (gmt-j.com); writing instruments (kingdomnote.com); and bicycles comprising road bikes and other sport bicycles (crowngears.com);

(3) Mitsuaki Taguchi 田口三昭, CEO of Bandai Namco バンダイナムコ (TSE: 7832, market cap US$9,173m). the entertainment brand platform proactively enabling innovative characters from Gundam, Dragon Ball, Kamen Rider, One Piece, Naruto, Super Sentai (Power Rangers), Ultraman to Anpanman, Ben10, Sailor Moon, Pretty Cure, iDOLM@STER, Love Live!, etc;

(4) John Guscic, Managing Director of Webjet (ASX: WEB, market cap US$1,180m), which provides online travel booking services in Australia, New Zealand, and internationally. It operates through Business to Consumer (B2C) and Business to Business (B2B) Travel segments.

We now live in an exponential world, and as the Baupost chief and super value investor Seth Klarman warns, disruption is accelerating “exponentially” and value investing has evolved. The paradigm shift to avoid the cheap-gets-cheaper “value traps” investment mistakes, to keep staying curious & humble, and to keep learning and adapting, has never been more critical for value investors. We believe tech-focused innovators with non-linear exponential growth potential are the most relevant multi-year investment trend and opportunity. Yet we do not want to chase the highly popular megacap tech stocks, or fall for the “Next-Big-Thing” trap by chasing to invest in fads, me-too imitators, cash-burning start-up tech companies. We see a distinct opportunity in underappreciated Asian SMID-cap tech stocks with unique scalable business models run by high-integrity entrepreneurs with a higher purpose in solving high-value problems.

H.E.R.O. stands for “Honorable. Exponential. Resilient. Organization.” and is operationalized into a unique, systematic 4-step investment process to identify the winners at the ARCHEA Asia H.E.R.O. Innovators Fund, the only Asian SMID-cap tech-focused fund in the industry. The H.E.R.O. HeartWare Weekly highlights interesting tech news and listed Asian emerging tech innovators with unique and scalable wide-moat business models to keep yourself well-informed about disruptive forces and innovation, new technologies and new business models coming up, and the companies that ride on and benefit from them in some of the most promising areas of the economy in Asia as part of our thought leadership for our ARCHEA Asia HERO Innovators Fund to add value to our clients and the community.

Some of the HERO Innovators in the focused portfolio include the largest online-to-offline pet insurance company in Japan with over 60% domestic share of the growing pet insurance market with over 636,000 policies in force generating over 98% sticky recurring revenue income & cashflow (Japanese households own 20m pets and only 1.3m or 6.3% were insured vs 22% of the 15m pets were insured in UK), and is a tech innovator with services that include allowing insurance claims to be made via LINE in just three minutes, an industry first, enabled by its powerful database & analytical prowess of more than 10 million insurance claims tied to illnesses and accident that allow the company to propose preventive measures by examining how animals become sick and how accidents occur. This highly profitable online pet insurance with a healthy net-cash balance sheet founded by an inspiring and down-to-earth entrepreneur with an agricultural economics background who started his career at a top insurance company is an archetypal H.E.R.O. Innovator.

Hope you find the weekly report to be useful and insightful. Please give us your candid feedback and harshest criticisms so that we can improve further to serve you better. Besides the BATTSS (Baidu, Alibaba, Tencent, TSMC, Softbank, Samsung), do also tell us which Asian tech entrepreneurs & CEOs whom you admire and respect and why – we will endeavor to do up profiles of them for sharing with the community. Please email kb@heroinnovator.com on your thoughts, thank you very much. Have a beautiful week ahead.

Warm regards,

KB

The ARCHEA Asia H.E.R.O. Innovators Fund (www.heroinnovator.com) is the only Asian SMID-cap tech-focused fund in the industry. H.E.R.O. stands for “Honorable. Exponential. Resilient. Organization.” and is operationalized into a unique, systematic 4-step investment process to identify the winners. The investment objective seeks to capture long-term investment returns created by disruptive forces and innovation by focusing on high-quality and liquid listed equities in the Asia-Pacific region that ride on and benefit from them. Through our cross-sector and in-depth fundamental research process, the Fund aim to provide access to companies whom we believe are run by high-integrity, honorable and far-sighted owner-operators with a higher sense of purpose in solving High-Value Problems for their target customers and society, and have unique, scalable and wide-moat business models with sustainable competitive advantages and innovative products, services, and processes to create, expand and service their total addressable market, including the resiliency and balance sheet strength to maintain or grow profitability, pricing power and market positions through up/downturns in the economy.

The ARCHEA H.E.R.O. Innovators Tech Fund is a UCITS V fund domiciled in Luxembourg, and is available to both retail and accredited investors in Europe (including Switzerland, Germany, France, Denmark, Belgium, Luxembourg) and qualified offshore investors worldwide. The ARCHEA Asia HERO Innovators Fund is now in the pre-launch stage, subject to regulatory approval. We will also be registering the funds under MAS CISNET for distribution in Singapore. Our target fund launch date for the Founders’ Series is in September 2018.

We have secured capital commitments from several institutional and high net-worth investors. Once we have gotten our ticker code and approval from the regulator for our UCITS fund, interested long-term partners can simply buy or sell units in the fund, just like the buying or selling of listed shares, by approaching any bank of your choice with the ticker code and wire the funds into an independent custodian bank. As a strictly regulated UCITS fund that is also audited by PwC, there is daily liquidity to buy or sell, and we have zero exit fees. If you are interested to participate in the exponential growth journey of the H.E.R.O. Innovators who are solving real-world high-value problems and have helped create what the world around you looks like today and tomorrow, please contact KB by email kb@heroinnovator.com or whatsapp +65 9695 1860.

How to Know If We are Right for Each Other?

You are an intelligent and thoughtful high net-worth investor, business owner, family office, institutional investor, allocator, or financial advisor who want to:

  • You want to learn and be well-informed about disruptive forces and innovation, new technologies and new business models coming up, and the companies that ride on and benefit from them in some of the most promising areas of the economy, and feel more confident in your knowledge in how these innovators are indispensable in the well-being of your daily life.
  • Yet, you do not wish to follow the crowd like everyone else to herd in the highly popular mega-cap tech stocks.
  • And you definitely do not want to fall for the Next-Big-Thing trap by investing in fads, me-too imitators, or even in seemingly cutting-edge technologies without the ability to monetize and generate recurring revenue with a sustainable and scalable business model, and you want to know how to distinguish between the true innovators and the swarming imitators.
  • You want to be proud of the entrepreneurs and owner-operators running the companies whom you invest in to generate sustainable returns, that they are honorable, high-integrity, far-sighted, and have a higher sense of purpose in solving High-Value Problems for their target customers and society, and have unique, scalable and wide-moat business models with sustainable competitive advantages and innovative products, services, and processes to grow profitably through up/downturns in the economy.

Mini Workshop | 100X: Be Exponential, Be Exceptional Like a H.E.R.O.! Business Model Innovation & Investment Insights to Transform SMEs Into Exponential Enterprises from $10 Million to $1 Billion

We are planning mini-workshops in partnership with a quality audit & consultancy firm for their clientele base of SME business owners to share about H.E.R.O. – below is a brief synopsis. If there is available space, we will open up the workshop to interested qualified investors who are lifelong learners. More details on the dates and venue to be shared at a later date. If you are interested to find out more or reserve a seat, please contact KB, thank you.

Synopsis:

Disruptive innovation is accelerating exponentially across many industries, upending passive companies and benefiting selective innovators whom we call H.E.R.O., which stands for “Honorable. Exponential. Resilient. Organization.”

Always feel that the insights from the usual case studies of big giants from Apple to Alibaba may not be relevant and applicable to your SME? H.E.R.O. Innovators are not your usual SMEs – they are exceptional market leaders in their respective fields and are 10X exponential compounders in profits and market value. What does it take to be exponential and exceptional like a H.E.R.O. and scale a SME 10 times or even 100X from $10 million to $1 billion in market value?

What are the business model innovation and investment insights that business owners, CEOs, managers and investors can learn and discover from the real-world case studies of H.E.R.O. Innovators that can be transformed into growth and positive change for yourselves?

Are we willing to commit ourselves and our companies to a process of mobilization, learning and discovery that progressively unlocked more of the company’s and personal full potential?

Part 1: Be Exponential! 天时

  • Stay ahead of the curve and keep your head when all others are losing theirs in an exponential world by acquiring the ability to tap on the technological insights of H.E.R.O. Innovators as a source of endless innovation for you and your team.

