Dubaibeat notes that Hossam Shobokshi (pictured), the Saudi-national and ex-MENA Head of Private Equity at Standard Chartered Bank, recently launched the Alef MENA Value Fund as Chairman of Alef Capital, a Cayman Island-based investment manager.  Commented Shobokshi:

“The MENA markets offer some of the most interesting value investment opportunities in the world today. There are a good number of well managed and positioned companies trading at good discounts of the possible range of their fair values.”

Per Shobokshi, Alef Capital’s principal investment ideology is rooted in “the well proven method of value investing” in lieu of top down, macro or even technical anlysis: 

“Alef Capital keeps things simple. The focus is solely on two things and only on two things–quality of the company and the price we pay for it.  Recently for instance, we are experiencing what we call ‘the GCC Shopping Festival’.  We are actively buying securities of several well managed and well positioned businesses in the UAE and other GCC countries that are trading at substantial discounts.  The abundance of value opportunities in the GCC is a relatively recent phenomenon as in the past couple of years good value opportunities in the MENA region were only available in the North Africa and Levant markets.”

Interestingly, Mr. Shobokshi laid out the essentials to value investing over on his Alef Group site.  They provide a window into his methodology.

1. Strong Barrier To Entry – such as strong brand names, licenses, and unique real estate.

2. Cash Profits – Alef Group cares NOT for growth without cash or fancy accounting.

3. Good Price – Alef Group HAS to buy significantly below the Intrinsic Value of the company.

4. Successful and friendly Managers/Partners – Alef Group believes in being low key and in management acting for the benefit of all partners.

5. Out of Favor – Alef Group likes to help people – to quote a legendary investor – “When people are selling, selling, selling and rushing out”, Alef Group helps them and buys. When a country, industry, and/or company is out of favor, Alef Group digs deeper and we often discover jewels beneath the rubble.

6. Solid Balance Sheets – Alef Group prefers low debt companies that can survive in down markets, buy other weak competitors, or become targets for acquisition.

7. Superior Returns on Capital – Again, Alef Group prefers good management as exhibited among other aspects by above industry ROE (Return On Equity) and ROA (Return On Assets).

8. Low Cost Provider – Good management is able to produce the product/service repeatedly at a lower cost than the competition – relentlessly allocating the capital and spending the owner’s funds smartly. Again, in bad times this low cost proposition enables them to survive and exhibit superior growth when the economy recovers with full force.

9. A Product/Service Becoming Close to A Need – Examples are mobile licenses and utilities and even well loved brands comes close to this level with the customer enabling the company to defend and even enhance margins and thus creating future cash profits for the owners.

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