ZPT Capital Management (ZPTCM)
50 Constantia Blvd
Constantia Kloof, Roodepoort
South Africa
067 907 4956


2022 ZPT CAPITAL MANAGEMENT ANNUAL LETTER.
Date: 25 Jan 2023

Vision 2030 - R1Billion Assets Under Management.

I would like to firstly start by welcoming you to our first annual letter. This year ZPTCM, a finance & investment company I founded in 2017 using my salary at the time will be turning 6 years. This is our first of many annual CEO letters where I will be highlighting our journey, wins, our mistakes and lessons learned. What a truly amazing years it has been.

Allow me to take you back in late 2016 after my 7th failed business. You see, I have been an entrepreneur since early age, tried many small businesses here and there and then later on I ventured into couple of seroius businesses of which 7 were the ones that stood out for me, the ones that I took a heavy beating. I learned most about business and entrepreneurship from those 7 businesses. I went from selling perfumes, graphic design business, online news business, selling bulk cigarette cartons to running a tuck shop, fast food shop and derivatives trading business. It is fair to mention that all those businesses were also started using salaries that I was earning from my corporate jobs.

In early 2017, I was down and out again, I was at my lowest point probably for my 3th or 4th times. I was very dissapointment in me and very frustrated.

Instead of been a cry baby and keep punishing myself, I then decided to once again go look for a job. I was so fortunate to get a contract with one of the leading SA Investment Bank as an FX Business Analyst. After 2 months I then started ZPTCM with zero assets under management with a BIG, HARRY, AUDACIOUS GOAL of making it a +1Billion Rand Company by 2030. I become my first client. I managed my salary through the company. Really, it has been quit a rollercoaster ride and in 6 years the company has grown to a Sizable Assets Under Management within finance, property and tech.

What Problem is ZPTCM Solving?

Entrepreneurship is about problem solving. When I started ZPTCM, I wanted to solve my financial problems and create wealth for me and my family. Soon thereafter, I realized that there are lots of people with the same problems. I started an advisory division where me and my team can provide individuals and businesses with financial Markets trading, finance and wealth advisory services.

In late 2017, I started a crypto fund with R350K. I used the fund to bet big on cryptocurrencies like ETH, MATIC and BNB to name the few. The crypto market started crashing big time from early 2018. I held on to my bet for the next coming 3/4 years. My patient paid me handsomely. That fund was sitting at +R4.5 million around February 2021. Not bad for a R350K investment over 3/4 years.

Now What, Balling Time?

No, not yet. I re-invested all that profit into Shares, Property and also started a Private Equity/Venture Capital fund to fund my own ideas and ideas of other entrepreneurs.

Fast forward 2022

2022 has to be one of the worse year for many. Covid, Russia invading Ukraine, Oil priceses raising sharply, rising interest rates, bleeding stock and crypto markets.

LUNA crushing, one of the largest lenders in crypto, Celsius Network, FTX, Alemeda Research blocking its users from withdrawing funds and eventually filing for bankruptcy.

Locally, our inflation reading (CPI) landed at 6.5%, above the SARB's 4 to 6% target range. Our local interest rates also continue to rise.

Globally, one of the biggest US hedge fund with had about $23 billion in assets under management at the end of 2021 was down over 60% for the year. In 2022, it's Global long/short equity hedge fund lost 56%, while it's smaller long-only fund fell 67%.

The hedge fund was founded by Chase Coleman and Scott Shleifer both billionares and both in their 40s. The firm focuses on the tech sector, and they also take stakes in private companies and start-ups.

Coleman and Shleifer have made themselves multi-billionaires over the last two decades. Both own extensive personal property portfolios, but also have a lot of their own money invested in their own funds.

Cathie Wood ARKK Fund was down 66%.

Our global fund (ZPTGF) which also focus on tech was down down over 50% while our local fund was up +12% for the year.

One of our investment philosophy is to invest for long term and when things turns this sour, We keep ourselves motivated by always looking at our heroes and mentors in this business like Warren Buffett and Seth Klarman to name the few.

Seth Klarman is an American billionaire and the CEO and portfolio manager at the Baupost Group, a Boston-based private hedge fund that he founded in 1982.

He started with investments of $27 million forty years ago and achieved 20% in annual returns.

Today, Baupost Group has $30 billion in assets under management, and Klarman has a personal net wealth of $1.5 billion.

Warren Buffett started his own investment company, called Buffett Partnership. Buffett started the company with $100 of his own money and roughly $105,000 in total from seven investing partners who included his sister, Doris, and his Aunt Alice, as well as his father-in-law.

Buffett continued forming additional partnerships with investors throughout the early 1960s. By 1962, he's grown his investors' assets to a total of $7.2 million, with his own stake worth over $1 million (including his fees for the partnerships' gains). Today Warren Buffett is worth +$111 Billion.

Investing is a long term game and it requires a huge amount of patience.

On the bright side We have earned a total dividends of R75,000 this year from our local fund and all were re-invested back into buying more shares. The goal is to keep on re-investing those dividends for the next coming 5 to 10 years until they are +7 to 8 figures dividends.

Some Of The Dividend Paying Companies We Owned:

- Stor-Age Property REIT
- DRD Gold
- Capital Appreciation
- Sanlam
- Standardbank
- Firstrand

Some of Highlights of The Year and Milestones Achieved:

- Moving into new offices
- Launching ZPT Money Managers fund
- myblackSure APP
- Launching FoundersFund
- ZPTCM Finance & Investment Masterclasses

Lessons learned:

- Do what you love and you will never work a day in your life. BUT before you do what you love, do what's necessary. Then use what you've earned from what's necessary to invest in what you love.

- In trading & investing in the financial markets, patience pays in the long run. Always try to wait for odds to be extremely in your favor, then do few bet, frequent bet but big bet.

- Learn to bet against the consensus. If your learn and successfully bet against the crowd, you will be highly rewarded.

- Learn capital allocation as early as possible in your entrepreneurial journey.

- Creating wealth or investing is not a sprint but a marathon.

- Start where you are and start with whatever you have around you or at your disposal.

- Be persistent and resilient. When you start no one is going to invite you to their table, some will ignore, laught and mock you. Dont backdown. Work persistently on your graft, build and grow. Sonner or later, invites to higher tables will come pouring.

Here's to the next coming 12 months. The work begins.

Regards
Zaks Tsotetsi, founder, CEO & fund manager, ZPTCM