Part 2: Be Exceptional! Business Model Innovation Insights 地利

  • Discover why Asian H.E.R.O. Innovators outperform to create value regardless of macroeconomic potholes and bumps and the innovations they introduce to make the bumps work for them – and how you can acquire the ability to adapt them to work for you and your team.
  • Learn why do two companies in similar industry with each earning the same absolute profit size differ vastly in their market value in the stock market.
  • Understand the surprising insight why sales, profit and tangible asset growth may not translate to market cap growth and the secrets to unlocking business valuation.

Part 3: Be a H.E.R.O.! CEO 2.0 人和

  • Master lessons in overcoming challenges, hardships and adversities from the leaders helming Asian H.E.R.O. Innovators who propelled some of today’s innovative next-generation companies to success. Avoid business mistakes of the decisions of H.E.R.O. Innovators.

Participants Profile:

JOIN US in this thriving community of serious entrepreneurs and value investors where we come together and profit from sharing ideas.

  • Business Owners, CEOsCFOs and company executives aspiring to scale new heights for their businesses and last the distance to lead a meaningful and successful life;
  • Finance professionalsaccountants, and non-financial professionals who are keen to enhance their understanding of business building and value investing principles for professional and personal use;
  • Scions of business owners who desire to sharpen their business and investment acumen, manage challenges in family business, wealth preservation and creation, and network with other entrepreneurs and senior managers.

About KB:

Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized investment management, investment advisory & research services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian equity fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Detecting Accounting Fraud in Asia as an official module at SMU. KB remains grateful to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community.

Selected media archives:

Scouring Accounting Footnotes to Prevent Tunneling Fraud, Business Times, 19 Aug 2015 (PDF)

Reforming Corporate Governance, Business Times, 25 Nov 2000 (PDF)

The Secret to Business Resilience: Be Like the Bamboo, Not the Oak, TODAY, 8 April 2013 (PDF)

Creating Bamboo Innovators in Singapore, Straits Times, 1 April 2013 (PDF)

管理狮城的狮子企业家 The Power of Vision, Business Times, 15 May 2000 & Lianhe Zaobao, 9 Aug 2010 (PDF)

Why ‘Democracy’ and ‘Drifter’ Firms Can Have Abnormal Returns: The Joint Importance of Corporate Governance and Accounting Quality in Separating Winners from Losers, Review of Social, Economic and Administrative Studies, Vol. 25 no. 1 (2011): 3-55. (PDF)

Are You a “First-Class Noticer” of Wide-Moat Compounders? Business Model Innovation & Investment Insights from Japan’s M3 Inc (Archive April 2015)

“Are you free now?” N asked me in a pensive mood when our paths crossed in a chance encounter in the underground basement of the Singapore Management University (SMU).

“Sure, what’s on your mind?”

“I have read your email on ‘To what can I devote my life’ last night and I have been thinking. I like to show you something. It’s an app business that I am doing up with my friend Chris.”

A SMU accounting student taking my course Accounting Fraud in Asia, N and his friend Chris have started a mobile app company which had developed an Uber-like mobile app to assist us to beat the long queues in healthcare clinics.

When I listened to N explaining his app, i immediately shared with him the Japanese innovator M3 Inc (2413 JP, MV $6.6bn). M3 is an overlooked wide-moat innovator I wrote about in 2012 and shared with the CEO and top management team of a listed tech company in a series of workshop “Uprising! Business Model Innovations and TMT Industry Trends” conducted in Singapore, HK and Beijing in 2012/13. M3 has since tripled to $6.6 billion. M3’s popular iTicket (www.iticket.co.jp) internet and mobile service used by more than 500,000 members to make reservations at clinics and beat the long queues might have some relevance for N to articulate the business model to seek funding – and clarity in their own execution and scalability. Both Chris and N have never heard of M3.

I explained briefly to them that M3 started out like a Google for medical professionals, with its core MR-kun service used as a marketing tool by pharmaceutical companies to provide consistent, repeated delivery of information on products and diseases. MR-kun also provides a channel for companies to receive questions and feedback from doctors, strengthening company/doctor relations.

With support by Sony Corp subsidiary So-Net which retains a 49.8% stake in M3, Itaru Tanimura established M3 in 2000 when he was 35. Essentially, M3 recognized that the demand for eDetails is quite high for busy physicians who require timely information at their convenience, without the limitations imposed by their off-line MRs. Doctors spend the most time collecting information via the Internet. Conversely, pharmaceutical firms spend the majority of their budget on MR related costs – and Japanese pharmaceutical firms’ huge marketing cost of ¥1.2-1.5tr ($10-12.5bn) is not sustainable.

Pharmaceutical companies signed up for MR-kun pay a basic annual fee of ¥70 to ¥100 million ($0.58 to 0.83 million) per electronic “e-detailing message,” which is the online equivalent of a sales visit by a MR (medical representative) to a physician’s clinic. In the pharmaceutical industry a sales visit by an MR to a doctor’s clinic is called a detail. M3 also charges fees for the production of promotional content and receives fees for other services such as facilitating the exchange of messages between pharma company MRs and their physician clients. The average of M3’s top five clients pays ¥860m ($7.2m) every year.

A dominant platform used by 80% of Japan’s physicians, MR-kun is rated by over 92% of its users who said its usage “deepened their knowledge of diseases”. With this intangible trust built up amongst the community of users, M3 is able to leverage this relationship with its members to develop new online tools. These include online tools in clinical trials to determine the feasibility of trials and help with patient recruitment, market research and survey panels, and online job search and career information site for member doctors and pharmacists. In China, M3’s membership for the healthcare professional portal site Medilive.cn topped one million members in August 2014 after just five years, covering roughly half of the physicians in China. M3 leveraged upon the media capacity of Medilive.cn to expand into “Messenger”, the Chinese version of MR-kun.

M3 even expanded from B2B to B2C by providing a range of services for consumers including AskDoctors.jp, a subscription service that gives patients a chance to ask doctors questions about their ailments, and iTicket.

M3’s Tanimura-san is what literary giant Saul Bellow would call a “first-class noticer”. Two entrepreneurs or value investors can study the same business model, watch the same video, or even take the same advice from a mentor, but the intensively-attentive and committed first-class noticer pick up critical details, opportunities and talents among noise that the other misses.

Building on Bellow’s term, Harvard’s business psychology expert Max Bazerman studied why some people notice and act on threats and opportunities while others do not. Bazerman identified three core challenges to being a first-class noticer: (1) Ambiguity, (2) Motivated blindness due to ego or vested self-interest, and (3) Conflict of interest with our desires influencing the way we interpret information, even when we are trying to be objective, and others that include the slippery slope and efforts of others to mislead us.

We develop noticing skills by acknowledging responsibility when things go wrong rather than blaming external forces beyond your control. Some character moves we can make to become first-class noticers:

·       Develop the introspection and capacity for observation to discover just how you learn and then to get out and do it.

·       Build in a process and attract people around you to challenge ambiguity, motivated blindness, and any conflict of interest to change you might have. Do it with intention. Intentionally establish a system to test your biases and comfortable assumptions.

·       Have a growth mindset that makes reinvention of yourself a regular way of life. Notice the signs. Find a way to embrace them rather than avoid them. Be self-accountable. Do it now.

Above all, the first-class noticer notices better because he or she cared more about their long-term journey than the shot-term paycheck. The intensive attentiveness is applied to a Purpose with an authentic Voice and the ability to engage others in shared meaning and to be truly aware of what’s going on in the world from wide-ranging and diverse sources of information. In the immortal words of leadership guru Warren Bennis, “the first-class noticer integrates a purpose with noble aims”. The first-class noticer devotes himself or herself to the Purpose and idea larger than themselves, being watchful and thankful. The word “watchful” is a legacy from the Old Testament – or a proactive sitting on a city wall and keeping watch. Watchmen were the first ones to see attacking armies or traveling traders. They saw things before others saw them.

One of the world’s greatest and most inspiring first-class noticer is Kazuo Inamori. Born into poverty, Kazuo Inamori lost his family home at age 13 and almost died that same year after contracting tuberculosis. A religious neighbour handed him several Buddhist religious tracts, urging him to meditate on the meaning of life. As he meditated, his TB subsided. His reprieve left Inamori with the idea that he should strive for the betterment of humanity.

Carrying this value in his heart, Dr. Inamori built two world-class companies from scratch in the course of a generation – global advanced ceramics company Kyocera (6971 JP, MV $20.6bn) (founded in 1959) and Japan’s second largest telecommunications firm KDDI(9433 JP, MV $62.8bn) (established in 1984), with a combined market capitalization of over $80 billion and employing over 80,000 kindred spirits. Through his commitment to society, which include the creation of the Nobel-class Kyoto Prize which honors contributors in technology, science, arts and philosophy by his Inamori Foundation, Inamori-san, 83, carries the voice of entrepreneurship on a global scale as the “Entrepreneur for the World”, an award he was presented with during the World Entrepreneurship Forum in 2009.

