On Jan 27, 2010 Hedgefundexchange editors spoke to Fund Manager Jeeva Ramaswamy, founder and CEO of Flemington, a NJ based Investment Fund Company. We talked to Jeeva on many issues pertaining to his funds as well as issues confronting the global hedge fund industry. Here are the details of the interview.

 Hello Jeeva, welcome, and thanks for granting Hedgefundexchange.net this special manager interview.

Hedgefundexchange: We like to begin by asking you how many hedge funds do you manage?

One – GJ Investment Funds I LP

Hedgefundexchange: What prompted you to get into hedge fund management?

I started investing at the age 15. I was interested in investing for many years. Learned about Buffett 16 years back, influenced by his investing methodologies. Learned lot about investing by doing reverse engineering his investments for many years, started practicing for personal account. After many years of experience, started with own personal money and started managing other people money. IT Entrepreneur experience helps me to analyze the business thoroughly and understands the business challenges.

Hedgefundexchange: What is the investment objective of GJ funds, and what steps do you take to accomplish those objectives?

The stated objective of the Fund is to, over the long term, outperform all three major U.S. stock market indices and over 90% of U.S. mutual fund and hedge fund managers. To date, the Fund has consistently outperformed the Dow 30, Nasdaq 100 Composite Index, S&P 500 Index and 90% of mutual fund managers.  Concentrated value and growth investing….

Hedgefundexchange: What types of investment strategies are employed by your firm for investment purposes?

Value Investing: The strategy of selecting stocks that trade at less than their intrinsic values. The Fund seeks listed equities of businesses that are believed to be undervalued.  The assumption is that the market overreacts to good and bad news, resulting in volatile stock price movements that do not correspond with the company's long-term fundamentals. The result is an opportunity for value investors to profit by investing when the company's price is undervalued. In other words, target investments in great businesses selling below their intrinsic value.

Activist Style Investing: My entrepreneurial experience is critical in identifying the hidden value of the undervalued businesses. The Fund seeks to take a 5 to 10% in position in such businesses.  Larger positions may be taken depending upon the targeted

Business. As well, the managing partner seeks to build relationships with the senior management while working to uncover the hidden value of the business.

Special Situations Investing: Is typically an attempt to profit from a change in a business’s current valuation as a result of certain corporate developments and is generally not a long-term valuation in its present form than it would after the spin off, an investor might buy shares in the larger company before the spin off in an attempt to realize a quick profit. There are many other circumstances that could be referred to as special situation investment opportunities such as tender offers, mergers and acquisitions, and bankruptcy proceedings.

Hedgefundexchange: You do a lot of investment in the emerging markets particularly Indian and Chinese markets, what opportunities are available in those markets?

Apart from US market, I do concentrate in India, China and Emerging markets. There are lots of opportunities in emerging markets. China and India are two of the fastest growing economies in the world. By  2009, India had prominently established itself as the world's second fastest growing major economy. Specifically, India's economic growth has averaged 7.5% a year over the last several years and as result, the country’s consumer base should realize similar growth rates in average annual income for the coming decade. The Fund intends to maintain a 20% to 35% position in securities of businesses headquartered in emerging market countries and from which the majority of their revenue is derived in these countries.  I was born and educated in India and developed many of my entrepreneurial skills in the country and as such, I can understands the Indian cultural and business cycles.  This provides an edge to the Fund's portfolio selection and management objectives.

Hedgefundexchange: What other markets do you invest with in addition to the emerging markets?

US….

Hedgefundexchange: Can you talk to us about the types of companies you invest with and why

I like to buy the securities, the companies, which I understand. Circle of competence is important. If I am not able to understand the business, I don’t buy it and also, the security should be available 25 to 50% below intrinsic value of the business. Even If I like the business and it is trading near the intrinsic value, I don’t touch it until it comes down to desire discount to intrinsic value.

1. Small and Mid Cap Growth Businesses: These businesses, in high-growth markets,

have shown a history of strong growth and are expected to continue such growth. The

Fund looks to take positions in businesses trading below their intrinsic value. The

Fund is willing to pay fair price in so doing. I add large cap also for diversification

Purpose. Here is my investment processes,

Do I understand this business well? Is it well within my circle of competence?

