Zubr Capital
07 july 2015

Secrets for Investing Success by David Fisher

At the beginning of July David Fisher, a distinguished private equity expert, visited Minsk. On 2-3 July he held training for Zubr Capital team.

David has more than 30 years of experience in private equity. In nineties, after coming to Poland, he was one of the originators of private equity in Poland. For many years David has been working at emerging markets, thus his expertise is so valuable for Zubr Capital.

Acknowledged Russian and Ukrainian ‘PE guru’ Mark Ivashko and Vladimir Burenkov have participated in the training together with Zubr Capital team. The two-day session was dedicated to private equity peculiarities in emerging markets: from essence of private equity, market analysis, search for deals to exits from investments. By the way, David Fisher shared his rules of ‘Investing Success’ in rather ironic and aphoristic way.

Rules of ‘Investing Success’ by David Fisher:

 

  1. FIRST RULE- The First Rule of Making Money is "Don't Lose Any!"  Sure we do some risky deals, but cover your downside (and backside) the best you can.
  2. RISING TIDE RULE - "A rising tide lifts all ships."  Investing in the right sectors provides a generous margin of error and great returns.
  3. WORK STANDARDS– We have only 3 categories for rating our work: Perfect, Excellent and Unacceptable.  Good is not good enough.  If you do a good job for us, you’re going to get fired
  4. HUMAN RESOURCES–  are the key assets of any fund manager - so hire the best and fire the rest.
  5. CHINESE WISDOM – The Chinese symbols for “crisis” are “danger” and “opportunity”. If you are clear-headed enough to see both while others panic, you will do well.  As the Brits say, “Keep calm and carry on.”
  6. ORGANIZATION- Without a clear delineation of goals, responsibilities, authori­ties, functions and relationships, you haven't got organization; you've got chaos.  Employees will spend more time fighting among themselves than doing the jobs they're paid to do.
  7. RISK, RISK AND MORE RISK - Think about the various kinds of risk applicable to your deal: Business Risk, Liquidity Risk, Default Risk, Market Risk, Political Risk, Inflation Risk, Foreign Exchange Risk, Interest Rate Risk, Concentration Risk, Contingent Liability Risk...BUT don't let it paralyze you.  Just make your best judgments and press on.
  8. CO-INVEST WITH THE BEST- A good way of spreading your risk and rationing your manpower is co-investing.  Just make sure you match up with good folks who ideally have expertise and experience in that investment area plus an alignment of interests and timing with you.  Like wolves, investors often hunt in packs.
  9. TIMING IS EVERYTHING– Managers who invest during economic down cycles and harvest during up cycles consistently outperform. 
  10. BACK TO THE BUSINESS BASICS- If you can't explain in a few paragraphs why this investee should be a success due to fundamental business principles and strate­gies, you're already in trouble.  Any business must identify market opportunities to fulfill those wants or needs at a profit that provides a reasonable return on investment considering the risks involved. 
  11. I'M OKAY, YOU'RE OKAY - Structure deals so that there is a co-alignment of interest between the investee and the investor.  You should win or lose together.
  12. WALL ST. JOURNAL TEST- Speaking of rules of thumb...I've always thought that a good ethics test for any situation or deal is--How would you feel about it if you read an accurate account of your actions on the front page of the Wall St. Journal?