As president of Seiwajyuku, a business leadership association dedicated to nurturing business owners and entrepreneurs, Inamori-san, ordained as a Buddhist monk at 65, offered this advice to entrepreneurs:

“If your goal is to be a rich and beautiful celebrity, or if you are not willing to sacrifice yourself for the world and other people, do not try to be an entrepreneur. Entrepreneurs have heavy responsibilities and must share the fruits of their labor with employees and shareholders. We must always have criteria in our hearts that can help us answer the question, ‘What is the right thing to do as a human being?’ and guide us to do what is good for society and humanity in our daily work.”

After our chance encounter, N sent me an email that he aspires to build the “M3 of Southeast Asia”: “Uber became the one of the largest transport service company with no taxis. Alibaba became the world’s largest e-commerce company with no inventories. We hope our company can have a firm foothold in the medical industry without clinics”.

The medical industry needs high reliability because of its mission to care for the life of human beings. This is the reason why M3 succeeded with the trusted platform, the “emptiness” of the trust and support from the community of pharmaceutical firms, physicians, and patients to generate stable and continued income with the option value and potential to expand their business based on the trusted platform.

We wish N all the best in the pursuit of his aspiration – and to become a first-class noticer of business model innovations beyond the mere technical aspects of what makes a wide-moat compounder.

Warm regards,
KB

The ARCHEA Asia H.E.R.O. Innovators Fund (www.heroinnovator.com) is the only Asian SMID-cap tech-focused fund in the industry. H.E.R.O. stands for “Honorable. Exponential. Resilient. Organization.” and is operationalized into a unique, systematic 4-step investment process to identify the winners. The investment objective seeks to capture long-term investment returns created by disruptive forces and innovation by focusing on high-quality and liquid listed equities in the Asia-Pacific region that ride on and benefit from them. Through our cross-sector and in-depth fundamental research process, the Fund aim to provide access to companies whom we believe are run by high-integrity, honorable and far-sighted owner-operators with a higher sense of purpose in solving High-Value Problems for their target customers and society, and have unique, scalable and wide-moat business models with sustainable competitive advantages and innovative products, services, and processes to create, expand and service their total addressable market, including the resiliency and balance sheet strength to maintain or grow profitability, pricing power and market positions through up/downturns in the economy.

The ARCHEA H.E.R.O. Innovators Tech Fund is a UCITS V fund domiciled in Luxembourg, and is available to both retail and accredited investors in Europe (including Switzerland, Germany, France, Denmark, Belgium, Luxembourg) and qualified offshore investors worldwide. UCITS stands for the Undertakings for the Collective Investment of Transferable Securities and is a regulatory framework of the European Commission that creates a harmonized regime throughout Europe for the management and sale of mutual funds. UCITS funds can be registered in Europe and sold to investors worldwide using unified regulatory and investor protection requirements. The ARCHEA Asia HERO Innovators Fund is now in the pre-launch stage, subject to regulatory approval. We will also be registering the funds under MAS CISNET for distribution in Singapore. Our target fund launch date for the Founders’ Series is in September 2018.

Together with my highly experienced business partner Mr. Loo Cheng Guan, we are progressing in our partnership with our Swiss partner Dr. Alain Würgler’s Bellatrix Asset Management to launch the HERO Innovators Fund under their UCITS V umbrella fund structure domiciled in Luxembourg for distribution to retail & qualified investors in Europe, and qualified non-Europe investors worldwide. We have secured capital commitments from several institutional and high net-worth investors. Once we have gotten our ticker code and approval from the regulator for our UCITS fund, interested long-term partners can simply buy or sell units in the fund, just like the buying or selling of listed shares, by approaching any bank of your choice with the ticker code and wire the funds into an independent custodian bank. As a strictly regulated UCITS fund, there is daily liquidity to buy or sell, and we have zero exit fees. If you are interested to participate in the exponential growth of the H.E.R.O. Innovators who are solving real-world high-value problems and have helped create what the world around you looks like today and tomorrow, please contact KB by email or whatsapp.

How to Know If We are Right for Each Other? 

You are an intelligent high net-worth investor, business owner, family office, institutional investor, allocator, or financial advisor who want to:

  • You want to learn and be well-informed about disruptive forces and innovation, new technologies and new business models coming up, and the companies that ride on and benefit from them in some of the most promising areas of the economy, and feel more confident in your knowledge in how these innovators are indispensable in the well-being of your daily life.
  • Yet, you do not wish to follow the crowd like everyone else to herd in the highly popular mega-cap tech stocks.
  • And you definitely do not want to fall for the Next-Big-Thing trap by investing in fads, me-too imitators, cash-burning tech companies, or even in seemingly cutting-edge technologies without the ability to monetize and generate recurring revenue with a sustainable and scalable business model, and you want to know how to distinguish between the true innovators and the swarming imitators.
  • You want to be proud of the entrepreneurs and owner-operators running the companies whom you invest in to generate sustainable returns, that they are honorable, high-integrity, far-sighted, and have a higher sense of purpose in solving High-Value Problems for their target customers and society, and have unique, scalable and wide-moat business models with sustainable competitive advantages and innovative products, services, and processes to grow profitably through up/downturns in the economy.

Ready to find out more about H.E.R.O.?

To make an appointment with KB to find out more about the H.E.R.O. investment and business model innovation framework, investment strategy & process, please click here or email kb@heroinnovator.com or whatsapp +65 9695 1860.

How H.E.R.O. Innovators en-Japan, Chroma ATE, Innodisk, cultivate “sapere vedere” to develop the deep insights required to solving customers’ problems

H.E.R.O. HeartWare: Weekly Asia Tech News – 11 June (Issue 5)

When asked for his secret, Leonardo da Vinci would characteristically respond with the phrase he conceived and adopted as his personal motto: Sapere vedere. The phrase combines the Latin “sapere”, which means knowing how, and “vedere”, which means to see. Sapere vedere is knowing how to see. People with sapere vedere look forward as well as inward; they are capable of believing and seeing what others don’t. Knowing how to see, is crucial to living a life of significance. H.E.R.O. Innovators cultivate sapere vedere to develop the deep insights required to understanding and solving customers’ problems.

This week, Michikatsu Ochi, founder and chairman of en-Japan (TSE: 4849, market cap US$2.3bn), the pioneer in the field of Internet-based job advertising, shared how he looked inward and forward to pursue an unconventional entrepreneurial approach in disrupting then the incumbent giant rival Recruit Holdings by building its websites with a focus on users (job hunters) over its clients (companies looking to recruit staff). The superior quality of information on its sites produced with the user in mind and the attention to the detail has resulted in improved response rates to listed ads. Having created a positive cycle to increase membership (leveraging selling power, job listings, and market share), each time a heavy demand period comes around, the company can effectively use promotional spending to further improve its market position. Due to the difficult and tight hiring environment in Japan, without a certain number of applicants, companies cannot find suitable hires. en-japan provides companies with enough applicants, leading to higher prices in a positive feedback loop.

Leo Huang 黃欽明, Chairman & CEO of Chroma ATE 致茂電子 (TSEC: 2360, market cap US$2.2bn), one of the global leaders in automatic test equipment, including the global #1 leader in power electronics test solutions, shared Chroma’s competitive edge is its “insight into the customer’s next-step development and design solutions that will be provided to customers as early as possible before the customer goes into mass production.” Randy Chien 簡川勝, Chairman & President/CEO of Innodisk 宜鼎國際 (GTSM: 5289, market cap US$385m) one of the few memory module manufacturers in the world focused on non-consumer storage products such as industrial control, enterprise and aerospace defense applications, shared Innodisk’s competitive edge comes from the “power to understand the requirements of specialized markets and help accelerated the launching of our customers’ products. The industrial control market emphasizes customer service and customization, and the market is difficult to enter.”

This week in H.E.R.O. HeartWare: Weekly Asia Tech News (Click to Download PDF) with brief highlights of the inspiring entrepreneurial stories of tech leaders in Asia whom we have been monitoring over the past decade in our broader watchlist of around 200 listed Asian tech companies and our focused portfolio of 40 HERO Innovators, we have:

(1) Michikatsu Ochi 越智通勝, founder and chairman, and Takatsuga Suzuki 鈴木孝二, CEO of en-Japan (TSE: 4849, market cap US$2.3bn), the pioneer in the field of Internet-based job advertising with the launch of the first job information website in Japan in 1995;
(2) Leo Huang 黃欽明, Chairman & CEO of Chroma ATE 致茂電子 (TSEC: 2360, market cap US$2.2bn), one of the global leaders in automatic test equipment, including the global #1 leader in power electronics test solutions;
(3) Randy Chien 簡川勝, Chairman & President/CEO of Innodisk 宜鼎國際 (GTSM: 5289, market cap US$385m) one of the few memory module manufacturers in the world focused on non-consumer storage products such as industrial control, enterprise and aerospace defense applications;
(4) Tony Klim, CEO of Bravura Solutions (ASX: BVS, market cap US$546m), a leading provider of software solutions for the wealth management, life insurance, and funds administration industries with more than 350 direct and indirect blue-chip clients entrusting over A$2.8 trillion in assets to its platform systems.