If the answer is no, the business is rejected as a candidate for research and 

Investment purposes. If the answer were yes, then the next question would be.

Is this a great business?

In scanning the universe of publicly traded businesses, applying Warren Buffett's

definition of a "great business" would imply a positive answer to one or more of the

following:

Does the company operate a simple and understandable business?

Does the company realize recurring revenue streams?

Does the company have a sustainable competitive advantage?

Does the company maintain a degree of monopolistic or oligopolistic?

Market position?

Does the company have the ability to raise prices ahead of inflation?

Is the company run by able and talented management?

Does the company maintain a strong franchise/brand that provides? 

Insulation from industry competitors?

Most businesses do not have all of the above characteristics and some may just have

One of the above. A business that has one or more of these characteristics is, by

definition, rare and would be considered a suitable target for research purposes.

Is it on sale at a price well below its intrinsic value (IV)?

Identifying a great business that is also selling at a discount to its intrinsic value is, by

Definition, an anomaly. When such a business is identified the Fund manager employs

a rigorous analysis and determines a targeted value with which to acquire a stake in the

business.

Hedgefundexchange: Ever since the collapse of Long Term Capital Management hedge fund, issues of leverage have come under focus. Does your fund use leverage in trading, if so what levels of leverage do you employ?

No Leverage. : Leverage is double sided sword. When the market goes up, if you leveraged up, you can make money. But it goes down below certain level, you are not decision maker, your broker is. I don’t like that. Last year financial crisis, many hedge funds lost lot of money because of the leverage. Shorting, you are not investing. You are betting saying that price of the stock will do down. If the security goes to zero, you can double the money, but goes against you, unlimited loss. I don’t like those kinds of bets. I look for low risk, high reward opportunities….

Hedgefundexchange: Do you believe that hedge funds may face further regulations from governments across the world in the coming years; can you elaborate on this issue for us?

More Hedge fund regulation will come into effect in coming years. One way that is good for the industry and investors

Hedgefundexchange: What does the future hold for hedge funds in your view?

Hedge fund will do fine as long as they do sensible investing with out using much leverage.

Hedgefundexchange: From the investment returns posted in 2009, it is obvious that hedge funds did very well in the past year. How did your fund do in 2009, what returns did you achieve for your investors?

GJ Funds generated net return of 213.24% from November 2008 to January 31,2010 after expenses and performance fees. These performance numbers are audited until December 2009.  These returns are achieved with out using leverage or options.

Hedgefundexchange What is the minimum investment required by your fund, and is there any lock-up periods?

Minimum investment $100,000, 12 months lock up. Redemption on Dec 31 st with 60 days notice

Hedgefundexchange: Hedge fund management revolves around the issue of risk management. Successful hedge fund managers tend to have very good risk management strategies in place. How does your fund manage risk?

The fund The GJ Investment Fund seeks to avoid “macro” risk factors in the following manner: No High leverage, 15 industry diversification, No short term trading, buying into highly liquidity companies, no herd mentality.

Hedgefundexchange: What is the fee structure for GJ Investment Funds?

No Management fee, Just performance fees only which is 25% of the profit above 6% hurdle rate with High Water Mark. I picked this compensation model from 1956 Buffett partnership. I feel that, if I don’t money for my partners, I should not deserve to get paid. I am very confident that I can able to make money for limited partners, so in turn as a general partner I can earn.

Hedgefundexchange: Can you tell us the contact information for your fund, and steps needed to invest in your fund?

GJ Investment Funds I LP,
4 Walter E Foran Blvd, Suite 206
Flemington, NJ-08822
Ph:908-782-0009 Ext 225
Cell:908-240-6368
Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Web:www.gjfunds.com

Investors can contact me for website login information and fund pitch book. We will provide the materials and subscription documents for investor review. We like to answer whatever questions they have before executing the documents and then they can wire in the assets to the fund account.

Hedgefundexchange: Thanks for granting us this exclusive interview, and we wish you all the best in the coming years.