 Good day, fellow investors. I'm very privileged today to be here with Peri Enster in his beautiful villa in Portugal, Cintra, to discuss about how to invest in stocks, because he has been a consultant, business consultant for more than 40 years, professor of strategy, and everything evolves around finding great businesses when it comes to investing. And I'm so happy to discuss this with Per and thank you, Per, for doing this. It's a pleasure. So let me start by introducing Peri Enster. He is an academic entrepreneur, investor, businessman, consultant. So he started his academic career as a Fulbright scholar at the Pittsburgh University, then started as a professor at Virginia, then followed by IMD Business School, then was the dean of the Copenhagen Business School, and then at the China International Business School in Shanghai. Yeah. Alongside that, because academics is best when it's practical, he also had your consulting business where you consulted dozens of businesses among IBM, Philips, Unilever, so you always did that. And the third pillar of your career has been investing in startups and bigger businesses that actually are now also you invest in shares through the fund that you set up. So a very broad perspective on investing, on businesses, on academia, and let's cut the chase and let me start with the questions. So please, Per, tell us, when you invest in a business, in a stock, what is the core, what are you looking at? I think we always look after a business that has a clear strategy. And what does that mean? Well, I think a strategy needs to be a concise concept focused on the market with products that are obviously unique or can differentiate itself from competition. We're looking at businesses that it's not easy to get into because if there are barriers to entry, if it is profitable, you will always see more competitors come in and try to steal away your gains. We're also looking for companies where you don't have too many competitors and preferably no competitors. And they don't necessarily need to be big businesses. I mean, there are many smaller businesses that other geographically or in a specific industry can be really, really unique. And so even the small size, they may actually have either the whole market or 70, 80%. And generally, when you have that kind of a market share, as my good friend, Jack Welch once said, one and two will do three and four out the door. When you dominate a segment, you control profitability, you can better cater to customers, and you have economies of scale, even at smaller sizes. In fact, most niches that are dominated by one person is actually a niche because there were only room for one company that can actually be at minimum efficient scale. So the uniqueness of these businesses is I think something that is very common, because if you have a good customer base and there's demand that outstrips supply, you will make money. Yeah. So that's the kind of businesses, whether it's in private or in listed companies, those are the kind of businesses I always try to look for, because they tend to be much more profitable than the average company out there. And do you prefer smaller businesses, or do you also like when you're found when you buy stocks and shares, do you also like to buy big businesses or just smaller, medium? All right. So you mentioned the fund. So six years ago, my partner, through 30 years, he used to be a student of mine at IMT. He'd been working with me in my consulting company for all these years. We decided actually that we wanted to create a fund because we felt that many of the funds that you can invest in if you go to your local bank or whatever, they actually don't really have a strategy. I mean, they will be sort of the top Europe top 50, or it will be Asian growth stocks, et cetera. In my book, those are not strategies. I mean, it's not that it's bad, because if you are very large fund, you maybe want to have some sector diversification or geographical diversification. But in my book, that can never really achieve high yields. So what we decided to do actually, given the fact that we had 34 years of experience in helping companies become more profitable than their competitors, was to actually find companies that had those special characteristics and then invest in it. Because we felt there were really not anything available on the market. That's not completely true, because there are funds out there managed by managers that follow a very similar strategy to ours and what you talk about on your video channel, classic value investing. But they also understand that you need to find those unique gems. But many of these funds are actually not available. I mean, first of all, you need to have $1 million or $10 million or $100 million to be part of that group of investors, or they are not available. And frankly, also, we were looking a little bit at the cost and we said, we think we can do this better. So we literally have created a fund for what we call Friends, Fools and Family. And we've been very successful so far. But those companies we are investing are the classic companies that I'm talking about. It is in our case now listed companies. So they need to be listed on the stock exchange. They are small to medium sized companies. And why do we do that? Because small to medium sized companies, if you track it historically, and this is where the academic side of us come in, are so much more profitable than if you invest in large caps. So we go for small