We now live in an exponential world, and as the Baupost chief and super value investor Seth Klarman warns, disruption is accelerating “exponentially”. We believe tech-focused innovators are the most relevant investment trend and opportunity over the next decade. Yet we do not want to chase the highly popular megacap tech stocks, or fall for the “Next-Big-Thing” trap by chasing to invest in fads, me-too imitators, cash-burning start-up tech companies. We see a distinct opportunity in underappreciated Asian SMID-cap tech stocks with unique scalable business models run by high-integrity entrepreneurs with a higher purpose in solving high-value problems.

H.E.R.O. stands for “Honorable. Exponential. Resilient. Organization.” and is operationalized into a unique, systematic 4-step investment process to identify the winners at the ARCHEA Asia H.E.R.O. Innovators Fund, the only Asian SMID-cap tech-focused fund in the industry. The H.E.R.O. HeartWare Weekly highlights interesting tech news and listed Asian emerging tech innovators with unique and scalable wide-moat business models to keep yourself well-informed about disruptive forces and innovation, new technologies and new business models coming up, and the companies that ride on and benefit from them in some of the most promising areas of the economy in Asia as part of our thought leadership for our ARCHEA Asia HERO Innovators Fund to add value to our clients and the community.

Some of the HERO Innovators in the focused portfolio include the largest online-to-offline pet insurance company in Japan with over 60% domestic share of the growing pet insurance market with over 636,000 policies in force generating over 98% sticky recurring revenue income & cashflow (Japanese households own 20m pets and only 1.3m or 6.3% were insured vs 22% of the 15m pets were insured in UK), and is a tech innovator with services that include allowing insurance claims to be made via LINE in just three minutes, an industry first, enabled by its powerful database & analytical prowess of more than 10 million insurance claims tied to illnesses and accident that allow the company to propose preventive measures by examining how animals become sick and how accidents occur. This highly profitable online pet insurance with a healthy net-cash balance sheet founded by an inspiring and down-to-earth entrepreneur with an agricultural economics background who started his career at a top insurance company is an archetypal H.E.R.O. Innovator.

Hope you find the weekly report to be useful and insightful. Please give us your candid feedback and harshest criticisms so that we can improve further to serve you better. Besides the BATTSS (Baidu, Alibaba, Tencent, TSMC, Softbank, Samsung), do also tell us which Asian tech entrepreneurs & CEOs whom you admire and respect and why – we will endeavor to do up profiles of them for sharing with the community. Please email kb@heroinnovator.com on your thoughts, thank you very much. Have a beautiful week ahead.

Warm regards,
KB

The ARCHEA Asia H.E.R.O. Innovators Fund (www.heroinnovator.com) is the only Asian SMID-cap tech-focused fund in the industry. H.E.R.O. stands for “Honorable. Exponential. Resilient. Organization.” and is operationalized into a unique, systematic 4-step investment process to identify the winners. The investment objective seeks to capture long-term investment returns created by disruptive forces and innovation by focusing on high-quality and liquid listed equities in the Asia-Pacific region that ride on and benefit from them. Through our cross-sector and in-depth fundamental research process, the Fund aim to provide access to companies whom we believe are run by high-integrity, honorable and far-sighted owner-operators with a higher sense of purpose in solving High-Value Problems for their target customers and society, and have unique, scalable and wide-moat business models with sustainable competitive advantages and innovative products, services, and processes to create, expand and service their total addressable market, including the resiliency and balance sheet strength to maintain or grow profitability, pricing power and market positions through up/downturns in the economy.

The ARCHEA H.E.R.O. Innovators Tech Fund is a UCITS V fund domiciled in Luxembourg, and is available to both retail and accredited investors in Europe (including Switzerland, Germany, France, Denmark, Belgium, Luxembourg) and qualified offshore investors worldwide. UCITS stands for the Undertakings for the Collective Investment of Transferable Securities and is a regulatory framework of the European Commission that creates a harmonized regime throughout Europe for the management and sale of mutual funds. UCITS funds can be registered in Europe and sold to investors worldwide using unified regulatory and investor protection requirements. The ARCHEA Asia HERO Innovators Fund is now in the pre-launch stage, subject to regulatory approval. We will also be registering the funds under MAS CISNET for distribution in Singapore. Our target fund launch date for the Founders’ Series is in September 2018.

Together with my highly experienced business partner Mr. Loo Cheng Guan, we are progressing in our partnership with our Swiss partner Dr. Alain Würgler’s Bellatrix Asset Management to launch the HERO Innovators Fund under their UCITS V umbrella fund structure domiciled in Luxembourg for distribution to retail & qualified investors in Europe, and qualified non-Europe investors worldwide. We have secured capital commitments from several institutional and high net-worth investors. Once we have gotten our ticker code and approval from the regulator for our UCITS fund, interested long-term partners can simply buy or sell units in the fund, just like the buying or selling of listed shares, by approaching any bank of your choice with the ticker code and wire the funds into an independent custodian bank. As a strictly regulated UCITS fund, there is daily liquidity to buy or sell, and we have zero exit fees. If you are interested to participate in the exponential growth of the H.E.R.O. Innovators who are solving real-world high-value problems and have helped create what the world around you looks like today and tomorrow, please contact KB by email or whatsapp.

How to Know If We are Right for Each Other? 

You are an intelligent high net-worth investor, business owner, family office, institutional investor, allocator, or financial advisor who want to:

  • You want to learn and be well-informed about disruptive forces and innovation, new technologies and new business models coming up, and the companies that ride on and benefit from them in some of the most promising areas of the economy, and feel more confident in your knowledge in how these innovators are indispensable in the well-being of your daily life.
  • Yet, you do not wish to follow the crowd like everyone else to herd in the highly popular mega-cap tech stocks.
  • And you definitely do not want to fall for the Next-Big-Thing trap by investing in fads, me-too imitators, cash-burning tech companies, or even in seemingly cutting-edge technologies without the ability to monetize and generate recurring revenue with a sustainable and scalable business model, and you want to know how to distinguish between the true innovators and the swarming imitators.
  • You want to be proud of the entrepreneurs and owner-operators running the companies whom you invest in to generate sustainable returns, that they are honorable, high-integrity, far-sighted, and have a higher sense of purpose in solving High-Value Problems for their target customers and society, and have unique, scalable and wide-moat business models with sustainable competitive advantages and innovative products, services, and processes to grow profitably through up/downturns in the economy.

Ready to find out more about H.E.R.O.?

To make an appointment with KB to find out more about the H.E.R.O. investment and business model innovation framework, investment strategy & process, please click here or email kb@heroinnovator.com or whatsapp +65 9695 1860.

How Kyocera’s Kazuo Inamori Inspired Tech Innovators to Build TATERU and e-Guardian Into Successful, Purpose-Driven H.E.R.O. Businesses

A Purpose endures. Embracing a Purpose to serve others can provide the determination, inner strength, and courage we need to survive obstacles that might otherwise shatter our spirit.

Sometimes, we need guidance in defining our Purpose. Just like Daisaku Furuki who shared last week in HeartWare Issue 3 how he convinced himself to persevere in the face of deep troubles and anxieties to build the innovative apartment management platform TATERU (TSE: 1435) no matter how matter how painful it is when he read the book by Kazuo Inamori, the billionaire founder of Kyocera and KDDI, who elucidated the important idea of ‘Why start a business?’ – discovering what kind of value we want to create and contribute, finding and committing to a Purpose to serve. Today, TATERU has scaled up to a market cap of US$1.67bn and Daisaku’s 46.7% equity stake is worth over US$700m. This week in HeartWare Issue 4, Takatani Yasuhisa also shared how Kazuo Inamori’s book changed his life as he changed job from J&J to Kyocera after reading the book. Takatani later went on to undertake a MBO in one of Kyocera’s businesses to transform e-Guardian (TSE: 6050) into a successful cyber-security company with the ability to monetize its cutting-edge artificial intelligence technology via a recurring subscription-based revenue model to win and retain sticky customers in multiple industries.

