Friday, January 10, 2014
When I learned that China was being overlooked by Wall Street, I wanted a piece of the action. This was late 1990s. So first I built positions in all of the China funds on the NYSE. I learned Mark Mobius was the man to watch, he taught me to let the manager do whatever he wants without limits.
This led me to a global fund which out performed the S&P enough to pay for my Porsche. During one of his seminars, this one was in New Zealand, he let slip that he was getting much higher returns on private capital.
In the US only the rich are allowed to get richer using private capital. It is still that way, three million dollars will not get you in. Which is why I became interested in a private capital management company that I owned in my Insider portfolio?
While we cannot Invest in the companies investment properties directly, we can own the management company and earn fees from those very same funds. They tell me the same thing. Not to restrict them to any ideas or countries and let them do their own thing too bring us higher risk-risk-adjusted absolute returns.
Och-Ziff makes investments on a global basis with headquarters in New York City and offices in London, Hong Kong, Mumbai, Och-Ziff Consulting (Beijing) Company Limited, and Dubai. So with one investment we get a global reach, diversification and a team investing along side of us.
With a pipeline we have solid assets in the ground paying out cash. But a management company is a service company. Our returns come from assets under management (Aum).
As long as Aum increases we should see greater growth, currently $40.6 billion in assets under management. When those assets begin to shrink we should not hesitate to bail out.