and medium sized companies. And we go for companies that are exposed to growth. It can either be in an industry or it can be in a geographical area. So my own preference is Asia. And I think you also have mentioned that on some of your videos. And why? Because there's a lot of people out there. There are lots of growth compared to Europe, which is anemic. And then finally, we do classic value investing, meaning we always go in and invest in good value where there's a wide upside to it. Where the margin of safety is very big. So these are the classic elements of the kind of things we invest in. And then we have a strategic mentor that we basically look for. That these companies have to qualify for. Again, as I said before, is there a barrier to entry? Do they have a lot of competition? Are there products different? What about consumers? Do they have a lot of options at choosing? And oftentimes, we try to actually avoid companies with too much fixed capital. And that, of course, is something to do with how you weather cyclicality, etc. So all our stocks have to sort of go through that mentor and be checked out in order to see whether they have strategic viability according to our criteria. And that is an exercise that I think is useful while you are investing in a private venture or where you are investing in stocks, in shares, as an individual or you like us are having a fun to do it. And something special that you always talk about how even if you invest just in stocks, you always like to go and meet the management and check the company personally. So I think that comes from your also investing in startups and that later many way went public. It does. It also comes from my academic work. I've always liked to actually even when I was teaching executives, etc., to bring in cases into the classroom where I had actually been with the senior management. You get a sense of them because you want to invest in companies where you have good quality managers and they don't do stupid things just because they're sitting on a pile of cash going out and buying something because they want to become bigger and etc. You want really to have an understanding of management teams that create that stability. I'm at an age now where I don't like to go out and buy a lot of green bananas. I like to have proven results and that sometimes make it a little bit boring. So I don't know anything about Bitcoin and I don't think I will ever get into that kind of thing. I like proven concepts, companies that have shown again and again that they can deliver, they can deliver growth, their customers are happy, employees work hard and they deliver earnings growth year after year. Those are the kind of companies that I personally like to invest in and some people may find them a little boring. I rather want to pay a higher price in terms of a PE because people often forget that even companies that have a slightly higher PE, if they are really profitable people forget that the earnings actually get invested but not at the PE rate at the one-to-one rate. So over time you will have shares that are just going to become more and more valuable. So what you pay in 10 years time or 20 years time is actually going to be almost irrelevant. So that's what we like to go for. So now that I hear this, that's very similar also, Munger says return on invested capital from the company. But a question now from the whole perspective of the industry, why is 99% of people chasing after index funds, why history, academia, successful investors, value investors have shown over and over again through time that these are the simple principles that work. Well, I think I have a dual sort of relationship to index funds because it is to that in the world of fund management fees are high and sometimes often too high. And it's where sort of the investors are bearing the brunt of the risk and the cost and the managers are basically just plugging the grapes no matter what happens. So index funds have a role in the sense that they are very cost effective. And it's also true that they have actually managed to do fairly well over the past 10, 15, 20 years. And with that success has also come their popularity. So they right now have a little bit the characteristics of one of these sort of multi marketing schemes where more and more people pile in and the more and more money there is. And of course they are all buying almost the same shares. And that is of course giving them a self fulfilling prophecy until my friend the market turns because as retail investors then becomes scared and want to get out. Of course the funds need to sell the same shares. So just as they have been very successful in building up quote unquote performance, they are also going to suffer the brunt when everybody wants to pile for the exit. And I think that's the difference with the way I think about investing is I don't really like to think about buying shares. I buy companies. And so that's why it's not that different whether you're investing in a small to medium sized company or startup, even a startup and invest in the shares of a listed company. Now I have to also warn your audience that small and medium sized companies also have a negative size to it. And that is that they are often very thinly traded. And that means also because they are thinly traded, if you want to get out, you often have to suffer price declines, particularly if you do it in one go because they are thinly traded and the spreads between buy and sell