Inamori-san also influenced my investment philosophy over the years in the relentless search to invest in honorable entrepreneurs when I first came across his quote: “If your goal is to be a rich and beautiful celebrity, or if you are not willing to sacrifice yourself for the world and other people, do not try to be an entrepreneur. Entrepreneurs have heavy responsibilities and must share the fruits of their labor with employees and shareholders. We must always have criteria in our hearts that can help us answer the question, ‘What is the right thing to do as a human being?’ and guide us to do what is good for society and humanity in our daily work.” This philosophy has also led us to our Big Why in doing up the H.E.R.O. Innovators Tech Fund, why we believe and care deeply in H.E.R.O. – to never stop exploring and learning in discovering and investing in the evergreen stories of emerging innovators who are willing to sacrifice to make significant contributions to others through the unique products and services they offer.

This week in H.E.R.O. HeartWare: Weekly Asia Tech News (Click to Download PDF) with brief highlights of the inspiring entrepreneurial stories of tech leaders in Asia whom we have been monitoring over the past decade in our broader watchlist of around 200 listed Asian tech companies and our focused portfolio of 40 HERO Innovators, we have:

(1) Takatani Yasuhisa 高谷康久, CEO of e-Guardian (TSE: 6050, market cap US$302m), the largest domestic cyber-security business in monitoring of posts on the internet with deep AI capabilities;

(2) Wang Shih-chung 王世忠, founder and CEO of AirTAC International Group (TSEC: 1590, market cap US$3.3bn), one of the global leaders in pneumatic components & equipment and the second largest in China, who shared how he endured seven consecutive years of losses to build AirTAC;

(3) Ian Black, CEO of Gentrack (NZSE: GTK, market cap US$414m) which provides billing and customer management software to utility companies and airports around the world;

(4) Hiroya Achiha and Kenjiro Kikuchi of NSK (TSE: 6471, market cap US$6.2bn), the world’s largest maker of ball screws, which are used to move objects back and forth with a high degree of precision, who shared how the 102-year old manufacturer is now undergoing a major shift as it supplies components critical to digital products and services and sales of components for chip-making machines and robot parts and the 3D NAND memory structural trend are helping to fuel earnings growth.

The H.E.R.O. HeartWare Weekly highlights interesting tech news and listed Asian emerging tech innovators with unique and scalable wide-moat business models to keep yourself well-informed about disruptive forces and innovation, new technologies and new business models coming up, and the companies that ride on and benefit from them in some of the most promising areas of the economy in Asia as part of our thought leadership for our ARCHEA Asia HERO Innovators Tech Fund, the only Asian SMID-cap tech-focused fund in the industry, to add value to our clients and the community.

Some of the HERO Innovators in the focused portfolio include the largest online-to-offline pet insurance company in Japan with over 60% domestic share of the growing pet insurance market with over 636,000 policies in force generating over 98% sticky recurring revenue income & cashflow (Japanese households own 20m pets and only 1.3m or 6.3% were insured vs 22% of the 15m pets were insured in UK), and is a tech innovator with services that include allowing insurance claims to be made via LINE in just three minutes, an industry first, enabled by its powerful database & analytical prowess of more than 10 million insurance claims tied to illnesses and accident that allow the company to propose preventive measures by examining how animals become sick and how accidents occur. This highly profitable online pet insurance with a healthy net-cash balance sheet founded by an inspiring and down-to-earth entrepreneur with an agricultural economics background who started his career at a top insurance company is an archetypal H.E.R.O. Innovator – H.E.R.O. stands for “Honorable. Exponential. Resilient. Organization.” and is operationalized into a unique, systematic 4-step investment process to identify the winners at the ARCHEA H.E.R.O. Innovators Tech Fund.

Hope you find the weekly report to be useful and insightful. Please give us your candid feedback and harshest criticisms so that we can improve further to serve you better. Besides the BATTSS (Baidu, Alibaba, Tencent, TSMC, Softbank, Samsung), do also tell us which Asian tech entrepreneurs & CEOs whom you admire and respect and why – we will endeavor to do up profiles of them for sharing with the community. Please email kb@heroinnovator.com on your thoughts, thank you very much. Have a beautiful week ahead.

Warm regards,

KB

The ARCHEA Asia H.E.R.O. Innovators Fund (www.heroinnovator.com) is the only Asian SMID-cap tech-focused fund in the industry. H.E.R.O. stands for “Honorable. Exponential. Resilient. Organization.” and is operationalized into a unique, systematic 4-step investment process to identify the winners. The investment objective seeks to capture long-term investment returns created by disruptive forces and innovation by focusing on high-quality and liquid listed equities in the Asia-Pacific region that ride on and benefit from them. Through our cross-sector and in-depth fundamental research process, the Fund aim to provide access to companies whom we believe are run by high-integrity, honorable and far-sighted owner-operators with a higher sense of purpose in solving High-Value Problems for their target customers and society, and have unique, scalable and wide-moat business models with sustainable competitive advantages and innovative products, services, and processes to create, expand and service their total addressable market, including the resiliency and balance sheet strength to maintain or grow profitability, pricing power and market positions through up/downturns in the economy.

The ARCHEA H.E.R.O. Innovators Tech Fund is a UCITS V fund domiciled in Luxembourg, and is available to both retail and accredited investors in Europe (including Switzerland, Germany, France, Denmark, Belgium, Luxembourg) and qualified offshore investors worldwide. UCITS stands for the Undertakings for the Collective Investment of Transferable Securities and is a regulatory framework of the European Commission that creates a harmonized regime throughout Europe for the management and sale of mutual funds. UCITS funds can be registered in Europe and sold to investors worldwide using unified regulatory and investor protection requirements. The ARCHEA Asia HERO Innovators Fund is now in the pre-launch stage, subject to regulatory approval. We will also be registering the funds under MAS CISNET for distribution in Singapore. Our target fund launch date for the Founders’ Series is in September 2018.

Together with my highly experienced business partner Mr. Loo Cheng Guan, we are progressing in our partnership with our Swiss partner Dr. Alain Würgler’s Bellatrix Asset Management to launch the HERO Innovators Fund under their UCITS V umbrella fund structure domiciled in Luxembourg for distribution to retail & qualified investors in Europe, and qualified non-Europe investors worldwide. We have secured capital commitments from several institutional and high net-worth investors. Once we have gotten our ticker code and approval from the regulator for our UCITS fund, interested long-term partners can simply buy or sell units in the fund, just like the buying or selling of listed shares, by approaching any bank of your choice with the ticker code and wire the funds into an independent custodian bank. As a strictly regulated UCITS fund, there is daily liquidity to buy or sell, and we have zero exit fees. If you are interested to participate in the exponential growth of the H.E.R.O. Innovators who are solving real-world high-value problems and have helped create what the world around you looks like today and tomorrow, please contact KB by email or whatsapp.

How to Know If We are Right for Each Other? 

You are an intelligent high net-worth investor, business owner, family office, institutional investor, allocator, or financial advisor who want to:

  • You want to learn and be well-informed about disruptive forces and innovation, new technologies and new business models coming up, and the companies that ride on and benefit from them in some of the most promising areas of the economy, and feel more confident in your knowledge in how these innovators are indispensable in the well-being of your daily life.
  • Yet, you do not wish to follow the crowd like everyone else to herd in the highly popular mega-cap tech stocks.
  • And you definitely do not want to fall for the Next-Big-Thing trap by investing in fads, me-too imitators, cash-burning tech companies, or even in seemingly cutting-edge technologies without the ability to monetize and generate recurring revenue with a sustainable and scalable business model, and you want to know how to distinguish between the true innovators and the swarming imitators.
  • You want to be proud of the entrepreneurs and owner-operators running the companies whom you invest in to generate sustainable returns, that they are honorable, high-integrity, far-sighted, and have a higher sense of purpose in solving High-Value Problems for their target customers and society, and have unique, scalable and wide-moat business models with sustainable competitive advantages and innovative products, services, and processes to grow profitably through up/downturns in the economy.

Ready to find out more about H.E.R.O.?

To make an appointment with KB to find out more about the H.E.R.O. investment and business model innovation framework, investment strategy & process, please click here or email kb@heroinnovator.com or whatsapp +65 9695 1860.

H.E.R.O. HeartWare: Weekly Asia Tech News – 11 June (Issue 5)

H.E.R.O. HeartWare: Weekly Asia Tech News – 11 June (Issue 5)

This week in H.E.R.O. HeartWare: Weekly Asia Tech News (Click to Download PDF) with brief highlights of the inspiring entrepreneurial stories of tech leaders in Asia whom we have been monitoring over the past decade in our broader watchlist of around 200 listed Asian tech companies and our focused portfolio of 40 HERO Innovators, we have:

(1) Michikatsu Ochi 越智通勝, founder and chairman, and Takatsuga Suzuki 鈴木孝二, CEO of en-Japan (TSE: 4849, market cap US$2.3bn), the pioneer in the field of Internet-based job advertising with the launch of the first job information website in Japan in 1995;
(2) Leo Huang 黃欽明, Chairman & CEO of Chroma ATE 致茂電子 (TSEC: 2360, market cap US$2.2bn), one of the global leaders in automatic test equipment, including the global #1 leader in power electronics test solutions;
(3) Randy Chien 簡川勝, Chairman & President/CEO of Innodisk 宜鼎國際 (GTSM: 5289, market cap US$385m) one of the few memory module manufacturers in the world focused on non-consumer storage products such as industrial control, enterprise and aerospace defense applications;
(4) Tony Klim, CEO of Bravura Solutions (ASX: BVS, market cap US$546m), a leading provider of software solutions for the wealth management, life insurance, and funds administration industries with more than 350 direct and indirect blue-chip clients entrusting over A$2.8 trillion in assets to its platform systems.

