Sunday, 12 Jul 2020

Eccentric investing – the strange strategies of Ibrahim Hanif

From patents of a soap manufacturer to real estate in Belarus, the investment portfolio of Ibrahim Hanif is an uneasy assortment of disconnected assets. It is built around three principles, and while they are not everyone’s cup of tea, the reported annual yield of 35% might be a reason one could be tempted to emulate the Dubai based investor.

Principle one – Sacrifice security for a controlling stake.

The first principle of Ibrahim’s investing strategy is to buy assets that have become risky because of mismanagement and flip them by changing direction. Investing in a controlling stake is a strategy he has in common with Warren Buffet, but the scouting differs. Buffet has an eye for underappreciated assets which he buys and holds till the market unlocks the appreciation. Hanif looks for properties he can make a difference in through management, and takes a controlling stake, aiming for cashflow improvement to maximize his annual yield.

Principle two – Select assets with barriers to entry not related to finance.

Financially, you will always have a bigger fish. So the best way to secure an investment, Ibrahim proposes, is by selecting investments you are uniquely qualified to own through your skills, connections, or a combination of the two. This principle explains why investing in patents was his initial primary focus. It is the ultimate barrier to entry.

Principle three – Always consider a series of investments.

Looking for one success in every three investments is one of his main benchmarks. The pressure on this success is to cover for the other two. This gives him the room to pace investing and let each asset breath. While it is an excellent expectation-setting tool, it could be counter-productive if you get carried away.

Each principle builds on top of the other when it comes to Ibrahim’s investing strategy. The approach relies on management skills and business building acumen, both of which he is quite formidable. For an average passive investor, this can be overwhelming, but this is a strategy we might recommend to business managers, and business development experts were they to opt for dedicating a large amount of their time networking.