often very large. So that's why for instance in our fund we don't trade that much. I mean we trade when some of our successful shares basically hit the upper limit of how many shares of that stock we are allowed to have. And my great partner Peter Barclay always cries when he has to sell some of his darlings. But then at the same time also when we didn't see that they have become maybe less pricey, we will also go in and buy some of them again if there's room for us. But we are very careful about trading because I think some people are day traders and I know very little about that and some people seem to be very successful with it. But that's not us. We invest in companies and we invest in companies with a very clear strategic focus. And I think everybody should look for that. And sometimes you can obviously need to do your financials and your channel is very good at discussing that. But I think the financials only show you what the company has been doing in so far in monetary terms. You need to go beyond on saying what was that actually created that financial structure in terms of products, markets, etc. And then you need to go back actually and look even further into the kind of organization, its history, its management team and also get a very clear understanding of whether this thing is also going to be viable in the future 5, 10, 15 years from now. And many investors don't want to do that work. And that's why I actually appreciate people like yourself who not only teach the people who follow you about the kind of depth that needs to go into considering these shares rather than just buying it because, oh it has a low PE. Let me just buy it. You need to do the work. And that's why also I think your platform is a great source for people who are interested in that to go in there and get more in-depth information usually than you can get from your stock broker or from the bank that you may be dealing through. Thank you, thank you. So that's also the business side, the qualitative that explains the numbers is also a reason why I applied for an internship at Per's Fund. So I hope to get that internship so that I can increase the value of YouTube and internship. All that I get is, I work, I hope I can help them a little bit with digging deeper and I hope to get back the knowledge and share that knowledge also on this YouTube channel. So I hope to see much more of parents of this YouTube channel. Of course your partner Peter Barklin and also presents some, I hope they will give me their analysis of stocks that I can make videos and increase the value of this YouTube for you as a viewer and for the whole investing community that likes this. Okay, we are not investing in shares stocks. We are investing in businesses, quality businesses, people management to let's say help us financially in the long-term. Well, I'm not sure how much we can teach you but I think it is so important that people, particularly now where we have a lot of flurry on the market, okay. And people are very nervous and in fact, you know, old friends of mine suddenly show up and saying, gee golly, I'm down 30%. Can you help me now? Well, I wish you had talked with me a little bit earlier. But particularly in these times, it's important to understand, yes, there's maybe a repricing going on in the market right now, but the companies you should have invested in, if they are healthy, etc. I'm not concerned, you know, because and I think this is the difference if people just are focusing on the daily value of their shares. I'm not going to compare myself in any way to Warren Buffett and Charlie Munger, despite the fact that I also play the ukulele. But I really want people to understand that they need to get away from this, you know, just looking at a stock market and the talking faces on the television. But they need to actually spend the time, as I think you were so well advocating on your channel to really find out where you don't need a lot of shares, you need some good ones and you you really should get some good ones that you can just keep and hold on to. So in our fund, we have I think now about 24, 25 shares. We don't want many more. If it goes below 15, I don't think I'm diversified enough in the fund. And even the fund to me is we have a very clear focus, small and medium-sized companies, etc. In my own portfolio, so I have a lot of money in the investment fund, but I also have my own portfolio where I diversified in different ways. For instance, I just got out of a very large business in China. And before I didn't want to have any more in China because there was too much. So the last last couple of months, I'm now looking at specific China-based companies. And also, as we talked about earlier in other emerging markets, you didn't sell stocks of the business in China. That was a private venture. Oh, it was a private venture. It was a very, very large project involving real estate, etc. in Sichuan province in China that I've been working on for eight years. And getting out of that freed up, not only some cash, but it also freed up the diversification opportunities for China. And I have always had a lot in real estate. Now I'm out of that real estate, which means I can now rebalance my portfolio with real estate in other areas, for instance. Or as you also say, you want to have some commodities, you want to have some diversification between industrial and consumers, etc., and financials. And I think everybody has to think in those terms. Even if you