We now live in an exponential world, and as the Baupost chief and super value investor Seth Klarman warns, disruption is accelerating “exponentially”. We believe tech-focused innovators are the most relevant investment trend and opportunity over the next decade. Yet we do not want to chase the highly popular megacap tech stocks, or fall for the “Next-Big-Thing” trap by chasing to invest in fads, me-too imitators, cash-burning start-up tech companies. We see a distinct opportunity in underappreciated Asian SMID-cap tech stocks with unique scalable business models run by high-integrity entrepreneurs with a higher purpose in solving high-value problems.

H.E.R.O. stands for “Honorable. Exponential. Resilient. Organization.” and is operationalized into a unique, systematic 4-step investment process to identify the winners at the ARCHEA Asia H.E.R.O. Innovators Fund, the only Asian SMID-cap tech-focused fund in the industry. The H.E.R.O. HeartWare Weekly highlights interesting tech news and listed Asian emerging tech innovators with unique and scalable wide-moat business models to keep yourself well-informed about disruptive forces and innovation, new technologies and new business models coming up, and the companies that ride on and benefit from them in some of the most promising areas of the economy in Asia as part of our thought leadership for our ARCHEA Asia HERO Innovators Fund to add value to our clients and the community.

Some of the HERO Innovators in the focused portfolio include the largest online-to-offline pet insurance company in Japan with over 60% domestic share of the growing pet insurance market with over 636,000 policies in force generating over 98% sticky recurring revenue income & cashflow (Japanese households own 20m pets and only 1.3m or 6.3% were insured vs 22% of the 15m pets were insured in UK), and is a tech innovator with services that include allowing insurance claims to be made via LINE in just three minutes, an industry first, enabled by its powerful database & analytical prowess of more than 10 million insurance claims tied to illnesses and accident that allow the company to propose preventive measures by examining how animals become sick and how accidents occur. This highly profitable online pet insurance with a healthy net-cash balance sheet founded by an inspiring and down-to-earth entrepreneur with an agricultural economics background who started his career at a top insurance company is an archetypal H.E.R.O. Innovator.

Hope you find the weekly report to be useful and insightful. Please give us your candid feedback and harshest criticisms so that we can improve further to serve you better. Besides the BATTSS (Baidu, Alibaba, Tencent, TSMC, Softbank, Samsung), do also tell us which Asian tech entrepreneurs & CEOs whom you admire and respect and why – we will endeavor to do up profiles of them for sharing with the community. Please email kb@heroinnovator.com on your thoughts, thank you very much. Have a beautiful week ahead.

Warm regards,
KB

The ARCHEA Asia H.E.R.O. Innovators Fund (www.heroinnovator.com) is the only Asian SMID-cap tech-focused fund in the industry. H.E.R.O. stands for “Honorable. Exponential. Resilient. Organization.” and is operationalized into a unique, systematic 4-step investment process to identify the winners. The investment objective seeks to capture long-term investment returns created by disruptive forces and innovation by focusing on high-quality and liquid listed equities in the Asia-Pacific region that ride on and benefit from them. Through our cross-sector and in-depth fundamental research process, the Fund aim to provide access to companies whom we believe are run by high-integrity, honorable and far-sighted owner-operators with a higher sense of purpose in solving High-Value Problems for their target customers and society, and have unique, scalable and wide-moat business models with sustainable competitive advantages and innovative products, services, and processes to create, expand and service their total addressable market, including the resiliency and balance sheet strength to maintain or grow profitability, pricing power and market positions through up/downturns in the economy.

The ARCHEA H.E.R.O. Innovators Tech Fund is a UCITS V fund domiciled in Luxembourg, and is available to both retail and accredited investors in Europe (including Switzerland, Germany, France, Denmark, Belgium, Luxembourg) and qualified offshore investors worldwide. UCITS stands for the Undertakings for the Collective Investment of Transferable Securities and is a regulatory framework of the European Commission that creates a harmonized regime throughout Europe for the management and sale of mutual funds. UCITS funds can be registered in Europe and sold to investors worldwide using unified regulatory and investor protection requirements. The ARCHEA Asia HERO Innovators Fund is now in the pre-launch stage, subject to regulatory approval. We will also be registering the funds under MAS CISNET for distribution in Singapore. Our target fund launch date for the Founders’ Series is in September 2018.

Together with my highly experienced business partner Mr. Loo Cheng Guan, we are progressing in our partnership with our Swiss partner Dr. Alain Würgler’s Bellatrix Asset Management to launch the HERO Innovators Fund under their UCITS V umbrella fund structure domiciled in Luxembourg for distribution to retail & qualified investors in Europe, and qualified non-Europe investors worldwide. We have secured capital commitments from several institutional and high net-worth investors. Once we have gotten our ticker code and approval from the regulator for our UCITS fund, interested long-term partners can simply buy or sell units in the fund, just like the buying or selling of listed shares, by approaching any bank of your choice with the ticker code and wire the funds into an independent custodian bank. As a strictly regulated UCITS fund, there is daily liquidity to buy or sell, and we have zero exit fees. If you are interested to participate in the exponential growth of the H.E.R.O. Innovators who are solving real-world high-value problems and have helped create what the world around you looks like today and tomorrow, please contact KB by email or whatsapp.

How to Know If We are Right for Each Other? 

You are an intelligent high net-worth investor, business owner, family office, institutional investor, allocator, or financial advisor who want to:

  • You want to learn and be well-informed about disruptive forces and innovation, new technologies and new business models coming up, and the companies that ride on and benefit from them in some of the most promising areas of the economy, and feel more confident in your knowledge in how these innovators are indispensable in the well-being of your daily life.
  • Yet, you do not wish to follow the crowd like everyone else to herd in the highly popular mega-cap tech stocks.
  • And you definitely do not want to fall for the Next-Big-Thing trap by investing in fads, me-too imitators, cash-burning tech companies, or even in seemingly cutting-edge technologies without the ability to monetize and generate recurring revenue with a sustainable and scalable business model, and you want to know how to distinguish between the true innovators and the swarming imitators.
  • You want to be proud of the entrepreneurs and owner-operators running the companies whom you invest in to generate sustainable returns, that they are honorable, high-integrity, far-sighted, and have a higher sense of purpose in solving High-Value Problems for their target customers and society, and have unique, scalable and wide-moat business models with sustainable competitive advantages and innovative products, services, and processes to grow profitably through up/downturns in the economy.

Ready to find out more about H.E.R.O.?

To make an appointment with KB to find out more about the H.E.R.O. investment and business model innovation framework, investment strategy & process, please click here or email kb@heroinnovator.com or whatsapp +65 9695 1860.

Foreword to “Rooted In Resilience: Hidden Champions Fund Letters to Shareholders”

14. Upward Toiling - Foreword header

Foreword

“To live is to suffer, to survive is to find meaning in the suffering.” – Friedrich Nietzsche

“The most beautiful people we have known are those who have known defeat, known suffering, known struggle, known loss, and have found their way out of those depths.”– Elisabeth Kubler-Ross

“Character cannot be developed in ease and quiet. Only through experience of trial and suffering can the soul be strengthened, ambition inspired, and success achieved.”– Helen Keller

Sufferings. Adversities. Crushing setbacks. Terrifying trials and ordeals. Disorienting disappointments. Cutting betrayals. Countless doubters, misunderstood and self-doubts. Exhaustion. Loneliness.

If one looks closely enough, these traumas and tragedies are more common than not and inevitable in our lives.

As a fund manager and educator in the Asian capital jungles, I have been reading, listening to and analyzing stories of entrepreneurs for over 15 years. Stories of triumphs and successes – and the struggles and setbacks behind them, insights glistened when rapport is built up and knowledge from monitoring and interacting over the years is accumulated. Many succumb to the setbacks and did not regain their former heights.

Over time, a selected group continue to grow and do well not just in spite of the inevitable adversities and sufferings they have known, but maybe even because of them. Social scientists call such men and women “resilient”. They “bounce back”. They “rebound”. Theirs is a perilous, inspiring and complex journey, one that, after decade-plus of interest and research, still amazes and confounds: “How do they do it?”

