Jon R. Carnes has over 20 years experience investing in a broad range of industries and companies of all sizes. From 1992 to 2000 he managed his own stock trading business, becoming the largest private client of two of the nation’s largest electronic brokerage houses. In 2001 he transitioned from trading to making long-term value investments. Mr. Carnes is a Phi Beta Kappa graduate of the University of South Carolina with a degree in business economics.

In addition to investing, Mr. Carnes arranged initial financing for the production of a Sundance nominated documentary, I.O.U.S.A., that warned Americans about the looming debt crisis and starred Bill Bixby, Warren Buffett, and David Walker. In the six months following I.O.U.S.A.’s 8/21/2008 premiere, U.S. stocks fell by 40%. You can watch I.O.U.S.A. on Youtube here.

Below is a picture of Mr. Carnes discussing I.O.U.S.A with Warren Buffett and David Walker at the film’s premiere in Omaha.

In 2007, after receiving approval to expand its capacity by building two additional cement production lines, Sichuan Zhiquan Cement Group approached us seeking financing. Zhiquan needed $40M first round financing to complete two modern rotary clinker production lines. Bank financing was out of the question since Zhiquan was not big enough to get favorable loans. Chairman Chen Zhiquan commented, "Eos offered us the investment capital we needed on reasonable terms. Eos not only invested but also managed the entire process. As my company's needs grew, Eos secured the investment and support of Merrill Lynch, one of the largest investment banks in the world."

The $40M investment in Zhiquan closed on September 26, 2008. What was remarkable about the investment was the fact that it was made at the original agreed on valuation decided in January, prior to the Chinese stock market's more than 50% fall. Eos honored its agreed valuation and saw no reason to demand a lower valuation just because the Chinese market had collapsed. Eos invests strictly based on value and growth potential. While Zhiquan's relative value had fallen, its growth potential had become more certain and was then worth even more.

Furthermore, when the Wenchuan earthquake destroyed one of Zhiquan's plants late in the investment process, Eos's president, Jon Carnes, immediately visited the site of the destruction and pledged to do everything possible to complete the investment on the original agreed terms. Despite the loss of earnings, Eos saw the long term potential to rebuild the region and advised investors to fund the investment at the original agreed valuation and also donated money to support the employees who had lost their homes.

As expected, Zhiquan's first round of financing was a lengthy and difficult process. The company had to be restructured into an entity suitable for foreign investment. Chairman Chen came to realize that "despite the extremely complicated process, Eos always maintained great confidence of the ultimate success and now that the process is complete our second round of financing will be much easier and I am positioned to have access to all the capital I need to become the dominant cement manufacturer in the region."

Copyright 2004-2013 Eos Global Holdings

Introduction & Background

Since 2004, Eos has invested in China, both long and short, participating in the Middle Kingdom’s astonishing growth while hedging against its widespread fraud and corruption.

Eos has achieved tremendous success from following a rigorous approach to due diligence. If a company passes our review and presents a good value, we invest. At the other extreme, when we find a company has defrauded investors, we short the stock. Eos’s fund manager, Jon Carnes, blew the whistle on seven Chinese stock frauds. All seven were subsequently delisted from the U.S. exchanges and the SEC charged three companies with fraud.

In 2011, Eos distributed all the invested capital and accumulated profits to its individual investors. Today, Eos exclusively manages the assets of its largest investor, an endowment fund that has donated over $3 million to various charitable causes since its establishment.

Copyright 2004-2013 Eos Global Holdings

Investment Strategy

Eos focuses on buying shares in early stage companies with superior management performance, capable of achieving substantial market share and high return on invested capital. These three elements make up what value investors such as Warren Buffett call a “franchise” or business with “durable” competitive advantages protecting it from competition and erecting barriers to new entrants.

Such “franchises” exhibit at least one of three competitive advantages. First and foremost are “demand” oriented advantages such as customer preference, habit, captivity, switching costs, or lack of substitutes. Second are supply advantages such as cost advantages, geography, technology, patents, or experience. Third are economies of scale whereby the largest company due to high fixed overhead and leading market share enjoys substantially lower per unit production costs than its smaller competitors.

Eos hedges its value investments by shorting: 1) Overvalued companies that have no competitive advantages, and 2) Questionable companies that fail our rigorous due diligence process.

Copyright 2004-2013 Eos Global Holdings