have a little money and you have big money, you need to sort of think about this. And it doesn't take place overnight or just because you're meeting with your local bank advisor, which you may not want to do. They're like used car salesmen. And this is also why I originally contacted you, because I think you're doing a great job and a great service that is not very common. You don't generally find it on sort of CNBC and CNN and Bloomberg. You don't find people that actually are willing to stand up and in a rigorous way go through and explain these things for the public. And some of your viewers, I'm sure, don't have too much money. And I'm sure that some of them actually have a lot of money. And you help everybody sort of understand and get on track in terms of these, I think, very valuable insights. It's not my insights. I mean, Warren Buffett and Charlie Munger, of course, are some of the biggest proponents of this way of thinking. And it's not unique. It's not difficult. If you are just willing to take the time to both learn about it, but also go through the analysis. And this is where I think the service of the channel is terrific and must be commended. Thank you. Thank you. Let me just finish with now we are many say late part of the economic cycle. When you go back in your long career, more than 40 years, how do you compare this period with something that happened or in the past? Or isn't it comparable? I think there are few things that are different. First of all, the access to information is very different today. I can pick up the telephone now to my broker in Singapore. And within half an hour, he will have three or four analyst reports on maybe a Chinese company that I'm interested in. I mean, it's just unthinkable in the old days. So the access to information, now you have to realize everybody has that access. And that's why you also have to be able to sort out what is, as we say in Denmark, shit or Chanel, you need to be able to understand, there's a lot of noise out there. And it can oftentimes be confusing for particularly inexperienced investors to not just listen to hype or whatever goes on, because there's also a lot of fake information out there or misinformation and populist information. So that's also one reason why, for instance, I like to go down and see the companies or go to the companies and see the companies we invest in, not that the personal meetings always can reveal everything. But sometimes, you know, you find information in saying, gee, God, nobody really actually knew about this. And you can see on their faces, if some of the information they have been posting in the public, maybe not, it's completely true, etc. And I think this is very important, particularly when you invest your own but also other people's money, that you have that sort of sanity check on how you do it. What else is also investing, for me personally also, I have, of course, learned. And I think this is another thing that your people who follow you need to understand is that over time, you become better and better and better. It's the same thing with entrepreneurs. I always tell the entrepreneurs of my own students, etc. Electing an entrepreneurial career path is a learning process. You never get it right first. You're going to make mistakes. You're probably going to, you know, if not go bankrupt, but certainly have to fold your company a few times. And in fact, I think that the people who have done it a few times that are actually the best entrepreneurs, because they have been down, they know what the bottom of the bank account looked like. And I think it's very healthy. It gives you humility. And I think you need humility if you want to learn so that every new day is a new opportunity to find insights you didn't have before. And to me, this is very important. And again, I said, I think your challenges are very good impetus for people to log in and say, gee, I never thought about that. Oh, wow, this kind of company, I actually never understood like you had a very good discussion on copper. I think it's very nice for people to be able to go to a place like this and have that be a start of their journey. And it is a journey because you're always going to learn new things. And to me, this is also exciting. This is why I'm an educator and academic. I love to learn. And so I think that's a little bit different today, where as 30 years ago, it was much, much more difficult. Thank you. I like I think all our viewers will enjoy it very much. If they have any questions, especially about the fund, if they are non US professional investors. Yeah, that's sort of an interesting twist. If I may just add a few comments is that so, you know, because the US have actually created restrictions around the world in terms of how you can open a bank account and who can be in a fund, etc. The reason why we don't take US citizens into our fund is that if we do that, we then have to basically expose every investor in the fund to US rules. And we just say then it's easier for us not to have US customer. So it's nothing against Americans. I'm sorry. But you sort of have done it to yourself. All right. So I'll put the link also below for if they have any questions. Yeah, if they have any questions, I'll be very happy to talk with people and answer them. Well, thank you for doing this. I'm sure they will enjoy it. And I'll see you next month in Malaysia at the investor conference. Yeah, we'll be happy to see you there. Great. Thank you, Pat. Cheers.