Pavaki Capital

Over 35 years ago, I received my first paycheck. What a journey since then in this great ol’ USA! 

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My employer informed me I could put aside money for my retirement. When I heard that the employer would match my contribution, I thanked Lakshmi Devi, a goddess of abundance, and contributed the maximum amount allowed. I studied different options for investment and settled on a growth stock mutual fund, a popular vehicle then for investment. 

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The great ol’ USA has provided me bread, butter, shelter, shoes, and a smartphone. I don’t need extra butter as I watch my waistline and guard my health assiduously. I mean butter metaphorically; butter representing abundance. My wife’s nudging for a nutritious diet, regular exercise, sound sleep, and meditation keeps me in shape. No wonder I do not need to take any medication.

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As my wife and I live frugally, my bank balance ballooned. The interest rate in the savings account did not satisfy me. Rather than investing extra money in the mutual fund, my competitive spirit induced me to invest in stocks. 

 

I read widely and deeply: Warren Buffett, Peter Lynch, Philip Fisher, Ben Graham, Templeton, and others. I studied finance, including Beta, CAPM model, Portfolio theory, Sharpe ratio, and more. Next, I invested my savings employing different strategies - growth, value, cyclical, international stocks, and so on. 

 

Fine! I keep my nose in the books, but can I deliver the return on my investments? Here is my performance:

 

I didn’t achieve solid returns by plowing my money in high-flying stocks such as Tesla but by investing in a diverse portfolio of about 40 stocks. 

 

You may ask, how about my long-term record? My personal portfolio returned me 53.44%  returns per year (as of July 31, 2021). 

 

What a result! My wife reminded me, “Don’t take solid returns for granted.” 

 

Over 30 years, I learned so many lessons about investing.  During the internet bubble in 1999, I missed out on the gargantuan gains because I couldn’t fathom the valuations of the high flyers. Then, I kept mum at social gatherings while others boasted of their fantastic returns. When the bubble burst, my portfolio returns satisfied me. 

 

Like Dr. Michael Burry, I am a physician. Of course, I can’t boast his fame of shorting subprime mortgages. But thousands of patients’ compliments soothe my soul. For more than 30 years, I successfully and satisfactorily improved the patients’ health, especially respiratory health. Now I want to enhance investors’ wealth, especially return on their investments.  

 

As you can see in the letter below, one of the so many patients' a mom wrote, “You are truly an angel in disguise.”

 

Of course, my wife may call me a pesky angel. Oh, no! More than likely, she will label me a pesky person. Do you want to know more about me?  Please click here. 

 

My wife does not hesitate to take advantage of a mushrooming portfolio, thanks to the compounding machine. I am talking about her shopping habits; please do not tell her.  

 

My smooth sailing life encountered a tsunami. The COVID-19 pandemic engulfed the globe. Deep and widespread misery followed. For the sake of employees and the community’s wellbeing, I pivoted to telemedicine, which showered me with extra time. As a nerd, I spent hours on finance and investing. To put knowledge to use, I formed a hedge fund, Pavaki Capital Partners. 

 

Pavaki, a Hindu goddess born from fire, stands for purity, perseverance, persistence, patience, and power of knowledge. An amazing ensemble of virtues needed to give a musical performance of satisfying returns on investment; it will please Pavaki, who also plays the musical instrument, Veena.

 

I found another calling to create a win-win situation. I look forward to: Analyze financial instruments diligently and value them rigorously. Next, invest in them opportunistically. Of course, don't forget the omnipotent risks—eventually, solid absolute returns mushroom.

 

I can’t guarantee I will double or triple the money in a short time, but I will try my best with the highest integrity. Forget about any felony or misdemeanor; so far, knock on wood, my driving record is clean, with no ticket. I abide by the laws.  In operating Pavaki Capital, my colleagues and I will follow the regulations religiously.

 

I do not know how to make money in the short term, so I chose the hedge fund vehicle. Investors of the hedge funds think long-term and commit their money for 2-3 years. 

 

I will focus on generating solid absolute returns.  

 

How much to charge for my services? 

 

1. Performance fee 

2. Management fee

 

Performance fees

 

I go to sleep thinking about the investments. When my alarm wakes me up, I grab my smartphone to check the overnight performance of Asian markets and the tempo of trading in Europe. Recently, my wife nudged me to put the smartphone on a desk and not on the nightstand; her suggestion improved my sleep quality.  

 

During the day, I will research and make informed decisions with trepidation as I know some decisions will not pan out. If all my decisions turn golden, the compounding machine will make me the first investor trillionaire. But the ground-level reality will keep me humble. With my immense efforts, I plan to earn a substantial return on my investments. 

 

For my labor, may I request 20% of the profit as compensation? In other words, I earn my fees only when you make money. We align our incentives. 

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Management fees

 

Zero (0%)

 

Pavaki Capital continues to look over its shoulder to ensure it has not inadvertently violated any regulatory requirements. It shells out a pretty penny, not to blood-sucking lawyers but a high power counsel. Do you remember Jurassic Park's dialogue? "Hammond: I don't believe it. I just don't believe it. I bring you here to protect me from these characters, and the only one I've got on my side is the blood-sucking lawyer."

 

Fortunately, Pavaki’s counsel gives us honest advice in a friendly tone. 

 

Pavaki Capital will engage prime brokerage, fund administrators, auditors, and so on. Of course, they have to pass their operational cost, plus they have to make some money. But Pavaki Capital will not charge you any management fee.

 

We earn only if you make money after we produce solid absolute returns on the investments.

 

I thank great ol' USA for showering me with opportunities that nurtured me to grow as an investor and, more importantly, as a human. For example, during my extensive business activities, I have hired more women than men as employees - 90% women and 10% men. 

 

I must confess that living in this great country; I have come to appreciate the environment. I have visited many national parks, hiked several fourteeners, traveled around the world - my wife loves to spend money as a tourist. 

 

I pulled the toothbrush, which I had accidentally dropped in the toilet bowl. I rinsed it under running water. Next, I dried it. After a few days, I started using it.  You will say, Yuck! Yes, I believe in recycling besides being stingy. Did I tell you that the bathroom is attached to my office and nobody else uses that bathroom? Even then, most people would have thrown away the toothbrush.

 

My wife throws away some of my clothes without asking me because they are over 15 years old. I protest vehemently. Why throw away clothes which are not torn! At times, my family doesn’t want to be seen with me in my ragtag garments, out of fashion and fad. 

 

I read Mahatma Gandhi, especially his ‘Geeta according to Gandhi’ almost every day - “One can perform all one's activities in the spirit of "nishkamakarma,” that is, without desire for the fruits of action.”  

 

In my hometown, some friends and I established the Gandhi Peace garden. I admire Gandhi but don’t expect me to wear the loincloth.

 

Thank you for endowing me with your hard-earned dollars, which I plan to guard and grow like my money. Why? Because I am depositing my wealth in the same pot along with yours. 

 

Arthur Levitt, past Chairman, SEC, challenged us, “For years, I have pressed for "plain English" in financial documents that go to the investing public, but with only mixed success.”

 

I got carried away with “plain English” in writing this letter; please pardon my English, especially corny jokes.