GFRhodes

Thanks for the feedback everyone :) I think there aren't more firms like them because it requires foregoing short-term gain. All the financial incentives pull the other way. Plus, building a business for the long-term can increase risk in the short-term. You can walk the high road but can you afford to keep the lights on? IMO Li Lu's speech was all about margin of safety: know what kind of participant you are in the market so you don't get shaken out by Mr. Market's siren song; behave in a way that benefits society too so you don't get shaken out if they turn against you; don't invest in what you don't understand so you don't get shaken out by life's many surprises; understand yourself and your emotions so you don't get shaken out by your own poor temperament etc. etc. So yeah, I think building trust with your clients is an absolutely vital margin of safety too. You don't want to be shaken out if your clients lose faith in you when it counts the most.

I've never met Li Lu but he's become one of my greatest teachers. Stuck at home, I thought I would translate the follow-up he gave late last year to his 2015 speech. Hope you all enjoy and learn as much as I did. https://www.longriverinv.com/blog/the-practice-of-value-investing-by-li-lu Stay safe

This might be the Chinese version. I can't read it unfortunately. http://liluchineseblog.tumblr.com Yes, that looks like them. Thanks! The introduction to the first post says: "Why is the disparity between China and the West so large? How can China catch up with the West? What will China look like after it catches up and can it reclaim its past glory? Using New History and adding economics, biology and other natural sciences, as well as traditional studies of Chinese history, we can today place the question of China’s modernisation into the context of mankind’s overall development over the past millennia. From this foundation, we can better understand and answer the three questions above and make more reliable forecasts about China’s future." The blog also has Li's foreword to the Chinese edition of Poor Charlie's Almanac. There's already a translation but the link doesn't work for me? http://blog.enochko.com/2010/06/my-teacher-charlie-munger-english.html

Part 1: http://36kr.com/p/5040874.html Part 2: http://36kr.com/p/5040866.html?from=guess

Li Lu of Himalaya Capital spoke to students at Peking University's Guanghua School of Management in October 2015 on the "Prospects for Value Investing in China". There's a partial summary on Seeking Alpha based on a machine translation but transcripts have to date only been available in Mandarin. Well, after chipping away for many, many weekends, I'm happy to share a full English translation here. The speech is a long discourse on investment and ethics - almost 40 pages - and will give you an excellent insight into Li's mental models and how he sees China (and perhaps a clue as to Charlie Munger's views on the same). All mistakes are my own, of course. Enjoy! 17_02_13_-_Li_Lu_-_Speech_at_Guanghua_School_of_Management_-_Translation.pdf

“If you want to build a ship, don’t drum up the men to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea.” - Antoine de Saint-Exupéry Thanks everyone for the posts and have a great weekend!

Warren and Charlie’s 50th anniversary addenda to this year’s BRK shareholder letter emphasise the importance of re-investment. Warren writes that “a conglomerate such as Berkshire is perfectly positioned to allocate capital rationally and at minimal cost… we can move huge sums from businesses that have limited opportunities for incremental investment to other sectors with greater promise.” The example he cites is See’s Candy, which has earned $1.9bn pre-tax since 1972 while requiring only $40m additional capital. But what if See’s had been an ordinary public company without someone in charge of capital allocation who could consistently re-invest that surplus elsewhere at a high rate of return? This is often the case in the Asia Pacific region where I invest. I see many great businesses which generate a lot of free cash flow but with apparently limited opportunities to put it back to work. While the ideal would be to return the cash to shareholders, it often ends up sitting idly on the balance sheet or seeking growth in a series of poorly performing side lines. Some examples in my opinion are: HSBC (5 HK), Wharf (4 HK), DuluxGroup (DLX AU), Sitoy (1023 HK), Tsingtao Breweries (168 HK), Galaxy (27 HK), Jollibee (JLB PH), Bosch (500350 IN) etc. I'm not as familiar with the US but arguably Microsoft and Apple fall into the same category. I’m quite interested to know what other investors think. Do you take re-investment into account when assessing a company and its value? Do you shy away from good businesses with limited growth?