When we include the narratives of the adversities and resilient entrepreneurs together in the investment letters, there is a bigger story. It is the untold story of a diverse group of women and men who are united by the experience of striving and thriving in stormy times building a certain type of businesses.

A special type of businesses that are “Hidden Champions”, an exceptional group of focused market leaders in sophisticated, hard-to-imitate niche products and valuable critical niche services that are largely invisible to the average consumer, yet are indispensable to our well-being in daily life. These Hidden Champions weather multiple crises and recession to deliver outperformance often not linked to general economic conditions, thus offering de-correlated and resilient investment returns. It is my conviction that Hidden Champions are the ultimate “shock absorbers”, transforming crises and traumas into opportunities for the future.

Rooted In Investment Resilience is that untold story of adversity and resilience. It shows that overcoming adversities is a courageous and complex endeavor. Successful people who have weathered multiple storms rarely believe things will simply work out and that optimism is overrated. She is more apt to practice defensive pessimism, imagining worst-case scenarios so she is more prepared when things go wrong. She has, however, strong faith in her own problem-solving abilities and the intangible knowledge asset – gained through the baptism of fire – that hard work and adaptation bring success.

When Bill Gates was asked in an interview “what it takes to build a Microsoft, or to build an Apple, or to build a Facebook”, his reply was unequivocal: “I think the world’s best companies are built by fanatics.” When pressed “what does fanatical mean?”, Gates said poignantly, “Work day and night. Sort of don’t worry about the possibility of failure. Every setback is just something to work a little bit harder at doing. We live in an age when people want a quick fix, a shortcut to exceptional results. But there is no such easy path. There is only an intense, long-term, sustained effort. And the only way to build that kind of enterprise is to be fanatic. Such obsessed people do not become the most popular people, as they often intimidate others, but when fanatics come together with other fanatics, the multiplicative effect is unstoppable.”

Thus, above all in our Hidden Champions, she is a fanatic who may not be a popular organization person with an EQ of 100, but definitely has PQ (Purpose Quotient), remaining unwavering in her commitment to an idea larger than oneself in service of others, and OQ (Obsession Quotient), the focus, intensity, conscientiousness and discipline towards her craftsmanship. In service of others, she may use her powers to be good and do good even as she struggles with exhaustion. She may live with incredible alienation even as only relationships can save her. It’s a never-ending battle.

An inner battle that never ends even if one achieves phenomenal success, like in the case of billionaire Shigenobu Nagamori, founder of Nidec Corp (TSE: 6594), the world’s #1 manufacturer of electric motors, which compounded over 5,000% since 1992 to a market value of US$46.9 billion. Nagamori-san recounted his story when he told his mother that he is starting his own business: “My mother asked me: ‘Are you ready to work twice as hard as everyone else? If other people work eight hours a day, are you going to work 16 hours?’ After I assured her on this point, she quietened down, and gave the venture her blessing. At the end of the day, if I’m tempted to slacken off, I can look out [of his 20th floor office] and see my mother’s grave. I say to her on these occasions: ‘I made you that promise, and I am still working.’”

Every never-ending story has a beginning, an origin story. There is a moment or a circumstance that sets everything in motion. An inspirational origin story in the guru Professor Dr. Hermann Simon who gave birth to the term Hidden Champions as he engaged in a conversation with Harvard’s Professor Ted Levitt who asked how could it be that Germany, in spite of its medium size, is always the #1 global export nation, and they conjectured that the mid-sized companies Mittelstand must be the cause. Thus, the Hidden Champions have their roots in the esprit de corps of Germany’s Mittelstand who are the 3.5 million small and midsize family enterprises that form the backbone of Germany’s resilient export-driven economy, employing more than 78% of workers and contributing more than half of the country’s GDP. Professor Simon went on to found a hugely successful management consultancy firm Simon-Kucher & Partners based on the success factors of Hidden Champions with a niche focus on pricing strategies.

An origin story in also how the Hidden Champions Fund was conceived and built from scratch when I joined 8I Holdings Ltd in September 2015, taking over a proprietary investment portfolio with cumulative absolute losses and portfolio stocks that include Singapore Post and Wilmar – and transformed into a proper fund structure, obtaining the Registered Fund Management Company (RFMC) status from the Singapore financial regulator Monetary Authority of Singapore; generated a cumulative positive absolute return of 31.2% (versus 21.5% for the EAHFI or EurekaHedge Asian Hedge Fund Index, an equally weighted index of 338 hedge funds investing exclusively in Asia) with an asset under management (AUM) of US$27 million as at 29 December 2017 since adopting the distinctive focused investment strategy of investing in successful yet relatively low-profile underappreciated Hidden Champions in Asia Pacific, including a 13.9% return in 2016 when overall markets are largely flat to negative; raised over US$5.6 million in new capital from high net-worth individuals and institutional clients; and received enquiries from institutional clients that include Yale Investments Office, Abu Dhabi Investment Authority (ADIA), institutional investment advisors in Japan and Australia.

It was tense at the beginning when I was confronted with the reality and ultimate responsibility of taking over a portfolio with cumulative absolute losses – and the overall market then was uncertain in outlook and continuing its decline. A natural course of action in decision is to sit and wait it out for the market to “rebound”. Wait for that proverbial “mean reversion in returns” to take its course. What if a “rebound” were to happen after you sold the losers or even realize profits in the winners in the portfolio? Shouldn’t value investing be supposedly about buying stocks when the market has crashed? While the market has corrected at that time in August-September 2015, it did not qualify as a crash like that during the 4Q2007-1Q2009 Global Financial Crisis. Is the decision to hold cash a well thought-out one to not chase after stocks while waiting for a supposed crash, or one that is masked under the guise of being paralyzed into not taking action, or not having a systematic investment strategy to identify and capitalize on mispriced opportunities?

What went through in my mind is something quite different and longer-term in perspective when making the difficult investment and business decisions back then: What should the investment philosophy, style and strategy of the portfolio be, so that it is distinctively unique to:

(1) Achieve superior long-term risk-adjusted returns, even generating positive absolute returns in down markets – value investing is thus not about market timing in waiting for a crash to happen;

(2) Not be widely followed by others in the investments industry to throw up structural and persistent mispricing opportunities;

(3) Be scalable in fund capacity to handle new money with a high-conviction investment strategy with transparency to overcome the asset size barrier to performance;

(4) Stand out amongst the thousands of funds in the marketplace to attract the attention and investments of long-term institutional clients.

Since picking up the first edition of the book Hidden Champions: Lessons from 500 of the World’s Best Unknown Companies authored by Professor Simon in 1996, I was spellbound and applied its framework to identifying and executing investment opportunities at my earlier careers at a boutique hedge fund specializing in value investing and at Korea’s largest mutual fund organization. Over time, I made improvements to adapt the business management principles of the Hidden Champions to value investing, giving birth to the proprietary Bamboo Innovator framework in analyzing wide-moat business model quality and avoiding the pitfalls of investing in Asia with its prevalent accounting fraud and misgovernance risks, which I incorporated and implemented in the investment process of the Hidden Champions Fund.

It is painful for me to witness first-hand many investors and friends who had invested their hard-earned savings in a number of these supposed value stocks which are thematic stocks that are part of the popular mantra “Ride the Asian Growth Story!”, only to find themselves subject to emotional upheavals when these stocks turned out to be inherently sick and prey to economic vicissitudes. They may seem to grow faster initially but the sustainable harvest of their returns is far too uncertain to be the focus of a wise program in investment.

Worse still, some turned out to be involved in accounting frauds, in which their financial numbers were “propped up” artificially to lure in more funds from investors, and the previous assessed asset value had already been “tunneled out” or expropriated in money-go-round tunneling opportunities via unusual related-party transactions. The four categories of commonly-used tunneling methods used by actual insiders, manipulators and syndicates to expropriate corporate assets include: (1) Money-go-round intercorporate loans, guarantees, other receivables and investments, (2) Capex irregularities, (3) Deals potion, (4) Consolidation craftiness e.g. the improper pushing of operating expenses and debt liabilities into unconsolidated entities in which the listco has effective economic control and power to artificially inflate its own profit and balance sheet asset value.

This issue is compounded as western-based fraud detection tools and techniques have not been adapted to the Asian context to avoid these traps. It is disheartening to witness many fraud perpetrators go away scot-free and live a life of super luxury on these unsuspecting minority investors’ hard-earned money.

Thus, accounting information can be used to inform – or to deceive. I am fortunate to have taught accounting at the SMU, including launching the inaugural 15-weeks course Accounting Fraud in Asia. I am grateful to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about the potential of implementing the world’s first fact-based fraud detection system for Singapore.

