Well, here we are again, the Holiday season is upon us! And as it seems wont to do, maybe it’s surprised you somewhat by how quickly it has arrived. This time of year, as in the past, we like to switch gears from our typical monthly investor letter to focus more on the big picture and the year that is wrapping up. We’ll be brief, to leave you ample time to get the baking and shopping done. : )
First and foremost, we want to wish everyone and their families a bright and warm Holiday Season! Merry Christmas, Happy Hanukkah, Feliz Navidad & Happy Kwanzaa–to name a few common greetings. Whatever one’s nation, faith or culture, the values of more family time, more warmth & gratitude, more giving and more clarity about what’s most important in our lives–ideally evoke a positivity that also ushers us well into the New Year. We invite you to find time to relax and enjoy the Season as much as possible this year.
As a nice dovetail to the giving part, Aloha would like to share details about a partnership we formed in 2018, with an eye towards corporate responsibility and making a difference in the lives of others and the world. In the process of choosing an approach, as a lender we liked the idea of a similarly-themed form of philanthropy. And as an investment manager for twenty-two years, working to create returns and passive income for our investors, we liked the idea of something sustainable and regenerative, versus making contributions outright to a charity. This led us to an organization out of San Francisco called Kiva. It is a micro-lending platform that has relationships with current clients and potential borrowers globally in 82 countries, including the U.S.! The concept is driven by the financial realities that: 1- many people, and particularly poor people, simply don’t have the kind of access to capital that the middle class and wealthy do. In fact, many have problems even getting a bank account. So despite having the desire to start a business or further capitalize a current business, getting the traction they need can be difficult.
These conditions can make it substantially harder to bootstrap and extricate oneself from poverty. And 2- given these facts, along with other more ethereal aspects of money such as currency valuations in less affluent parts of the world, on a relative basis if one is able to loan smaller amounts of money that would barely cover a couple of rounds of drinks here in the U.S., this may actually still make a huge difference to the end client’s life and his or her opportunity spectrum. To this end, Aloha Capital chose to align with Kiva and committed to adding $25 to our micro-lending account, for every loan we close in-house. We made our first micro-loans in July (for things like farm and weaving equipment), and thanks to the platform, it required a lot less paperwork than doing an Aloha real estate loan. As of December, we have already received a number of timely payments from our borrowers, who hail from three different countries.
Here are a few additional, highly impressive facts about this organization before we move on: 100% of the money lent goes to the field, Kiva doesn’t take a cut of loans, but instead covers their costs through optional donations. They’ve made $1.2 billion in loans since inception. And perhaps the best stat is that 96.9% of Kiva loans have been repaid! This begets the previously mentioned regenerative aspect of this form of philanthropy, and is, we think, a very creative way of helping to improve people’s lives globally in the many countries Kiva serves.
And last but certainly not least, it’s been another great year for Aloha LTD Income Fund and Aloha Capital! Please know how much we appreciate you, our investors–past, present and future. You trust us with hard-earned capital, and we strive daily to do our best on behalf of your interests and this business. We have two months remaining in the year to report to you, and as of this writing, returns should continue to track in the range they have been, and according to overall expectations.
We’ve done a lot of lending in 2018–$49.1 million of lending across 291 loans year-to-date, in fact. This is more loan volume than we’d done in the prior three years combined! In total, Aloha has originated 730 loans totaling $85.5 million in face amount over the past four years–it’s been a busy time. As a result, the company has grown to now being a team of 6 full-time people, plus our trusty intern, Joe. We moved into nice new office space in October, and have our unit and overarching work culture running more like a well-oiled machine every day. Life is good and we are grateful on many levels.
As always, feel free to reach out with questions and interest in working with Aloha Capital in this excellent investment–Aloha LTD Income Fund.
Again, we hope you have a fantastic Holiday Season and Happy New Year! We’ll see you in 2019.