I incorporated and implemented this fact-based forward-looking fraud detection system that combines accounting data, especially footnotes, with a wide array of contextual information – including unusual related-party transactions; money-go-round off balance-sheet activities; governance, group structure, consolidation accounting and ownership analysis; textual and linguistic analysis; analysis of event-based “catalysts” (information-based manipulation) and sensitive market announcements (action-based manipulation in prices and volume) – to provide fresh insights in equity valuation to inform our decision making in investments at the Hidden Champions Fund.


Caring is an exacting, serious and demanding business, especially when it comes to being entrusted to invest in another person’s financial assets, which represent much more than money – they are a tangible product of one’s life’s work and a repository of aspirations for the future. We are acutely aware of the intensive work nature with time sensitivity and the weight of short-term performance pressure on our shoulders. We must endure periodic bouts of being misunderstood while we focus on delivering sustainable long-term returns over time. The daily grind of the investment work is not to the liking of most people and the work finds us only when we decide to live with a greater purpose to serve.

Like the ancient Painters descending into the clay pits to study the rudiments of color, we enter our 30-square-meters investment room to embark upon a learning journey of self-reflection and discovery to nudge and help one another to strive towards mastery and excellence as we lose ourselves in the service of others. I have invested a lot of my time, energy, emotions and dedication in training and grooming the team wholeheartedly, never holding back with what I know.

For instance, Joyce Pang Qin, our Investment Analyst, is now quite adept at plowing through the prospectuses and annual reports of Taiwan listed companies to assess the quality and evolution of the origin story, having being encouraged and pushed by me to go through several dozens of prospectuses and annual reports, for one need to walk through the coals of fire to get to a critical mass of knowledge for the callused feet of resilience, ferreting out nuanced important information such as whether the company talks significantly more about the industry and less about the company itself in its business model, strengths, weaknesses, opportunities and threats; as well as to evaluate critical risk factors that over 80% of the listed Taiwan companies have, such as whether the management made any share pledge 股權質押 and unusual non-core investments 轉投資, etc.

Tho Jinliang, our Business Development Analyst, has supported under my guidance in listing our Hidden Champions Fund on HFM Global database and EurekaHedge, which highlights some unique statistics of our Fund, such as the percentage of positive months which stands at over 70%, and also puts our Fund in the radar screen and direct scrutiny of the asset allocators and institutional investors. Jinliang is also instrumental in bringing to fruition our website www.hiddenchampionsfund.com that will make it easier for investors to appreciate our unique investment philosophy and process. The website also includes a section of “Business Builders of Asian Hidden Champions – Heroes in our Lives” to map out a selected group of Asian entrepreneurs whom we have monitored over the decade plus and admire and respect them. Please let us know of your valuable comments and who else do you admire in Asia and would like us to include in the Hall of Fame, as well as share with us which Asian entrepreneur do you like most.

Both Joyce and Jinliang have dedicated themselves to the craft and I will like to promote Jinliang to Business Development Manager and Joyce to Investment Manager. They do not talk about how they have no time to do deep work, the things that matter and need to be done, for all of us to move and progress ahead.

“No matter how hard your job is, don’t try to make easy money. If you want to realize your dream, work twice as hard as others do. It’s hard but if you work hard and never give up, you will succeed!” – This heartwarming advice by Nagarmori-san’s mother to her son is what my loving mother would have said to me too. The personal story of Nidec’s Nagamori-san in how he etched his mother’s advice and love deep in his heart, and the tales of struggles to success of these Heroes in Our Lives, have inspired me deeply all these years that there is no short cut to success.

I will always remember the date 8 January 2011. It was nearing midnight on a Saturday. I was looking at my excel spreadsheet and doing some research work on stocks. My mother was in her own room next to mine. She suddenly let out a really scary yet strangled scream, one that I had never heard before. When I rushed into her room, she was vomiting. Later, I noticed that she cannot move one side of her hand and leg and she cannot talk. After rushing her to the hospital did I realize that she had suffered a severe hemorrhage stroke that had burst her blood vessels. She has since been disabled and speechless for the past seven years, with added pain complications in her central nervous system that affects a rare few in post-stroke victims, and my dad and I are caregivers to her. Till today, I can never forget the sound of that scream by my mom on that night which is a life-altering event for my family.

Imagine if an investment professional says he or she finds it difficult to have quiet time – over an extended period of time – to do deep work and the investment work that matters and is needed to be done for all of us to move and progress ahead. I worked on research and dedicate to my craft when the night is quiet, for years, even till today. While I am nowhere near successful, I feel very strongly that the journey of a struggling artist-like career is like that of a value investor and is akin to what Lee Kuan Yew and Sim Kee Boon once said, that joining the administrative service is like entering a royal priesthood. It is a sacred journey. It requires a reverence for the craft. You do not desecrate the craft of an artist. You do not denigrate the journey of an artist. That investment professional should feel strange and perhaps even ashamed to have that responsibility in handling the hard-earned assets of the clients. There are certain values, principles and decisions involved towards craftsmanship that perhaps should not be disputed or interfered with.

While I am merely the “football coach” of the Fund, I have pour forth my whole heart and blood into creating from scratch and building an ongoing business with recurring income and cost discipline for the Group and football club owners, also risking my own hard-earned savings investing into the Fund with the same fees and terms as the external client, to demonstrate with action my personal commitment and alignment with the client. On this note, I like to express my thanks and gratitude to Ken and Clive, the co-founders of 8IH, for providing the platform with 8IH seeding the initial capital.

I would also like to take the opportunity to express my heartfelt gratitude and thanks to the people who have been so supportive and encouraging despite my many flaws and weaknesses: my wise and kind and loving mentor Professor Leong Kwong Sin from the Singapore Management University (SMU); Professor Pang Yang Hoong, the Vice-Provost and former accounting dean of SMU; Hemant Amin, founder, Managing Director and CIO of the hugely successful multi-million Asiamin single-family office; Arun Chopra, CEO of IIFL Singapore; François Badelon, founder and President of Amiral Gestion Group; John Mihaljevic from Manual of Ideas and Oliver Mihaljevic; Chuck Royce, founder of Royce Funds and one of the pioneers of small-cap investing, and clients of the Moat Report Asia.

It is easy to feel like a failure if you have not made your mark by the time you are forty, or even thirty, especially since popular culture bombards us with messages that make overnight success seem deceptively ordinary. Yet many people hit roadblocks and quit points that challenge their dedication to a goal, and a lot of them give up and move on to something that is easier or more convenient. What sets Hidden Champions apart is the determination to succeed on their own terms, no matter how long it takes, what form or shape it takes.


In more than one letters to shareholders, Warren Buffett and Charlie Munger suggest that the best investment you can make is in yourself. We hope these letters to the shareholders will be a useful resource of learning and analysis that you can adapt for your own investment decisions.

This is not a how-to book. You get, however, a candid and frank account of investment mistakes made and obstacles overcome. You will be able to view our decision-making process from a unique vantage point. You have a collection of insights about what went on beneath the surface of those decisions over time. You will see our fallible side. You will see how we responded to our own mistakes and faced challenges as the world changed around us. You see how the same timeless principles are applied to vastly changing landscapes and circumstances.   These letters will sometimes be rambling like a loving mother to emphasize its importance. They will also be full of tales of the lure and dangers, shocking revelations and intrigue of money management. And they will be loving as well.

Hidden Champions thrive in stormy times: Market positions are not redistributed during sunny and calm times, but during times of crisis. The specialization and innovative force of many mid-sized Hidden Champions makes them indispensable for their customers and Hidden Champions have stood the test of time in facing crises, proving themselves to be adept consolidators in snatching market share from unfocused rivals to achieve market leadership and even market dominance, and to be innovators in creating new categories of growth.

The Hidden Champions Fund is not for everyone. Only for investors who see themselves in the Hidden Champions – their struggles, how they are misunderstood and overcome the odds with persistence, and the non-linear triumphs – that we invest in with high-conviction when the reward-to-risk and value-to-quality metrics are compelling. Only for investors who want to go the right way, not the easy way.

These letters are the story of Stage 1.0 thus far in this initial two years and three months of the Hidden Champions Fund’s journey, with the ongoing long-term resilient growth of our portfolio companies. Overall performance has been gratifying, giving us confidence in the robustness of the investment philosophy. As we now progress into Stage 2.0, a collaborative activist investment approach will be undertaken to unlock non-linear jumps in market value creation of our key portfolio companies in which we are substantial shareholders by engaging in constructive discussions with management to identify and execute on opportunities to unlock value for the benefit of all shareholders.

To our clients, we are thankful and grateful for your trust and support in us.

Please feel free to contact me with any questions, thoughts or comments at: kb@hiddenchampionsfund.com.

Warm regards,
KB

KEE Koon Boon
Chief Investment Officer & CEO
Hidden Champions Capital Management
Hidden Champions Fund

%d bloggers like this: