1 00:00:11,039 --> 00:00:14,600 Speaker 1: Hello, and welcome to another episode of the All Thoughts Podcast. 2 00:00:14,760 --> 00:00:19,200 Speaker 1: I'm Tracy Alloway and I'm Joe. Wisn'tal Joe? Do you 3 00:00:19,280 --> 00:00:23,480 Speaker 1: remember a few months ago? Wow? It seems like ages 4 00:00:23,480 --> 00:00:26,759 Speaker 1: ago actually, But back in January we spoke to an 5 00:00:26,800 --> 00:00:31,560 Speaker 1: investor in Iranian markets. Yes, and I was thinking, actually, 6 00:00:31,560 --> 00:00:35,760 Speaker 1: we should we should invite that guy back, because when 7 00:00:35,760 --> 00:00:38,280 Speaker 1: we talked in January, um, you know, we talked about 8 00:00:38,280 --> 00:00:41,000 Speaker 1: a run and what investing in that market was like. 9 00:00:41,320 --> 00:00:43,919 Speaker 1: But that was, of course, obviously before it got hit 10 00:00:44,000 --> 00:00:46,760 Speaker 1: with COVID, which it was one of the countries that 11 00:00:46,840 --> 00:00:50,040 Speaker 1: really got hit hard very quickly after China. So I'm 12 00:00:50,040 --> 00:00:52,560 Speaker 1: glad you mentioned that because let's reminder to us to 13 00:00:53,200 --> 00:00:55,040 Speaker 1: have him back and see how things are going there. 14 00:00:56,160 --> 00:00:59,240 Speaker 1: We should definitely do a follow up. But one of 15 00:00:59,280 --> 00:01:02,720 Speaker 1: the sort of themes that came out of that episode, 16 00:01:02,760 --> 00:01:06,479 Speaker 1: I guess, was the idea that you can find yield 17 00:01:06,560 --> 00:01:09,760 Speaker 1: and you can find returns if you're willing to put 18 00:01:09,800 --> 00:01:13,319 Speaker 1: in work that basically no one else is willing to do. 19 00:01:13,520 --> 00:01:15,800 Speaker 1: So if you're willing to go to Iran all the 20 00:01:15,840 --> 00:01:19,039 Speaker 1: time and sort of deal with all the sanctions issues 21 00:01:19,160 --> 00:01:21,200 Speaker 1: and things like that, and really get to know that 22 00:01:21,240 --> 00:01:27,319 Speaker 1: particular market, well, maybe you can find some decent investment opportunities, right. 23 00:01:27,360 --> 00:01:29,480 Speaker 1: I think that's a really important point, and I like 24 00:01:29,520 --> 00:01:31,800 Speaker 1: the way you put it in terms of like putting 25 00:01:31,920 --> 00:01:34,400 Speaker 1: in the work, because you're not going to find much 26 00:01:34,440 --> 00:01:38,720 Speaker 1: sort of like yield or obvious alpha if you're just 27 00:01:38,760 --> 00:01:42,520 Speaker 1: sort of like looking through a screen of liquid stickers 28 00:01:42,640 --> 00:01:45,120 Speaker 1: traded on a US exchange or at least, it's going 29 00:01:45,160 --> 00:01:48,560 Speaker 1: to be very hard to find an edge. But what 30 00:01:48,560 --> 00:01:53,120 Speaker 1: what made that episode striking was just the sheer amount 31 00:01:53,120 --> 00:01:57,600 Speaker 1: of legwork required to even invest uh in Iranian companies 32 00:01:57,680 --> 00:02:00,800 Speaker 1: as a foreign investor instead of up the broker relationships 33 00:02:00,800 --> 00:02:03,240 Speaker 1: and getting money in out of the country. And if 34 00:02:03,240 --> 00:02:06,240 Speaker 1: you can find a way to do that, and you 35 00:02:06,360 --> 00:02:10,240 Speaker 1: can make that smoothly, you know, operate that, then there 36 00:02:10,240 --> 00:02:12,880 Speaker 1: are opportunities. But that's a lot harder than what most 37 00:02:12,880 --> 00:02:16,280 Speaker 1: people are willing to do. Right, Most people will just 38 00:02:16,320 --> 00:02:19,760 Speaker 1: put their money in SPX, and I think that will suffice. 39 00:02:19,840 --> 00:02:23,000 Speaker 1: But clearly, again, if you're trying to generate alpha, a 40 00:02:23,040 --> 00:02:25,680 Speaker 1: lot of people do look to emerging markets. They look 41 00:02:25,720 --> 00:02:28,680 Speaker 1: to frontier markets because those are considered sort of lesser 42 00:02:28,720 --> 00:02:32,679 Speaker 1: known than the rest of the world and that per 43 00:02:32,760 --> 00:02:37,160 Speaker 1: the around example is really where do diligence comes in? 44 00:02:37,600 --> 00:02:40,359 Speaker 1: So and this has been a theme in emerging markets 45 00:02:40,360 --> 00:02:42,320 Speaker 1: for a long time, but we've had people, you know, 46 00:02:42,360 --> 00:02:45,440 Speaker 1: who go to those markets and try to become experts 47 00:02:45,440 --> 00:02:48,320 Speaker 1: in them and really get to know what's going on 48 00:02:48,440 --> 00:02:51,800 Speaker 1: in those particular countries. And I'm happy to say that 49 00:02:51,840 --> 00:02:55,480 Speaker 1: while we aren't talking to the Iranian investor today, we 50 00:02:55,560 --> 00:03:01,079 Speaker 1: are talking to two investors who have basically made traveling 51 00:03:01,160 --> 00:03:06,399 Speaker 1: to various emerging markets their raised on DETRA for almost 52 00:03:06,480 --> 00:03:09,400 Speaker 1: the past year. They've gone to I think it's something 53 00:03:09,440 --> 00:03:14,799 Speaker 1: like ten countries and lived probably a month in each one, 54 00:03:15,200 --> 00:03:18,200 Speaker 1: all in the name of getting that edge, doing the 55 00:03:18,280 --> 00:03:22,639 Speaker 1: due diligence and getting to know the market better. I'm 56 00:03:22,639 --> 00:03:24,840 Speaker 1: looking forward to it. I think I love this topic. 57 00:03:24,919 --> 00:03:28,440 Speaker 1: I love the idea of um putting in the legwork, 58 00:03:28,480 --> 00:03:32,640 Speaker 1: actually getting to know U countries now just sort of 59 00:03:32,639 --> 00:03:35,520 Speaker 1: looking at screens and looking at pe ratios and saying 60 00:03:35,520 --> 00:03:39,440 Speaker 1: that they're going to mean revert or actually uh, putting 61 00:03:39,440 --> 00:03:41,160 Speaker 1: on the work. And I'm looking I think this is 62 00:03:41,200 --> 00:03:44,160 Speaker 1: a topic, and especially now, like in the middle of 63 00:03:44,200 --> 00:03:48,480 Speaker 1: this crisis that we're still in. I feel like there 64 00:03:48,640 --> 00:03:50,920 Speaker 1: is going to be a real I don't want to say, 65 00:03:50,960 --> 00:03:53,200 Speaker 1: I don't know. Maybe bifurcation isn't the word, but there 66 00:03:53,200 --> 00:03:56,520 Speaker 1: are some companies that will thrive and figure out ways, 67 00:03:56,680 --> 00:03:59,560 Speaker 1: some companies that won't in different countries are going to 68 00:03:59,720 --> 00:04:03,760 Speaker 1: come back in different ways eventually, and it's going to 69 00:04:03,880 --> 00:04:07,160 Speaker 1: be up. There will be rewards for the investors that 70 00:04:07,240 --> 00:04:10,800 Speaker 1: actually figure out sort of what works and what recovers faster, 71 00:04:10,920 --> 00:04:13,640 Speaker 1: and what what can thrive and the sort of post 72 00:04:14,040 --> 00:04:17,960 Speaker 1: COVID order whatever that may be. Yeah, I think that's 73 00:04:18,000 --> 00:04:21,360 Speaker 1: absolutely right. And the other thing um that that sort 74 00:04:21,400 --> 00:04:23,880 Speaker 1: of at play at the moment is just how countries 75 00:04:23,920 --> 00:04:26,680 Speaker 1: are dealing with coronavirus. And I do think it's very 76 00:04:26,720 --> 00:04:29,680 Speaker 1: difficult to get a sense of how different places are 77 00:04:29,720 --> 00:04:33,120 Speaker 1: are grappling with it without actually being on the ground 78 00:04:33,160 --> 00:04:35,480 Speaker 1: and seeing everything that's happening. So this is gonna be 79 00:04:35,480 --> 00:04:37,839 Speaker 1: an interesting episode. We're going to talk em We're gonna 80 00:04:37,880 --> 00:04:42,039 Speaker 1: talk coronavirus without further ado. Let's bring on our guests. 81 00:04:42,080 --> 00:04:49,000 Speaker 1: We have Burton, Flynn and Ivan. Burton is managing partner 82 00:04:49,400 --> 00:04:54,320 Speaker 1: at Terra Nova Capital, which advises the every Emerging Frontier Fund, 83 00:04:54,560 --> 00:04:58,839 Speaker 1: and Ivan is a senior investment professional for the same 84 00:04:58,960 --> 00:05:01,760 Speaker 1: fund at Tara nov So thank you both for coming 85 00:05:01,760 --> 00:05:04,760 Speaker 1: on today. Thanks for having us. Yeah, thanks for having this. 86 00:05:05,680 --> 00:05:09,240 Speaker 1: So I guess just to begin, where did this idea 87 00:05:10,080 --> 00:05:14,880 Speaker 1: actually come from traveling around emerging markets? I think when 88 00:05:14,880 --> 00:05:16,960 Speaker 1: you originally set out you wanted to go to twelve 89 00:05:17,000 --> 00:05:22,280 Speaker 1: countries over the course of twelve months. Why do that? Yeah, 90 00:05:22,360 --> 00:05:25,080 Speaker 1: you know, we've been traveling as part of our investment 91 00:05:25,120 --> 00:05:31,120 Speaker 1: strategy for UM for over five years, and UM, you know, 92 00:05:31,360 --> 00:05:35,000 Speaker 1: we've spent about a week a month, usually visiting about 93 00:05:35,040 --> 00:05:38,279 Speaker 1: two countries, and you know, I think that's already more 94 00:05:38,320 --> 00:05:43,480 Speaker 1: than most most managers typically do. Uh. We we go 95 00:05:43,520 --> 00:05:45,880 Speaker 1: out and we meet management and we get a lot 96 00:05:45,920 --> 00:05:48,760 Speaker 1: of value out of those meetings. I had a friend 97 00:05:48,920 --> 00:05:53,080 Speaker 1: who was kind of perpetually traveling for five or six years, 98 00:05:53,120 --> 00:05:58,480 Speaker 1: and I I was always interested in, you know, doing 99 00:05:58,560 --> 00:06:01,200 Speaker 1: something like that but applying it to kind of our 100 00:06:01,680 --> 00:06:05,760 Speaker 1: our business model, and so this is something that's been 101 00:06:05,760 --> 00:06:08,240 Speaker 1: in the works for years. Finally we we kind of 102 00:06:08,279 --> 00:06:12,400 Speaker 1: made the plans, and um, we set out to not 103 00:06:12,480 --> 00:06:17,280 Speaker 1: just visit, but live in twelve emerging markets for for 104 00:06:17,320 --> 00:06:21,040 Speaker 1: one month each and with our families moving our families, 105 00:06:21,400 --> 00:06:25,479 Speaker 1: you know, one month at a time and um, you know, 106 00:06:25,520 --> 00:06:29,360 Speaker 1: really immersing ourselves. So what what countries did you go 107 00:06:29,480 --> 00:06:33,720 Speaker 1: to on this tour? And what does immersing yourselves actually mean? 108 00:06:33,800 --> 00:06:36,600 Speaker 1: Because a month, you know, it's obviously a little longer 109 00:06:36,640 --> 00:06:39,919 Speaker 1: than sort of a tourist trip. It's longer than a 110 00:06:40,040 --> 00:06:44,400 Speaker 1: typical vacation, but still not you know, necessarily long enough 111 00:06:44,440 --> 00:06:47,760 Speaker 1: to really sort of no place and know what data 112 00:06:48,240 --> 00:06:51,080 Speaker 1: life is like. But what is how do you learn 113 00:06:51,120 --> 00:06:54,080 Speaker 1: about a country in a month? Yeah? Absolutely, But we 114 00:06:54,120 --> 00:06:56,640 Speaker 1: started out with the Philippines. From there we went to 115 00:06:56,720 --> 00:07:01,680 Speaker 1: Malaysia and then Indonesia, and then we were in Bangladesh 116 00:07:01,760 --> 00:07:06,560 Speaker 1: and Pakistan. UH. From there we went to Thailand and 117 00:07:06,600 --> 00:07:12,000 Speaker 1: then Vietnam and Saudi Arabia, South Africa and Turkey, and 118 00:07:12,440 --> 00:07:17,200 Speaker 1: we had planned to go on to Egypt and Argentina, 119 00:07:17,400 --> 00:07:20,760 Speaker 1: Chile and Mexico. Um, and that's actually more than twelve. 120 00:07:20,960 --> 00:07:23,720 Speaker 1: We started out with the idea of twelve. We we 121 00:07:23,880 --> 00:07:27,640 Speaker 1: got really excited and added a few more countries before 122 00:07:28,440 --> 00:07:31,720 Speaker 1: before things kind of came to a screeching halta with 123 00:07:31,720 --> 00:07:35,760 Speaker 1: with UH with coronavirus. But the idea was, you know 124 00:07:35,880 --> 00:07:38,600 Speaker 1: that we wanted to really get to know these smaller 125 00:07:38,600 --> 00:07:41,200 Speaker 1: emerging markets. I mean, there's a lot of experts out 126 00:07:41,200 --> 00:07:45,400 Speaker 1: there that no China and no India, but we really 127 00:07:45,400 --> 00:07:48,760 Speaker 1: wanted to get to know these these smaller markets. M hmm. 128 00:07:49,360 --> 00:07:51,560 Speaker 1: Just on that point, can you maybe walk us through 129 00:07:52,040 --> 00:07:55,640 Speaker 1: a little bit of the investment strategy of the fund 130 00:07:55,680 --> 00:07:58,800 Speaker 1: that you manage, Like what exactly is it that you're 131 00:07:58,840 --> 00:08:01,240 Speaker 1: investing in and what are you looking for when you 132 00:08:01,280 --> 00:08:07,160 Speaker 1: go to these countries? Yeah, absolutely so. Our strategy is 133 00:08:07,400 --> 00:08:09,840 Speaker 1: a value of value of strategy. So we we are 134 00:08:09,920 --> 00:08:16,600 Speaker 1: value investors UM. We are going on location and trying 135 00:08:16,640 --> 00:08:20,520 Speaker 1: to find companies that aren't just cheap, but that are 136 00:08:20,600 --> 00:08:24,560 Speaker 1: growing and you know that are that are high quality 137 00:08:24,600 --> 00:08:27,840 Speaker 1: companies and so you know, it sounds like we're trying 138 00:08:27,840 --> 00:08:30,480 Speaker 1: to get the best of you know, all worlds. Most 139 00:08:30,480 --> 00:08:35,000 Speaker 1: people are either value investors, growth investor quality investors UM, 140 00:08:35,200 --> 00:08:38,600 Speaker 1: but we're really looking for a combination of of all three. 141 00:08:39,320 --> 00:08:43,640 Speaker 1: So if you look at our portfolio UM statistics and 142 00:08:43,720 --> 00:08:46,559 Speaker 1: you compare it to you know, to the index for example, 143 00:08:47,559 --> 00:08:51,000 Speaker 1: you know, our pe ratio is is less than half 144 00:08:51,240 --> 00:08:54,800 Speaker 1: that of the index UM, while are you know that 145 00:08:55,000 --> 00:08:57,920 Speaker 1: the average growth of the portfolio is quite quite a 146 00:08:57,920 --> 00:09:00,840 Speaker 1: bit higher, and the you know, the return on equity 147 00:09:00,960 --> 00:09:05,199 Speaker 1: is double. Um, the you know, the net debt to 148 00:09:05,240 --> 00:09:08,640 Speaker 1: eve it does a fourth. So you know, it almost 149 00:09:08,640 --> 00:09:10,839 Speaker 1: seems like too good to be true. I mean, you've 150 00:09:10,880 --> 00:09:14,600 Speaker 1: got something that's cheaper, that's growing faster, that's more high quality. 151 00:09:14,640 --> 00:09:17,680 Speaker 1: But but that's what we're going for. And it's not easy, 152 00:09:17,880 --> 00:09:20,640 Speaker 1: and so that's why we spend so much time on 153 00:09:20,679 --> 00:09:24,400 Speaker 1: the road looking for these companies. You know, it's it's 154 00:09:24,400 --> 00:09:26,679 Speaker 1: not easy to put together portfolio like this, you know, 155 00:09:26,720 --> 00:09:29,920 Speaker 1: but we've managed to find, uh, somewhere in the range 156 00:09:29,920 --> 00:09:33,199 Speaker 1: of thirty companies that that we're that we're really excited about. 157 00:09:34,520 --> 00:09:37,920 Speaker 1: Talk about that the easiness, because Tracy and I alluded 158 00:09:38,000 --> 00:09:42,200 Speaker 1: to that in the introduction when we talked about the 159 00:09:42,240 --> 00:09:46,320 Speaker 1: guy who invested in Iran. It's work, and it's not easy, 160 00:09:46,360 --> 00:09:48,600 Speaker 1: and it's not looking at a screen, and it's not 161 00:09:48,720 --> 00:09:55,080 Speaker 1: looking for some sort of pe ratio, historical Norman reversion 162 00:09:55,440 --> 00:10:00,480 Speaker 1: or some other quantitative strategy. It actually seems difficult to 163 00:10:00,640 --> 00:10:04,600 Speaker 1: find opportunities in a way that you know, you're it's 164 00:10:04,640 --> 00:10:06,960 Speaker 1: a lot harder than just looking at a list. Talk 165 00:10:07,000 --> 00:10:10,240 Speaker 1: about like obviously there's the travel part and going to 166 00:10:10,360 --> 00:10:12,880 Speaker 1: a country, but then like just sort of the grinding 167 00:10:12,880 --> 00:10:15,440 Speaker 1: it out and figuring out which companies are traded in, 168 00:10:15,480 --> 00:10:21,000 Speaker 1: which companies have the characteristics that you like for your portfolio. Um, 169 00:10:21,040 --> 00:10:24,760 Speaker 1: what is that process like? Yes? So, so basically you 170 00:10:24,800 --> 00:10:28,199 Speaker 1: know this kind of project of twelve markets and twelve months. 171 00:10:28,200 --> 00:10:32,040 Speaker 1: It's not only meeting the companies that already look attractive 172 00:10:32,240 --> 00:10:37,160 Speaker 1: on paper fundamentally, which we could probably find just off 173 00:10:37,200 --> 00:10:41,120 Speaker 1: the computer screen. So we actually try to meet every 174 00:10:41,160 --> 00:10:43,480 Speaker 1: company that's willing to meet with us. Part of this 175 00:10:43,600 --> 00:10:48,240 Speaker 1: is research if there is any signal whether the company 176 00:10:48,320 --> 00:10:51,199 Speaker 1: is willing to meet or not, but also it really 177 00:10:51,240 --> 00:10:54,960 Speaker 1: helps us build the knowledge and expertise in these markets. 178 00:10:55,000 --> 00:10:58,080 Speaker 1: And so the more companies you meet, the more CEOs 179 00:10:58,120 --> 00:11:00,640 Speaker 1: you meet, I think you also learned the colleges of 180 00:11:01,280 --> 00:11:05,360 Speaker 1: people and the managers, because I think at this point 181 00:11:05,800 --> 00:11:08,920 Speaker 1: it already kind of came to this stage that when 182 00:11:08,960 --> 00:11:11,560 Speaker 1: we walk into the into the meeting, sometimes it's enough 183 00:11:11,720 --> 00:11:14,040 Speaker 1: to talk to the CEO for two or three minutes 184 00:11:14,080 --> 00:11:17,080 Speaker 1: to realize whether they're just trying to promote their business 185 00:11:17,520 --> 00:11:21,440 Speaker 1: or they're being authentic in the in the responses to 186 00:11:21,400 --> 00:11:25,480 Speaker 1: our questions so so, so this implies that we meet 187 00:11:25,520 --> 00:11:27,960 Speaker 1: a lot of companies. So for example, I think it's 188 00:11:28,040 --> 00:11:31,840 Speaker 1: somewhere between forty companies the minimum we met in a 189 00:11:31,920 --> 00:11:35,800 Speaker 1: country to ninety companies the maximum we met. And I 190 00:11:35,800 --> 00:11:37,960 Speaker 1: think we were going to meet over a hundred companies 191 00:11:39,000 --> 00:11:42,600 Speaker 1: in a month in Chokey, but obviously COVID kind of 192 00:11:42,640 --> 00:11:46,280 Speaker 1: disturbed our plans. And after we meet the company, obviously 193 00:11:46,320 --> 00:11:50,160 Speaker 1: we before that, we already have the research done, Our 194 00:11:50,280 --> 00:11:53,800 Speaker 1: team does the research, we have the qualitative quantitative data 195 00:11:53,800 --> 00:11:55,680 Speaker 1: about the company, then we have the data from the 196 00:11:55,720 --> 00:11:59,240 Speaker 1: meeting itself. Then a big component of the process is 197 00:11:59,280 --> 00:12:02,680 Speaker 1: also to a questionnaire that we ask the companies to complete. 198 00:12:03,200 --> 00:12:05,160 Speaker 1: And when we have all of this data of this 199 00:12:05,280 --> 00:12:09,360 Speaker 1: information with them, make investment decisions and as an investment committee, 200 00:12:09,720 --> 00:12:14,080 Speaker 1: of course, some of the companies probably would never qualify 201 00:12:14,240 --> 00:12:17,160 Speaker 1: as investors, but you know, at the same time, for 202 00:12:17,240 --> 00:12:21,960 Speaker 1: research purposes, this is an invaluable experience. I think Brkin 203 00:12:22,040 --> 00:12:25,760 Speaker 1: can kind of explain a bit more about the research itself. 204 00:12:26,960 --> 00:12:29,839 Speaker 1: Absolutely so, and and it's not just it's not just 205 00:12:30,000 --> 00:12:33,200 Speaker 1: meeting companies that we are setting out to do. So 206 00:12:33,520 --> 00:12:36,080 Speaker 1: so basically, in addition to these kind of forty two 207 00:12:36,120 --> 00:12:39,880 Speaker 1: you know, hundred company meetings that we've done each month. 208 00:12:40,040 --> 00:12:42,760 Speaker 1: We've also set out to meet with some of the 209 00:12:42,800 --> 00:12:46,120 Speaker 1: best macro experts in the country. And and that starts 210 00:12:46,160 --> 00:12:50,040 Speaker 1: with the finance minister and the central bank governor and 211 00:12:50,160 --> 00:12:52,439 Speaker 1: you know, and then the president of the Stock Exchange, 212 00:12:53,120 --> 00:12:57,320 Speaker 1: the commissioner of the local sec you know, the financial 213 00:12:57,360 --> 00:13:01,120 Speaker 1: regulator UM and then and then many more. In South Africa, 214 00:13:01,160 --> 00:13:04,160 Speaker 1: for example, we also met with the Commissioner of their 215 00:13:04,480 --> 00:13:08,880 Speaker 1: Black Economic Empowerment Initiative UM. And you know, we also 216 00:13:09,320 --> 00:13:14,480 Speaker 1: attempt to meet with the UM Minister of Climate Change 217 00:13:14,480 --> 00:13:17,760 Speaker 1: where environment in in each country as well, which which 218 00:13:17,760 --> 00:13:20,880 Speaker 1: we met in Pakistan for example. So so we we 219 00:13:20,960 --> 00:13:23,800 Speaker 1: set out to meet kind of these important macro players 220 00:13:23,840 --> 00:13:27,200 Speaker 1: and and you know, government officials. We we also meet 221 00:13:27,240 --> 00:13:29,920 Speaker 1: the U s Ambassador and and you know, the Finnish 222 00:13:29,960 --> 00:13:34,080 Speaker 1: ambassador and in each country that that we're able to UM. 223 00:13:34,120 --> 00:13:36,240 Speaker 1: But then in addition to that, you know, we also 224 00:13:36,280 --> 00:13:39,240 Speaker 1: try to triangulate what we're learning in those meetings as 225 00:13:39,240 --> 00:13:43,520 Speaker 1: well as in the you know, company meetings with UM 226 00:13:43,559 --> 00:13:45,880 Speaker 1: with other kind of business leaders and and the best 227 00:13:45,880 --> 00:13:48,080 Speaker 1: way we found to do this is, you know, is 228 00:13:48,120 --> 00:13:50,560 Speaker 1: to reach out to alumni from the business school that 229 00:13:50,600 --> 00:13:52,520 Speaker 1: we went to. So Ivan and I both attended the 230 00:13:52,720 --> 00:13:56,160 Speaker 1: work the Warton Business School. Uh. And so we've reached 231 00:13:56,200 --> 00:13:59,920 Speaker 1: out to, you know, to too many of the Warton 232 00:14:00,000 --> 00:14:02,520 Speaker 1: alumni in each of these countries, you know, starting with 233 00:14:02,559 --> 00:14:06,240 Speaker 1: the Philippines, which was interesting because there's there's quite a 234 00:14:07,000 --> 00:14:11,080 Speaker 1: broad base of Worton alumni there. So we we had 235 00:14:11,160 --> 00:14:14,520 Speaker 1: lunch every single day with a different Worton alum in 236 00:14:14,559 --> 00:14:18,319 Speaker 1: the Philippines. But this has given us a great opportunity 237 00:14:18,679 --> 00:14:22,680 Speaker 1: to you know, to basically meet more people in a 238 00:14:22,720 --> 00:14:25,840 Speaker 1: different setting. Um, you know, people that are more comfortable 239 00:14:25,880 --> 00:14:28,920 Speaker 1: talking to us and and you know, talk about like 240 00:14:28,960 --> 00:14:31,320 Speaker 1: what we're seeing in in these company meetings, in these 241 00:14:31,400 --> 00:14:35,200 Speaker 1: macro meetings, and and um get a better idea of 242 00:14:35,320 --> 00:14:41,440 Speaker 1: you know, of what of what the real situation is. Mhm. 243 00:14:42,000 --> 00:14:44,640 Speaker 1: Just on this note, Um, how do we actually go 244 00:14:44,720 --> 00:14:48,960 Speaker 1: about arranging these meetings? I think Joe and I as 245 00:14:49,040 --> 00:14:52,480 Speaker 1: journalists probably have an interest in anything you can teach 246 00:14:52,560 --> 00:14:55,520 Speaker 1: us about access. But what's it like to actually approach, 247 00:14:55,640 --> 00:14:59,280 Speaker 1: for instance, the central Bank governor and get a meeting 248 00:14:59,280 --> 00:15:02,360 Speaker 1: with them? Like, how does that work? Well, the typical 249 00:15:02,400 --> 00:15:07,000 Speaker 1: way that fund managers, you know, get meetings with companies 250 00:15:07,320 --> 00:15:11,560 Speaker 1: UM or with with uh you know, macro players, UM, 251 00:15:11,640 --> 00:15:15,040 Speaker 1: like the Central Bank governor is through the broker and UM. 252 00:15:15,120 --> 00:15:17,520 Speaker 1: You know, in the past, we've we've had we've had 253 00:15:17,640 --> 00:15:21,400 Speaker 1: okay experience working with our brokers, UM. But actually in 254 00:15:21,440 --> 00:15:24,640 Speaker 1: our in our second and third countries that we were in, 255 00:15:25,200 --> 00:15:28,480 Speaker 1: we kind of had a bad, bad experience with with 256 00:15:28,520 --> 00:15:30,880 Speaker 1: our brokers. In in the second country we were in, 257 00:15:31,400 --> 00:15:35,240 Speaker 1: our broker quit the first week we were there, and 258 00:15:35,400 --> 00:15:37,560 Speaker 1: uh kind of send us an email on you know, 259 00:15:38,040 --> 00:15:40,480 Speaker 1: on on our fourth day there and and just said, hey, 260 00:15:40,520 --> 00:15:43,160 Speaker 1: today is my last day, by the way, and then 261 00:15:43,320 --> 00:15:45,680 Speaker 1: and then our our you know, in in the third 262 00:15:45,680 --> 00:15:48,680 Speaker 1: country and in the Indonesia, you know, the broker just 263 00:15:48,840 --> 00:15:52,080 Speaker 1: didn't respond to emails and so so we so we 264 00:15:52,120 --> 00:15:56,320 Speaker 1: just started actually reaching out ourselves to two companies just 265 00:15:56,480 --> 00:15:59,680 Speaker 1: off their investor relations website or you know, off the 266 00:15:59,720 --> 00:16:04,239 Speaker 1: Center Bank governor website, and uh, we were really surprised. 267 00:16:04,280 --> 00:16:07,840 Speaker 1: Actually so so the brokers. You know, they're big value proposition, 268 00:16:08,280 --> 00:16:11,120 Speaker 1: UH is that you can't get these meetings yourself. You know, 269 00:16:11,160 --> 00:16:12,760 Speaker 1: you just can't do it yourself. You have to have 270 00:16:12,800 --> 00:16:17,360 Speaker 1: the local networks and everything. So we started emailing these companies. Uh, 271 00:16:17,400 --> 00:16:19,120 Speaker 1: you know. In the first country we did it, we 272 00:16:19,160 --> 00:16:21,160 Speaker 1: sent to a couple of you know, I think we 273 00:16:21,200 --> 00:16:25,440 Speaker 1: sent one follow up. Um. And the more we did this, 274 00:16:25,600 --> 00:16:29,720 Speaker 1: the more experience we got. We actually hired an administrative 275 00:16:29,720 --> 00:16:34,640 Speaker 1: assistant to help us. And um, you know, the last 276 00:16:34,640 --> 00:16:37,680 Speaker 1: country we were in, for example, UM, I think we 277 00:16:37,760 --> 00:16:40,840 Speaker 1: sent fifteen follow up emails. So it's literally every single 278 00:16:40,920 --> 00:16:44,040 Speaker 1: day we would send another, you know, another follow up 279 00:16:44,240 --> 00:16:48,480 Speaker 1: and and you'd be surprised, actually how many companies. Uh, well, 280 00:16:48,480 --> 00:16:51,360 Speaker 1: there's there's not that many, but you'd be surprised that, 281 00:16:51,960 --> 00:16:54,640 Speaker 1: you know, there are companies that on the fourteen email 282 00:16:54,800 --> 00:16:57,520 Speaker 1: you know, reply and say, oh, I'm sorry I missed 283 00:16:57,600 --> 00:17:02,800 Speaker 1: your first thirteen you know email to so UM. So 284 00:17:02,840 --> 00:17:05,760 Speaker 1: it's really been and an effort of reaching out cold, 285 00:17:06,160 --> 00:17:08,639 Speaker 1: of course, explaining who we are, kind of working it 286 00:17:08,760 --> 00:17:11,159 Speaker 1: that way. Of course, then we you know, if we 287 00:17:11,200 --> 00:17:13,040 Speaker 1: can't get ahold of companies that we really want to 288 00:17:13,040 --> 00:17:16,320 Speaker 1: get a hold of or or um, you know, government leaders, 289 00:17:16,840 --> 00:17:19,600 Speaker 1: we might try other sources. We might ask you know, 290 00:17:19,640 --> 00:17:23,639 Speaker 1: the broker still um. And we'll also go through the 291 00:17:23,960 --> 00:17:27,280 Speaker 1: work network, and we'll go through kind of you know, 292 00:17:27,320 --> 00:17:31,280 Speaker 1: any any channel that we can UM. So, for example, 293 00:17:31,320 --> 00:17:34,399 Speaker 1: in Saudi Arabia, you know, we we were able to 294 00:17:34,880 --> 00:17:37,280 Speaker 1: actually we write about this in in our trip report 295 00:17:37,320 --> 00:17:39,960 Speaker 1: that we have published on our on our website. But 296 00:17:40,119 --> 00:17:42,920 Speaker 1: we asked our broker to help us get a meeting, 297 00:17:43,160 --> 00:17:45,360 Speaker 1: you know with with kind of the central bank governor, 298 00:17:45,359 --> 00:17:48,600 Speaker 1: with the finance minister, with the stact Exchange president. And 299 00:17:48,600 --> 00:17:50,440 Speaker 1: they said that, you know, it's just really too hard 300 00:17:50,640 --> 00:17:54,720 Speaker 1: in Saudi. Those people never you know, never meet with investors. Uh, 301 00:17:54,760 --> 00:17:57,600 Speaker 1: you know, it's it's not even worth trying, really, and 302 00:17:57,680 --> 00:18:00,520 Speaker 1: so we you know, we got on LinkedIn and we 303 00:18:01,040 --> 00:18:04,639 Speaker 1: found somebody who was an advisor to the CEO of 304 00:18:04,680 --> 00:18:07,480 Speaker 1: the Stock Exchange and reached out to him and through 305 00:18:07,560 --> 00:18:10,080 Speaker 1: him we were able to get a meeting with you know, 306 00:18:10,119 --> 00:18:13,919 Speaker 1: with with the president of the stock Exchange and um. Actually, 307 00:18:13,920 --> 00:18:15,959 Speaker 1: in the meeting with the president of the Stock Exchange, 308 00:18:15,960 --> 00:18:18,919 Speaker 1: we mentioned that we were trying to get a meeting 309 00:18:18,960 --> 00:18:24,719 Speaker 1: with the sec you know, commissioner and the Central bank governor. 310 00:18:25,080 --> 00:18:26,960 Speaker 1: He said, oh, no problem, and he pulled out his 311 00:18:27,000 --> 00:18:29,840 Speaker 1: phone and you know what's apped, you know, the the 312 00:18:30,960 --> 00:18:34,720 Speaker 1: commissioner and the governor and and I said, no I've 313 00:18:34,720 --> 00:18:37,520 Speaker 1: got a meeting arranged arranged for you guys. So uh, 314 00:18:37,520 --> 00:18:40,439 Speaker 1: you know, no, no problem. So it's it's really you know, 315 00:18:40,640 --> 00:18:44,640 Speaker 1: it's it's really just kind of being scrappy and um, 316 00:18:44,680 --> 00:18:49,040 Speaker 1: you know, and and and you know, reaching out to 317 00:18:49,119 --> 00:18:51,720 Speaker 1: everybody we we want to meet and you know, explaining 318 00:18:51,840 --> 00:18:55,280 Speaker 1: explaining who we are. So uh, Burton, you mentioned your 319 00:18:55,320 --> 00:18:57,840 Speaker 1: blog just then and I was sort of flipping through 320 00:18:57,840 --> 00:19:01,359 Speaker 1: it earlier. And one of the meetings you describe was 321 00:19:01,520 --> 00:19:05,359 Speaker 1: with I think it was Donald Trump Jr. Which is 322 00:19:05,600 --> 00:19:08,000 Speaker 1: kind of unusual for someone to go to Indonesia and 323 00:19:08,000 --> 00:19:11,720 Speaker 1: then end up meeting um, someone like that. How did 324 00:19:11,760 --> 00:19:15,640 Speaker 1: that come about? And how did the meeting actually go? Yeah, 325 00:19:15,720 --> 00:19:18,920 Speaker 1: I still wonder how that how that really all all happened, 326 00:19:19,240 --> 00:19:24,080 Speaker 1: because basically, you know, we we went to Indonesia, and 327 00:19:24,119 --> 00:19:27,359 Speaker 1: I think maybe ten days after we arrived, Um, you know, 328 00:19:27,920 --> 00:19:31,240 Speaker 1: we're sitting across the table at a small group dinner 329 00:19:31,320 --> 00:19:35,800 Speaker 1: with Donald Trump Junr. And um, some others from the 330 00:19:35,800 --> 00:19:39,439 Speaker 1: Trump you know, Trump organization and then a company that 331 00:19:39,520 --> 00:19:43,760 Speaker 1: we you know, the we were investigating as well as 332 00:19:43,840 --> 00:19:47,119 Speaker 1: as a potential investment. So basically, you know, we showed 333 00:19:47,200 --> 00:19:51,959 Speaker 1: up the CEO of this company there that's a media 334 00:19:52,000 --> 00:19:55,719 Speaker 1: company that also has real estate holdings. UM accepted our 335 00:19:55,720 --> 00:20:00,400 Speaker 1: meeting request. We went and met with him and had 336 00:20:00,560 --> 00:20:05,960 Speaker 1: had dinner afterwards. A very prominent individual in Indonesia UM 337 00:20:06,119 --> 00:20:09,080 Speaker 1: who's a billionairerand, very well known. We were sitting at 338 00:20:09,119 --> 00:20:12,879 Speaker 1: dinner with him and uh he was he was, you know, 339 00:20:12,960 --> 00:20:16,040 Speaker 1: kind of dropping names of people that he knows, but 340 00:20:16,800 --> 00:20:18,840 Speaker 1: you know, in in the classiest way you can you 341 00:20:18,880 --> 00:20:22,800 Speaker 1: can imagine. Um. So so basically, you know, he would mention, uh, 342 00:20:23,040 --> 00:20:26,440 Speaker 1: you know, having having a vacation house where his neighbor 343 00:20:26,560 --> 00:20:29,879 Speaker 1: is justin Weaver or uh you know, or or you know, 344 00:20:30,359 --> 00:20:33,720 Speaker 1: hanging out with Donald Trump or something UM. And then 345 00:20:33,720 --> 00:20:36,520 Speaker 1: he would he would grab his phone and uh, you 346 00:20:36,520 --> 00:20:39,520 Speaker 1: know to show us the pictures. But instead of going 347 00:20:39,560 --> 00:20:41,960 Speaker 1: to his photos app like most of us would do, 348 00:20:42,359 --> 00:20:44,679 Speaker 1: he went to Google and typed in his name and 349 00:20:44,920 --> 00:20:49,360 Speaker 1: the person's name showed us showed us the pictures with him. 350 00:20:49,560 --> 00:20:51,840 Speaker 1: So he so he mentioned, uh, you know, at this 351 00:20:51,880 --> 00:20:55,480 Speaker 1: dinner and this was Friday night after our meeting. He 352 00:20:55,560 --> 00:20:58,639 Speaker 1: mentioned to us that a couple of days later, Donald 353 00:20:58,640 --> 00:21:03,719 Speaker 1: Trump Jr. Was flying flying in for a pre launch 354 00:21:03,880 --> 00:21:07,760 Speaker 1: event for their their properties that they that they're selling 355 00:21:08,119 --> 00:21:12,280 Speaker 1: together with the Trump Organization, and that they're also you know, 356 00:21:12,320 --> 00:21:15,280 Speaker 1: going to Bali to tour a project that they're working 357 00:21:15,280 --> 00:21:18,040 Speaker 1: on together. He said, you know, if you guys would 358 00:21:18,080 --> 00:21:20,959 Speaker 1: like to come to this pre launch event, you know, UM, 359 00:21:21,000 --> 00:21:23,720 Speaker 1: you're you're welcome to come. And um, actually, you know, 360 00:21:23,720 --> 00:21:25,399 Speaker 1: if you'd like to, if you'd like to come to 361 00:21:25,440 --> 00:21:29,360 Speaker 1: Bali and um, you know, spend four days hanging out 362 00:21:29,400 --> 00:21:33,520 Speaker 1: with Donald Trump Jr. Please come and Uh. The purpose 363 00:21:33,560 --> 00:21:37,280 Speaker 1: for us was really a chance to one observed the CEO, 364 00:21:38,040 --> 00:21:41,600 Speaker 1: this chairman owner of a company that, uh, that we 365 00:21:41,600 --> 00:21:45,760 Speaker 1: were really interested in, and to also tour the assets 366 00:21:46,200 --> 00:21:50,239 Speaker 1: that that the company owned. Um. And so so then 367 00:21:50,280 --> 00:21:53,960 Speaker 1: we were you know, we were sitting sitting at a 368 00:21:54,280 --> 00:21:57,040 Speaker 1: small group dinner. We were invited to four you know, 369 00:21:57,080 --> 00:22:02,320 Speaker 1: four dinners with Donald Trump Jr. And I sort of 370 00:22:02,359 --> 00:22:06,160 Speaker 1: got more and more comfortable in each meeting, and by 371 00:22:06,240 --> 00:22:09,080 Speaker 1: the you know, by the third dinner, I kind of 372 00:22:09,119 --> 00:22:12,840 Speaker 1: made some jokes and uh, I ended up getting uninvited 373 00:22:12,880 --> 00:22:32,919 Speaker 1: to the fourth dinner. So let's talk about some of 374 00:22:32,960 --> 00:22:35,320 Speaker 1: the countries and places we can get to the sort 375 00:22:35,320 --> 00:22:40,440 Speaker 1: of current crisis and how COVID is affecting your view 376 00:22:40,440 --> 00:22:44,600 Speaker 1: of the world and various emerging markets or frontier markets. 377 00:22:44,960 --> 00:22:49,040 Speaker 1: But pre crisis, as you traveled the world, where were 378 00:22:49,080 --> 00:22:51,879 Speaker 1: some of the places that particularly stood out to you 379 00:22:52,960 --> 00:22:55,400 Speaker 1: in terms of places where there are a lot of 380 00:22:55,600 --> 00:23:01,200 Speaker 1: companies doing interesting things that people didn't appreciate at compelling valuation. Yeah, 381 00:23:01,280 --> 00:23:03,600 Speaker 1: I mean, I guess there are countries that stood out 382 00:23:03,760 --> 00:23:07,200 Speaker 1: for good or for bad reasons. I think in terms 383 00:23:07,200 --> 00:23:10,240 Speaker 1: of evaluations, I think the very we had a very 384 00:23:10,280 --> 00:23:13,719 Speaker 1: interesting month in Pakistan because when we came to Pakistan, 385 00:23:13,760 --> 00:23:19,040 Speaker 1: the country was basically coming off very I think pronounced 386 00:23:19,240 --> 00:23:23,200 Speaker 1: currency crash I think about over thirty and there was 387 00:23:23,240 --> 00:23:26,680 Speaker 1: economic crisis in the country, and we kind of captured 388 00:23:26,720 --> 00:23:30,639 Speaker 1: the very bottom of it. And so many companies, especially 389 00:23:31,640 --> 00:23:35,840 Speaker 1: the good companies with good corporate governance, with good cash flows, 390 00:23:36,000 --> 00:23:38,840 Speaker 1: they were trading at like four or five times B, 391 00:23:40,040 --> 00:23:44,160 Speaker 1: which if you compare it to some other countries like Thailand, 392 00:23:44,200 --> 00:23:46,960 Speaker 1: where we went to after Pakistan, you would actually you 393 00:23:47,040 --> 00:23:49,600 Speaker 1: never find the company that trades even at like ten 394 00:23:49,680 --> 00:23:52,800 Speaker 1: times B in Thailand. So in Pakistan evlations were very, 395 00:23:52,920 --> 00:23:56,760 Speaker 1: very cheap. But we found some companies that were very 396 00:23:56,760 --> 00:24:01,240 Speaker 1: good quality um with growing earnings and good aspect um, 397 00:24:01,359 --> 00:24:03,960 Speaker 1: I mean from the bad countries. I mean not bad countries, 398 00:24:04,000 --> 00:24:09,480 Speaker 1: but countries with let's say, unfortunate macro situations. So unfortunately, 399 00:24:09,520 --> 00:24:14,239 Speaker 1: South Africa comes to mind us number one country that 400 00:24:14,440 --> 00:24:18,639 Speaker 1: is really really challenged from macro perspective. So you know, 401 00:24:18,720 --> 00:24:22,320 Speaker 1: it still is considered an emergent market, but it's the 402 00:24:22,359 --> 00:24:25,000 Speaker 1: only emergent market in the world that failed to grow 403 00:24:25,000 --> 00:24:27,359 Speaker 1: it's g D peper capital over the past ten years. 404 00:24:28,400 --> 00:24:32,960 Speaker 1: So we we witnessed many kind of issues staming from 405 00:24:33,200 --> 00:24:38,640 Speaker 1: uh inefficient political system and just basically failed institutions all 406 00:24:38,640 --> 00:24:41,680 Speaker 1: over the place, unfortunately for the people of the country. 407 00:24:41,720 --> 00:24:44,280 Speaker 1: But there is a lot of corruption, there is no 408 00:24:44,359 --> 00:24:48,960 Speaker 1: credible opposition there is basically they have the decades of 409 00:24:49,000 --> 00:24:54,600 Speaker 1: institutionalized racism and unemployment rate is attent and about six 410 00:24:55,240 --> 00:24:59,600 Speaker 1: young people. So we really felt that the country has 411 00:24:59,640 --> 00:25:03,000 Speaker 1: so many challenges. And actually we were there right before 412 00:25:03,080 --> 00:25:06,840 Speaker 1: the moody Is moody Is downgraded their credit rating and 413 00:25:06,920 --> 00:25:12,800 Speaker 1: since then the currency collapsed another before even coronavirus, And 414 00:25:12,920 --> 00:25:15,240 Speaker 1: this is kind of the interesting part of investing in 415 00:25:15,240 --> 00:25:19,919 Speaker 1: emerging markets. We have really countries in different stages of 416 00:25:20,160 --> 00:25:24,800 Speaker 1: their you know, politics, economics. For example of South Africa 417 00:25:24,840 --> 00:25:28,440 Speaker 1: Pakistan dimensioned. You also have Vietnam with a very very 418 00:25:28,480 --> 00:25:33,199 Speaker 1: strong command communist regime which actually makes economic wonders like 419 00:25:33,280 --> 00:25:36,359 Speaker 1: at this point of the country's development. Then you also 420 00:25:36,400 --> 00:25:41,160 Speaker 1: have Bangladesh which was growing like seven eight percent gdpeoper year. Uh. 421 00:25:41,200 --> 00:25:45,000 Speaker 1: And this diversity is very very interesting. I mean, Malaysia 422 00:25:45,040 --> 00:25:48,320 Speaker 1: probably stands out and I think Burton will give you 423 00:25:48,400 --> 00:25:52,439 Speaker 1: some good reasons for why. You know, people look at 424 00:25:52,440 --> 00:25:57,280 Speaker 1: our portfolio and today we have about thirty percent of 425 00:25:57,280 --> 00:26:02,159 Speaker 1: our portfolio invested in Malaysia, and they often you know, 426 00:26:02,200 --> 00:26:04,119 Speaker 1: one of the first questions I often ask us is 427 00:26:04,880 --> 00:26:07,800 Speaker 1: why do you guys love Malaysia so much? But before 428 00:26:07,840 --> 00:26:09,879 Speaker 1: you go on, I just want to interrupt you. I 429 00:26:10,119 --> 00:26:12,280 Speaker 1: used to live in Malaysia and I love it, so 430 00:26:12,320 --> 00:26:16,920 Speaker 1: I'm really excited about hearing this. Well, so people ask 431 00:26:17,000 --> 00:26:18,959 Speaker 1: us why do you love Malaysia so much? And our 432 00:26:19,000 --> 00:26:24,480 Speaker 1: answer is we don't. We hate Malaysia the exact office. 433 00:26:26,320 --> 00:26:32,880 Speaker 1: So that's so good. Sorry. So, so you know, we're 434 00:26:32,880 --> 00:26:36,200 Speaker 1: really passionate about emerging markets. We love emerging markets. I've 435 00:26:36,280 --> 00:26:41,360 Speaker 1: I've spent my entire career in in emerging markets and Um. 436 00:26:41,400 --> 00:26:45,040 Speaker 1: You know, emerging markets are exciting. There's always something, you know, 437 00:26:45,119 --> 00:26:48,240 Speaker 1: something happening. Um. You know there's there's some kind of 438 00:26:48,640 --> 00:26:52,639 Speaker 1: air strikes or you know, currency to valuations, hyper inflation. 439 00:26:53,240 --> 00:26:57,679 Speaker 1: There's always something interesting happening in emerging markets. UM, but 440 00:26:57,760 --> 00:27:01,080 Speaker 1: not Malaysia. You know, Malaysia's boring. It just it grows 441 00:27:01,080 --> 00:27:04,960 Speaker 1: at five percent a year and maintains three percent unemployment. 442 00:27:05,720 --> 00:27:09,800 Speaker 1: You know, it keeps inflation around two percent a year. UM, 443 00:27:09,920 --> 00:27:14,200 Speaker 1: and uh, you know, it just never has these really riveting, 444 00:27:14,240 --> 00:27:19,400 Speaker 1: exciting stories. So you know, it's it's uh, it's it's um, 445 00:27:19,440 --> 00:27:22,560 Speaker 1: it's the most boring of all the emerging markets. Uh. 446 00:27:22,640 --> 00:27:26,320 Speaker 1: So you know my point, My point is we're not 447 00:27:26,480 --> 00:27:29,360 Speaker 1: macro investors, So we're not you know, we're not We're 448 00:27:29,400 --> 00:27:32,680 Speaker 1: not trying to pick countries and say, okay, we really 449 00:27:32,680 --> 00:27:37,560 Speaker 1: love Malaysia, let's invest in Malaysia. It just happens to 450 00:27:37,640 --> 00:27:42,600 Speaker 1: be the case that we have found several really really interesting, 451 00:27:42,640 --> 00:27:47,359 Speaker 1: exciting companies in Malaysia that we are you know, that 452 00:27:47,440 --> 00:27:51,919 Speaker 1: we're really um confident will grow their earnings and that 453 00:27:51,960 --> 00:27:57,520 Speaker 1: are trading at very reasonable cheap valuations. And for you know, 454 00:27:57,600 --> 00:28:00,640 Speaker 1: that's the reason that we have thirty percent invested in Malaysia. Uh. 455 00:28:00,840 --> 00:28:17,040 Speaker 1: You know outside kl is an amazing city. Something I'm 456 00:28:17,040 --> 00:28:19,240 Speaker 1: curious about is, you know you talk about all the 457 00:28:19,560 --> 00:28:21,840 Speaker 1: great companies you find in Malaysia, and I think when 458 00:28:21,880 --> 00:28:25,000 Speaker 1: I often think about from tier markets investing, I think 459 00:28:25,000 --> 00:28:30,080 Speaker 1: about these or emerging markets, whatever you want to call them. Um. 460 00:28:30,119 --> 00:28:35,119 Speaker 1: You know, not many listed companies, uh exchanges dominated by 461 00:28:35,240 --> 00:28:41,760 Speaker 1: some privatized banks or commodity or utility or telecom companies maybe, Um, 462 00:28:41,800 --> 00:28:46,760 Speaker 1: but what are the types of companies, sort of industry specific, um, 463 00:28:46,800 --> 00:28:49,440 Speaker 1: that you find exciting? Like are there interesting tech companies 464 00:28:49,480 --> 00:28:53,280 Speaker 1: and on these markets? Like what are the sectors within 465 00:28:53,800 --> 00:28:57,000 Speaker 1: these same Malaysia or any others that you tend to 466 00:28:57,040 --> 00:29:02,000 Speaker 1: see interesting opportunities? Yeah? Absolutely, UM. You know, often we 467 00:29:02,080 --> 00:29:06,040 Speaker 1: find some very interesting industrial companies that you know, are 468 00:29:06,080 --> 00:29:10,200 Speaker 1: kind of boring and overlooked. Ivan can share with you 469 00:29:10,560 --> 00:29:14,640 Speaker 1: a couple of examples, but I'll share with you you know, 470 00:29:14,720 --> 00:29:17,760 Speaker 1: one example that we actually found in Malaysia. That's that's 471 00:29:17,760 --> 00:29:22,560 Speaker 1: currently our our highest weight in the portfolio. UM and 472 00:29:23,040 --> 00:29:28,240 Speaker 1: uh this is a a tech company, but tech hardware company, 473 00:29:28,840 --> 00:29:34,000 Speaker 1: so they produce testing equipment for three D sensors. UM, 474 00:29:34,080 --> 00:29:36,840 Speaker 1: so the kinds of sensors that you find on your iPhone, 475 00:29:36,880 --> 00:29:41,200 Speaker 1: for example, they test, you know, they test the the 476 00:29:41,240 --> 00:29:46,040 Speaker 1: equipment that UM, you know, does facial recognition recognition. UM. 477 00:29:46,080 --> 00:29:49,760 Speaker 1: They test the air air pods, uh, you know for Apple. 478 00:29:50,280 --> 00:29:54,040 Speaker 1: Apple is one of their biggest clients. UM. They test 479 00:29:54,280 --> 00:29:57,800 Speaker 1: the equipment that goes on to UM, you know, onto 480 00:29:58,200 --> 00:30:04,320 Speaker 1: autonomous cars and elect vehicles. UM. And and this company, UH, 481 00:30:04,440 --> 00:30:07,760 Speaker 1: this company, what's what's really interesting about it? Okay, so 482 00:30:08,080 --> 00:30:10,880 Speaker 1: it's been growing at over fifty percent a year, both 483 00:30:10,920 --> 00:30:13,920 Speaker 1: top line and bottom line for five years now. It's 484 00:30:13,960 --> 00:30:17,000 Speaker 1: a company that is high quality and in a lot 485 00:30:17,040 --> 00:30:22,959 Speaker 1: of respects. And UM one that we actually owned several 486 00:30:23,040 --> 00:30:27,400 Speaker 1: years back when the pe was was was ten times 487 00:30:27,800 --> 00:30:31,280 Speaker 1: or even less, and we did quite well on it before, 488 00:30:31,320 --> 00:30:33,800 Speaker 1: but we ended up selling it because the valuation got 489 00:30:33,800 --> 00:30:36,520 Speaker 1: into the twenties and thirties. But when we went and 490 00:30:36,600 --> 00:30:40,560 Speaker 1: revisited this company, we actually learned that they had since 491 00:30:40,600 --> 00:30:44,320 Speaker 1: restructured their listing and they now have essentially a dual listing, 492 00:30:44,840 --> 00:30:49,400 Speaker 1: one on Malaysia and one on the Hong Kong Stocking change. 493 00:30:49,840 --> 00:30:53,880 Speaker 1: And what was really interesting is that the the listing 494 00:30:53,880 --> 00:30:56,200 Speaker 1: on the Hong Kong Stock Change where it was trading 495 00:30:56,280 --> 00:31:00,480 Speaker 1: for less than half the valuation of the listing on 496 00:31:00,520 --> 00:31:03,480 Speaker 1: the Malaysia Stock Exchange. So you know, we got really 497 00:31:03,480 --> 00:31:06,640 Speaker 1: excited not only about the fundamentals and the prospects of 498 00:31:06,680 --> 00:31:10,200 Speaker 1: growth prospects of this company, but also you know, this 499 00:31:10,600 --> 00:31:14,120 Speaker 1: sort of arbitrage opportunity where you know, we could own 500 00:31:14,200 --> 00:31:17,280 Speaker 1: this company that was growing at over fifty percent a 501 00:31:17,360 --> 00:31:22,040 Speaker 1: year for uh multiple of of ten times or less. 502 00:31:22,160 --> 00:31:27,520 Speaker 1: And so we immediately after after that meeting, I think 503 00:31:27,560 --> 00:31:30,360 Speaker 1: within within a couple of days, you know, put in 504 00:31:30,560 --> 00:31:34,160 Speaker 1: put in our order and made that company the you know, 505 00:31:34,200 --> 00:31:38,400 Speaker 1: the largest weight in in our portfolio. And it's actually 506 00:31:38,400 --> 00:31:43,280 Speaker 1: paid off. So so since since we started this trip 507 00:31:44,200 --> 00:31:48,640 Speaker 1: back in June, until the coronavirus crisis hit, you know, 508 00:31:48,680 --> 00:31:52,520 Speaker 1: our performance for that I think seven or eight month 509 00:31:52,560 --> 00:31:57,600 Speaker 1: period was ten and just to give you a reference, 510 00:31:57,680 --> 00:32:01,280 Speaker 1: the closest index to you know, to our strategy, which 511 00:32:01,480 --> 00:32:03,480 Speaker 1: by the way, we're very different from what the index 512 00:32:03,520 --> 00:32:07,560 Speaker 1: looks like, but the closest index was up four and 513 00:32:08,040 --> 00:32:12,000 Speaker 1: of of that ten percent return, about four percent came 514 00:32:12,040 --> 00:32:15,640 Speaker 1: from this this one company. Um and so so it's 515 00:32:15,680 --> 00:32:19,000 Speaker 1: been it's been a huge win for you know, for 516 00:32:19,040 --> 00:32:23,720 Speaker 1: our fund. So just going back to the Malaysia example, 517 00:32:24,000 --> 00:32:26,960 Speaker 1: and I'm just gonna pile in on on Joe here 518 00:32:27,000 --> 00:32:29,680 Speaker 1: a little bit. And you mentioned that that market tends 519 00:32:29,720 --> 00:32:32,680 Speaker 1: to be quite boring. But we have had one exciting 520 00:32:32,760 --> 00:32:36,040 Speaker 1: thing that happened, and that was the one MDB scandal. 521 00:32:36,280 --> 00:32:39,560 Speaker 1: And this is sort of a repetitive theme in emerging markets. 522 00:32:39,680 --> 00:32:44,040 Speaker 1: We all often have scandals, we often have corporate governance issues. 523 00:32:44,600 --> 00:32:47,840 Speaker 1: How do you get comfortable with that risk as emerging 524 00:32:47,880 --> 00:32:50,720 Speaker 1: market investors? Is there something specific that you look out 525 00:32:50,760 --> 00:32:55,959 Speaker 1: for when trying to judge a company, Yeah, a company 526 00:32:56,040 --> 00:32:59,680 Speaker 1: or country, because I mean the example you you share, 527 00:33:01,160 --> 00:33:04,520 Speaker 1: so in terms of getting comfortable with the country, you know, 528 00:33:04,920 --> 00:33:10,400 Speaker 1: using your example of of kind of the one MDB scandal. Um, 529 00:33:10,520 --> 00:33:13,320 Speaker 1: we used to do absolutely nothing on on the macro front. 530 00:33:13,440 --> 00:33:16,960 Speaker 1: So you know, we were true bottom up investors that 531 00:33:17,040 --> 00:33:20,440 Speaker 1: we're just looking for amazing companies to add to the portfolio. 532 00:33:20,920 --> 00:33:24,000 Speaker 1: And you know, for the first four or five years 533 00:33:24,520 --> 00:33:28,320 Speaker 1: that worked really well. And in ten we had a 534 00:33:28,360 --> 00:33:33,120 Speaker 1: fairly heart high weight in Turkey and in Pakistan and 535 00:33:33,240 --> 00:33:38,000 Speaker 1: that year um Turkeys lira, the Turkish lira fell within 536 00:33:38,000 --> 00:33:43,360 Speaker 1: a twelve month period fell by and the you know, 537 00:33:43,400 --> 00:33:47,240 Speaker 1: the the rupie fell by in in a twelve month 538 00:33:47,400 --> 00:33:51,400 Speaker 1: or maybe an eighteen month period, and as a result, 539 00:33:51,480 --> 00:33:56,240 Speaker 1: we actually ended up massively under performing. Um So, so 540 00:33:56,320 --> 00:33:58,400 Speaker 1: up to that point, for the first three or four years, 541 00:33:58,600 --> 00:34:01,920 Speaker 1: we actually are performance was in the top one percentile 542 00:34:02,440 --> 00:34:05,160 Speaker 1: of you know, of of all of our peers um 543 00:34:05,280 --> 00:34:07,800 Speaker 1: that year. Had it not been for Turkey and Pakistan, 544 00:34:08,200 --> 00:34:11,799 Speaker 1: we would have actually maintained that seller performance. But as 545 00:34:11,880 --> 00:34:16,240 Speaker 1: a result, we ended up massively underperforming. And so, as 546 00:34:16,280 --> 00:34:18,920 Speaker 1: you know, what we ended up doing was doing a 547 00:34:18,920 --> 00:34:22,600 Speaker 1: lot of research on macro events. UM. I'm actually currently 548 00:34:22,640 --> 00:34:27,080 Speaker 1: listening to, uh, the audiobook of Ray Dalio's Principles, and 549 00:34:27,320 --> 00:34:29,400 Speaker 1: you know, he does a lot of these case studies, 550 00:34:29,400 --> 00:34:32,160 Speaker 1: these macro case studies, and that's essentially what we what 551 00:34:32,200 --> 00:34:35,640 Speaker 1: we did is we started digging into, uh, you know, 552 00:34:35,960 --> 00:34:38,560 Speaker 1: to all of the currency crisises that have happened in 553 00:34:38,560 --> 00:34:41,839 Speaker 1: emerging markets. By the way, UM, do you guys have 554 00:34:41,880 --> 00:34:45,480 Speaker 1: any idea how many times the currency in emerging markets 555 00:34:45,480 --> 00:34:49,400 Speaker 1: has devalued by fift in a twelve month period, let's say, 556 00:34:49,440 --> 00:34:53,040 Speaker 1: in the last thirty years. M No, But I'd like, 557 00:34:53,160 --> 00:34:56,440 Speaker 1: what's the idea. So so it's only happened twelve times 558 00:34:56,880 --> 00:34:59,719 Speaker 1: UH in the last in the last thirty years, and 559 00:35:00,040 --> 00:35:02,840 Speaker 1: four of those twelve times was related to the Asian 560 00:35:02,880 --> 00:35:05,399 Speaker 1: financial crisis. So if you take away those those four 561 00:35:05,480 --> 00:35:09,080 Speaker 1: related Asian financial crisis, there's only been eight times that 562 00:35:09,120 --> 00:35:13,760 Speaker 1: a currency has devalued by fifty or more. And um, 563 00:35:13,920 --> 00:35:18,440 Speaker 1: four of those eight we're Turkey and two two of 564 00:35:18,480 --> 00:35:22,880 Speaker 1: those eight were Argentina, So there there are some repeat 565 00:35:22,920 --> 00:35:26,919 Speaker 1: offenders in terms of emerging market currency to valuations. And 566 00:35:27,239 --> 00:35:30,640 Speaker 1: so we did these these big case studies and UM 567 00:35:30,719 --> 00:35:34,920 Speaker 1: we also built a kind of macro risk quantitative model 568 00:35:35,360 --> 00:35:37,880 Speaker 1: and as a you know, as a result, we have 569 00:35:38,080 --> 00:35:42,200 Speaker 1: now overlaid this macro risk model to get comfortable with 570 00:35:42,719 --> 00:35:45,680 Speaker 1: UH you know, with countries on both quantitative basis looking 571 00:35:45,680 --> 00:35:49,600 Speaker 1: at their current accounts, looking at their their fiscal deficit 572 00:35:49,760 --> 00:35:54,200 Speaker 1: and their you know, debt UM and also on a 573 00:35:54,280 --> 00:35:59,160 Speaker 1: qualitative basis UM, you know, looking for UH events that 574 00:35:59,160 --> 00:36:02,600 Speaker 1: that have been associate it with currency crisis in the past. 575 00:36:05,000 --> 00:36:07,720 Speaker 1: That's on the country level. On the on the company level, 576 00:36:07,840 --> 00:36:11,799 Speaker 1: you know, UH, we obviously go on the ground and 577 00:36:12,239 --> 00:36:15,759 Speaker 1: do our diligence on the company's UH. You know that 578 00:36:15,880 --> 00:36:18,439 Speaker 1: we're interested in. But we also spend a lot of time, 579 00:36:19,000 --> 00:36:22,480 Speaker 1: as I mentioned, kind of you know, meeting with those 580 00:36:22,520 --> 00:36:25,960 Speaker 1: outside of the company. Um, you know, really trying to 581 00:36:26,000 --> 00:36:30,040 Speaker 1: meet with locals who are you know, alumps from our 582 00:36:30,040 --> 00:36:35,520 Speaker 1: business school or uh, you know, competitors, ideally suppliers, people 583 00:36:35,560 --> 00:36:38,160 Speaker 1: that are familiar with the company, because we want to 584 00:36:38,200 --> 00:36:40,360 Speaker 1: make sure, you know, that the people that we're talking 585 00:36:40,400 --> 00:36:44,280 Speaker 1: to are reliable. And you know, if we get uh, 586 00:36:44,320 --> 00:36:49,320 Speaker 1: if we get conflicting accounts or we get questionable reports 587 00:36:49,360 --> 00:36:52,359 Speaker 1: of the integrity of the managers, we won't invest. And 588 00:36:52,400 --> 00:36:55,000 Speaker 1: so so just to give you one example actually, which 589 00:36:55,040 --> 00:36:57,400 Speaker 1: was also in Malaysia, there was a company we were 590 00:36:57,400 --> 00:37:01,400 Speaker 1: really excited about and and would have ended up investing in. 591 00:37:01,680 --> 00:37:04,120 Speaker 1: You know, we got some conflicting accounts about the integrity 592 00:37:04,160 --> 00:37:08,760 Speaker 1: of the managers and and we decided not to invest 593 00:37:08,760 --> 00:37:11,120 Speaker 1: in that company. Now, unfortunately for us, it was it 594 00:37:11,120 --> 00:37:13,680 Speaker 1: would have been one of the best performers. It turns out, 595 00:37:14,280 --> 00:37:17,239 Speaker 1: you know, it turns out that the what the you 596 00:37:17,280 --> 00:37:20,440 Speaker 1: know CEO that we met with was telling us was 597 00:37:20,840 --> 00:37:23,239 Speaker 1: in fact true, and and uh, it would have been 598 00:37:23,320 --> 00:37:26,239 Speaker 1: this amazing investment. But you know, at the end of 599 00:37:26,239 --> 00:37:29,320 Speaker 1: the day. That's that's what we need to do to UH, 600 00:37:29,360 --> 00:37:32,200 Speaker 1: to make sure that we are you know, that that 601 00:37:32,280 --> 00:37:37,520 Speaker 1: we're protecting our investors. So talk to us. Now, let's 602 00:37:37,560 --> 00:37:40,759 Speaker 1: let's let's talk about the sort of current situation a 603 00:37:40,800 --> 00:37:44,880 Speaker 1: little bit more because obviously, yeah, it's kind of a cliche, 604 00:37:45,080 --> 00:37:47,880 Speaker 1: but the current crisis in a sense has changed everything. 605 00:37:48,520 --> 00:37:50,759 Speaker 1: We don't know how much will permanently be changed, but 606 00:37:50,880 --> 00:37:54,080 Speaker 1: presumably a lot. And they're also just questions about who 607 00:37:54,120 --> 00:37:57,080 Speaker 1: will even make it from a sort of company standpoint 608 00:37:57,600 --> 00:38:01,799 Speaker 1: to the post crisis era, given the collapse, cash flows, etcetera. 609 00:38:01,920 --> 00:38:04,359 Speaker 1: So talk to us, UH and Iven, maybe you can 610 00:38:04,440 --> 00:38:08,919 Speaker 1: come in here about how you're monitoring who's making things 611 00:38:09,000 --> 00:38:11,840 Speaker 1: work or who's getting by or who's driving in this 612 00:38:11,960 --> 00:38:15,640 Speaker 1: current moment um. Yeah, absolutely so. So I think in 613 00:38:15,760 --> 00:38:19,120 Speaker 1: our of you, actually we see some great opportunities to 614 00:38:19,640 --> 00:38:24,480 Speaker 1: buy good businesses at attractive valuations. I mean some some 615 00:38:24,560 --> 00:38:28,720 Speaker 1: of the purchases could could probably be the percent related 616 00:38:28,800 --> 00:38:32,320 Speaker 1: to take an advantage of the current environment. So for example, 617 00:38:32,360 --> 00:38:35,120 Speaker 1: I mean speaking of Malaysia, but we bought a globe 618 00:38:35,520 --> 00:38:39,120 Speaker 1: like a rubber rubber globe manufacturer in Malaysia to protect 619 00:38:39,640 --> 00:38:43,400 Speaker 1: against this COVID related kind of market clubs, and so 620 00:38:43,440 --> 00:38:45,560 Speaker 1: we bought it about two two and a half months ago, 621 00:38:45,640 --> 00:38:49,680 Speaker 1: and since then it already went up one because the 622 00:38:49,760 --> 00:38:54,319 Speaker 1: demand for rubber globes has skyrocketed. But but also you know, 623 00:38:54,360 --> 00:38:56,120 Speaker 1: because we spent so much time on the ground, we 624 00:38:56,239 --> 00:38:59,200 Speaker 1: try to select the very best company we can get 625 00:38:59,239 --> 00:39:03,480 Speaker 1: for the valuation, for the strategy, prospects and demand and everything. 626 00:39:03,880 --> 00:39:07,759 Speaker 1: So in Malaysia are four very large globe manufacturers. So 627 00:39:07,840 --> 00:39:10,279 Speaker 1: the one we bought went up, as I said, about 628 00:39:10,360 --> 00:39:13,719 Speaker 1: hundred fifty since we bought it, but the other three 629 00:39:14,040 --> 00:39:18,560 Speaker 1: went up probably like between thirty five and so, so 630 00:39:18,600 --> 00:39:20,279 Speaker 1: you know, it takes it takes some time on the 631 00:39:20,320 --> 00:39:22,920 Speaker 1: ground to really understand which companies are undervalued. So in 632 00:39:22,960 --> 00:39:26,880 Speaker 1: this case, we had the right call um. Of course. 633 00:39:27,080 --> 00:39:31,200 Speaker 1: Uh we recently did this survey of all the companies 634 00:39:31,239 --> 00:39:34,160 Speaker 1: we met over the last ten months, so six hundred 635 00:39:34,200 --> 00:39:38,080 Speaker 1: thirty two companies. We asked each one of them thirteen 636 00:39:38,160 --> 00:39:42,560 Speaker 1: questions about the impact of coronavirus on their operations, and 637 00:39:42,680 --> 00:39:45,760 Speaker 1: I think over nine of them said that the impact 638 00:39:45,840 --> 00:39:48,960 Speaker 1: is negative. So of course, in this environment it's not 639 00:39:49,000 --> 00:39:52,320 Speaker 1: so easy to uh, you know, select only de winion companies. 640 00:39:52,880 --> 00:39:56,200 Speaker 1: But what we can do if you think long term. 641 00:39:56,480 --> 00:39:58,959 Speaker 1: Obviously there are some like this rubber glove company, But 642 00:39:59,040 --> 00:40:01,480 Speaker 1: at the same time, we can positional portfolio very well 643 00:40:01,520 --> 00:40:04,640 Speaker 1: for the long term. For example, businesses that were hit 644 00:40:04,760 --> 00:40:08,400 Speaker 1: the most because of the panic sell off, but that 645 00:40:08,719 --> 00:40:13,000 Speaker 1: have great management teams, great cash flows UH and the 646 00:40:13,080 --> 00:40:16,759 Speaker 1: customers will return quickly. So we believe those companies are 647 00:40:16,960 --> 00:40:20,520 Speaker 1: positioned very well too to keep performing. I mean, some 648 00:40:20,600 --> 00:40:23,000 Speaker 1: of those could be some of the largest and most 649 00:40:23,040 --> 00:40:26,200 Speaker 1: stable banks in let's say each of the emerging markets. 650 00:40:26,920 --> 00:40:30,200 Speaker 1: Some of those could even be retailers when people start 651 00:40:30,760 --> 00:40:34,319 Speaker 1: and I think more grocery retailers than some other type 652 00:40:34,320 --> 00:40:38,080 Speaker 1: of retailers. UM. But but you know it, I think 653 00:40:38,239 --> 00:40:42,200 Speaker 1: everyone has hit about the same all around the globe, 654 00:40:42,680 --> 00:40:45,480 Speaker 1: but you always have these pockets of opportunity. For example, 655 00:40:45,480 --> 00:40:49,880 Speaker 1: in Pakistan, we had this company which makes hydrogen peroxcite. 656 00:40:50,440 --> 00:40:53,600 Speaker 1: So I mean, of course it's UH, it's basically luck. 657 00:40:53,880 --> 00:40:57,600 Speaker 1: But during these tough times they started producing the disinfectants 658 00:40:57,600 --> 00:41:03,320 Speaker 1: for UH because they used Drosian third site for food industry. 659 00:41:03,760 --> 00:41:07,799 Speaker 1: But now they started producing it as a disaffectant, so 660 00:41:07,880 --> 00:41:12,080 Speaker 1: there their shares also went up about six um. So 661 00:41:12,320 --> 00:41:14,800 Speaker 1: you know, sometimes it's skilled, but sometimes, I mean you 662 00:41:14,920 --> 00:41:18,479 Speaker 1: also get like Tracy, remind me to tell you after 663 00:41:18,520 --> 00:41:20,880 Speaker 1: the podcast about the time I was in a nightclub 664 00:41:21,280 --> 00:41:24,560 Speaker 1: in kl by the way, listening to a palm oil 665 00:41:24,800 --> 00:41:28,960 Speaker 1: CEO telling me about why the world will forever need 666 00:41:29,000 --> 00:41:31,520 Speaker 1: palm oil and why it's one of the greatest businesses 667 00:41:31,920 --> 00:41:34,120 Speaker 1: in the world. But that's for another time. I was 668 00:41:34,160 --> 00:41:37,400 Speaker 1: a bit worried when when Ivan was talking about you know, 669 00:41:37,520 --> 00:41:40,880 Speaker 1: like disaffectant and the immediately segue to remind me to 670 00:41:40,880 --> 00:41:42,520 Speaker 1: tell you about the time I was in a club 671 00:41:42,560 --> 00:41:48,160 Speaker 1: in kl Okay, I will definitely ask um, well, okay. 672 00:41:48,200 --> 00:41:51,400 Speaker 1: So clearly COVID has had an impact on businesses and 673 00:41:51,560 --> 00:41:53,799 Speaker 1: is definitely going to continue to do so. It's also 674 00:41:53,880 --> 00:41:57,080 Speaker 1: had an impact on the market itself. I'm just curious, 675 00:41:57,120 --> 00:42:02,200 Speaker 1: but in terms of investment appetite for emerging market assets 676 00:42:02,280 --> 00:42:05,000 Speaker 1: at the moment, what are you seeing, Like how bad 677 00:42:05,239 --> 00:42:08,120 Speaker 1: is it and how difficult is it to convince people 678 00:42:08,239 --> 00:42:13,239 Speaker 1: to invest in e M at the moment. Yeah, well, 679 00:42:13,320 --> 00:42:17,840 Speaker 1: we don't spend a lot of our time marketing our fund, 680 00:42:18,280 --> 00:42:21,640 Speaker 1: so we spend we spendent of our time on the 681 00:42:21,680 --> 00:42:24,440 Speaker 1: on the investment side. UM, what I can tell you is, 682 00:42:24,480 --> 00:42:31,640 Speaker 1: I've been really surprised by the limited amount of redemptions 683 00:42:32,040 --> 00:42:36,319 Speaker 1: from our fund. Typically during you know, during drawdowns like this, 684 00:42:36,600 --> 00:42:39,440 Speaker 1: you'll get a lot of you know, investors heading heading 685 00:42:39,440 --> 00:42:44,399 Speaker 1: for the doors. Um, we've only had one investor really redeem, 686 00:42:44,400 --> 00:42:49,560 Speaker 1: redeem their investment aside from Aside from that, the flows 687 00:42:49,560 --> 00:42:52,759 Speaker 1: have been very stable. And so I think, you know, 688 00:42:52,840 --> 00:42:55,239 Speaker 1: part of that is that we when we do meet 689 00:42:55,280 --> 00:42:59,120 Speaker 1: with clients, uh, we try to make sure that they 690 00:42:59,200 --> 00:43:02,960 Speaker 1: understand what our strategy is and and the you know, 691 00:43:03,520 --> 00:43:07,520 Speaker 1: the volatility that's you know, that's related to it. UM. 692 00:43:07,560 --> 00:43:09,719 Speaker 1: But I think part of it might be. Yeah, I 693 00:43:09,760 --> 00:43:12,400 Speaker 1: mean it's you know, emerging markets are scary right now, 694 00:43:12,560 --> 00:43:15,560 Speaker 1: but it's hard to say what's what's scarier. I mean 695 00:43:15,719 --> 00:43:20,200 Speaker 1: there's also very very high, you know, inflated valuations and 696 00:43:20,239 --> 00:43:26,319 Speaker 1: developed markets, so you know, it's it's it's maybe it's 697 00:43:26,320 --> 00:43:29,839 Speaker 1: difficult to know where you know, where to optimally put 698 00:43:30,000 --> 00:43:33,480 Speaker 1: you know, put put one's money. But uh, emerging markets, 699 00:43:33,520 --> 00:43:37,040 Speaker 1: relative to you know, to develop markets have definitely been 700 00:43:37,080 --> 00:43:40,000 Speaker 1: out of favor for the last decade. In some sense 701 00:43:40,719 --> 00:43:44,960 Speaker 1: are an interesting place to be obviously, you know, central 702 00:43:44,960 --> 00:43:50,760 Speaker 1: banks have much more limited ability to uh manage the crisis, 703 00:43:50,840 --> 00:43:53,200 Speaker 1: and and that's you know, that's something that we're looking at, 704 00:43:53,280 --> 00:43:56,080 Speaker 1: and so we spent a lot of time analyzing, you know, 705 00:43:56,160 --> 00:44:00,000 Speaker 1: as part of our macro risk management, you know, commend 706 00:44:00,040 --> 00:44:02,920 Speaker 1: meant analyzing, you know, where each of these countries are 707 00:44:02,920 --> 00:44:06,840 Speaker 1: at and reducing or eliminating our weight in countries that 708 00:44:06,880 --> 00:44:12,560 Speaker 1: we see, you know, having excessive risk related to coronavirus crisis. 709 00:44:13,719 --> 00:44:16,160 Speaker 1: Do you do either of you have or do both 710 00:44:16,200 --> 00:44:20,200 Speaker 1: of you have a favorite moment from your recent trip. 711 00:44:20,239 --> 00:44:22,880 Speaker 1: I realized it was cut short, but I'm sure you 712 00:44:22,920 --> 00:44:25,280 Speaker 1: have a lot of memories, a lot of interesting takeaways 713 00:44:25,320 --> 00:44:28,480 Speaker 1: and lessons. What's one thing that sort of stood out 714 00:44:28,560 --> 00:44:32,120 Speaker 1: for both of you? Yeah? Sure, I'll let even think 715 00:44:32,160 --> 00:44:36,120 Speaker 1: about that for for a second. I'm gonna go back to, 716 00:44:36,400 --> 00:44:40,000 Speaker 1: you know, the situation that I had shared with you 717 00:44:40,080 --> 00:44:43,800 Speaker 1: earlier about you know, sitting across the table from Donald 718 00:44:43,840 --> 00:44:47,600 Speaker 1: Trump Jr. Yeah, you know, they're they're already mentioned the 719 00:44:47,640 --> 00:44:50,880 Speaker 1: access we can get simply by sending emails to companies 720 00:44:50,880 --> 00:44:53,880 Speaker 1: and to stakeholders in its markets. And I think maybe 721 00:44:53,880 --> 00:44:56,960 Speaker 1: half of the companies they never met foreign investors before 722 00:44:57,080 --> 00:44:59,200 Speaker 1: and here we come, we send them an emails. Of 723 00:44:59,200 --> 00:45:01,799 Speaker 1: course they're happy to meet, which kind of means the 724 00:45:01,840 --> 00:45:05,360 Speaker 1: brokers don't always hold the keys. So for example, I 725 00:45:05,360 --> 00:45:07,719 Speaker 1: think for me it was when we spent a month 726 00:45:07,760 --> 00:45:11,239 Speaker 1: in Bangladesh. Basically just send a simple email too to 727 00:45:11,320 --> 00:45:16,240 Speaker 1: the Nobel Prize winner Mohammed Unus, doctor Yunus, and they said, 728 00:45:16,640 --> 00:45:20,520 Speaker 1: you know, our fund has a very kind of pronounced 729 00:45:20,920 --> 00:45:23,120 Speaker 1: E S G focus, but we always want to learn 730 00:45:23,160 --> 00:45:25,800 Speaker 1: more about E s thre how can we create impact 731 00:45:25,800 --> 00:45:29,840 Speaker 1: throw investments And you know, we would really appreciate meeting you. 732 00:45:30,360 --> 00:45:32,520 Speaker 1: And you know, he himself here resppointed and he said, 733 00:45:32,680 --> 00:45:35,160 Speaker 1: look I'm in Bangladesh right now, so we can meet 734 00:45:35,200 --> 00:45:38,160 Speaker 1: next week. And it's been a great half an hour 735 00:45:38,560 --> 00:45:41,040 Speaker 1: one on one meeting, just kind of talking about his 736 00:45:41,120 --> 00:45:46,279 Speaker 1: involvement in the UN Sustainable Development Initiative and just kind 737 00:45:46,280 --> 00:45:50,240 Speaker 1: of really getting this experience and wisdom from the Nobel 738 00:45:50,280 --> 00:45:53,399 Speaker 1: Prize winner how we could also try to be kind 739 00:45:53,400 --> 00:45:57,319 Speaker 1: of more sustainable investors. So this kind of meetings on 740 00:45:57,320 --> 00:46:01,600 Speaker 1: the ground really are worth a lot for us. All right, Well, 741 00:46:02,160 --> 00:46:04,719 Speaker 1: thank you to you both for walking us through your 742 00:46:04,760 --> 00:46:07,520 Speaker 1: experiences and of course it's a shame that your your 743 00:46:07,560 --> 00:46:10,840 Speaker 1: trip got cut off early due to the coronavirus crisis, 744 00:46:10,840 --> 00:46:13,839 Speaker 1: but hopefully you get to go out again, um at 745 00:46:13,880 --> 00:46:16,920 Speaker 1: some point and you can tell us what you've learned 746 00:46:16,960 --> 00:46:19,719 Speaker 1: on on that trip as well. So Burton Flynn and 747 00:46:19,960 --> 00:46:23,240 Speaker 1: Ivan Nichev, thank you so much for being on all thoughts. 748 00:46:23,680 --> 00:46:27,759 Speaker 1: That was great. Thank you great. Yeah, thanks to lood 749 00:46:38,760 --> 00:46:43,399 Speaker 1: So Joe. I was gonna say something summing up that conversation, 750 00:46:43,440 --> 00:46:45,680 Speaker 1: but I think I'm just gonna go right to your 751 00:46:46,280 --> 00:46:49,560 Speaker 1: k l your Koala lump or club experience with a 752 00:46:49,680 --> 00:46:54,200 Speaker 1: palm oil CEO. Yeah, I think he was definitely an executive. 753 00:46:54,200 --> 00:46:56,520 Speaker 1: And it was like this like filping nightclub. It's like 754 00:46:56,680 --> 00:46:59,239 Speaker 1: really loud, like you know, like you try to have 755 00:46:59,320 --> 00:47:02,000 Speaker 1: conversations of the club and it never worked. But this 756 00:47:02,040 --> 00:47:04,480 Speaker 1: guy was like really trying to give me this detailed, 757 00:47:05,040 --> 00:47:07,959 Speaker 1: like sort of like technical argument about why palm oil 758 00:47:08,040 --> 00:47:09,800 Speaker 1: is this great business in the middle of a club, 759 00:47:10,440 --> 00:47:13,320 Speaker 1: and he like talked about all the uses for palm oil, 760 00:47:13,920 --> 00:47:17,600 Speaker 1: like women's lipstick and how there's no substitute for it. 761 00:47:17,840 --> 00:47:19,440 Speaker 1: And then he also said, and I thought this was 762 00:47:19,480 --> 00:47:23,360 Speaker 1: really interesting, which is that, um, you can't really automate 763 00:47:23,800 --> 00:47:28,880 Speaker 1: um palm oil production because of the way the because 764 00:47:28,880 --> 00:47:31,400 Speaker 1: of the way they're on trees, and so it's not 765 00:47:31,440 --> 00:47:34,400 Speaker 1: like say like potatoes or wheat where you could just 766 00:47:34,440 --> 00:47:36,360 Speaker 1: like have someone out there with like a machine and 767 00:47:36,400 --> 00:47:38,160 Speaker 1: get a big field. You really need to have people 768 00:47:38,880 --> 00:47:42,480 Speaker 1: in uh in the jungles or in the plantations um 769 00:47:42,480 --> 00:47:44,600 Speaker 1: picking the stuff. And so he was talking about how 770 00:47:44,680 --> 00:47:48,680 Speaker 1: much that of an advantage that was for Malaysia, and 771 00:47:48,840 --> 00:47:51,120 Speaker 1: labor costs were essential, so you couldn't do it in 772 00:47:51,160 --> 00:47:54,680 Speaker 1: a high labor cost country, etcetera. So I don't really 773 00:47:54,719 --> 00:47:56,680 Speaker 1: know where I'm going with it. It's just if if 774 00:47:56,719 --> 00:47:59,120 Speaker 1: I were doing a tour, that would have been my highlight. 775 00:47:59,719 --> 00:48:02,080 Speaker 1: I I like how this is just like this episode 776 00:48:02,080 --> 00:48:07,440 Speaker 1: has morphed into share your sort of random emerging market experiences. 777 00:48:06,920 --> 00:48:14,960 Speaker 1: What's your favorite random emerging market experience? I got a lot, Joe, Well, Okay, 778 00:48:15,120 --> 00:48:19,560 Speaker 1: one time I was in Pakistan with my mother's then 779 00:48:19,640 --> 00:48:23,640 Speaker 1: boyfriend who owns a very large company, and we were 780 00:48:23,640 --> 00:48:26,359 Speaker 1: going up through the mountains in Pakistan. We've just gone 781 00:48:26,400 --> 00:48:28,680 Speaker 1: to dinner somewhere um, and then we were coming back 782 00:48:28,680 --> 00:48:32,440 Speaker 1: down and suddenly he stops the car and he starts 783 00:48:32,480 --> 00:48:36,040 Speaker 1: to panic, and my mom and I are going, oh 784 00:48:36,080 --> 00:48:40,680 Speaker 1: my gosh, what's happening. What's the problem here? And her 785 00:48:40,680 --> 00:48:44,200 Speaker 1: boyfriend gets on the phone. Um calls his like personal 786 00:48:44,239 --> 00:48:48,080 Speaker 1: assistant and starts talking to him and Urdu and he 787 00:48:48,120 --> 00:48:50,200 Speaker 1: finally like hangs up the phone and he comes back 788 00:48:50,239 --> 00:48:53,880 Speaker 1: to the car and we go, what's what's the problem, 789 00:48:53,920 --> 00:48:56,920 Speaker 1: And he says, I just reached down for my gun 790 00:48:57,200 --> 00:49:01,120 Speaker 1: underneath my car seat and it's not there. So basically 791 00:49:01,600 --> 00:49:05,160 Speaker 1: he's really unusual in that he's a rich CEO who 792 00:49:05,440 --> 00:49:11,240 Speaker 1: drives himself UM, and that's pretty unusual in Pakistan. And 793 00:49:11,600 --> 00:49:14,080 Speaker 1: he thought because his gun was suddenly missing that someone 794 00:49:14,120 --> 00:49:16,759 Speaker 1: had basically set him up to get robbed or kidnapped 795 00:49:16,880 --> 00:49:20,040 Speaker 1: or worse. It turns out that his driver or the 796 00:49:20,040 --> 00:49:21,759 Speaker 1: guy that cleans the car just forgot to put the 797 00:49:21,800 --> 00:49:25,160 Speaker 1: gun under his chair. But that kind of gives you 798 00:49:25,200 --> 00:49:28,520 Speaker 1: a snapshot of what it's like to live in Pakistan 799 00:49:28,640 --> 00:49:32,520 Speaker 1: and do business right. This is this is the kind 800 00:49:32,520 --> 00:49:35,120 Speaker 1: of stuff we need. No more of this, Like the 801 00:49:35,239 --> 00:49:38,000 Speaker 1: FED is going to lucid policy and that a week 802 00:49:38,000 --> 00:49:42,239 Speaker 1: of the dollar and that'll cause and flows into countries 803 00:49:42,440 --> 00:49:46,040 Speaker 1: with high real GDP blah, blah, it's like these this 804 00:49:46,120 --> 00:49:48,759 Speaker 1: is the kind of stuff that really matters for investors. Yeah, 805 00:49:49,080 --> 00:49:52,240 Speaker 1: which CIOs have to carry a gun? The late competitive 806 00:49:52,320 --> 00:49:56,759 Speaker 1: labor cross advantage of picking palm oil in Malaysia. This 807 00:49:56,800 --> 00:49:58,719 Speaker 1: is where we need to go. H this is this 808 00:49:58,800 --> 00:50:00,279 Speaker 1: is what we need to be talking about. Know what 809 00:50:00,320 --> 00:50:02,359 Speaker 1: we need to do. Like a call in show where 810 00:50:02,360 --> 00:50:06,120 Speaker 1: everyone just shares their sort of like emerging market business 811 00:50:06,160 --> 00:50:11,000 Speaker 1: investment experience. That okay, but on a serious note, I 812 00:50:11,040 --> 00:50:13,640 Speaker 1: really enjoyed that conversation. I think it gets back to 813 00:50:13,840 --> 00:50:16,400 Speaker 1: what we were discussing in the intro, which is that 814 00:50:16,560 --> 00:50:19,480 Speaker 1: if you are investing in these types of markets, you 815 00:50:19,560 --> 00:50:23,399 Speaker 1: really have to do the legwork, and that should mean 816 00:50:23,560 --> 00:50:26,560 Speaker 1: really going to these places and experiencing both the country 817 00:50:26,680 --> 00:50:29,640 Speaker 1: and the business that you're investing in. It's also interesting 818 00:50:29,680 --> 00:50:32,040 Speaker 1: to think about like the sort of even in the 819 00:50:32,080 --> 00:50:35,120 Speaker 1: midst of this crisis, the sort of competitive advantage of 820 00:50:35,160 --> 00:50:39,160 Speaker 1: having having gotten to know markets. So it's like, Okay, 821 00:50:39,200 --> 00:50:42,959 Speaker 1: suddenly this virus breaks out. Oh there's a well run 822 00:50:43,120 --> 00:50:47,240 Speaker 1: Malaysian um rubber glove company that could stand to benefit. 823 00:50:47,280 --> 00:50:50,520 Speaker 1: Like how many people would know that? Yeah, absolutely bad 824 00:50:50,520 --> 00:50:54,359 Speaker 1: company even exists, but so so yeah, but very good. Uh, 825 00:50:54,800 --> 00:50:57,719 Speaker 1: very interesting, and of course it'll be interesting too, and 826 00:50:57,760 --> 00:51:02,720 Speaker 1: it always comes up with e M things or frontiers, uh, 827 00:51:02,840 --> 00:51:05,920 Speaker 1: the degree to which the macro overwhelms the micro. So 828 00:51:05,960 --> 00:51:08,600 Speaker 1: obviously even good companies are going to have a hard 829 00:51:08,600 --> 00:51:12,759 Speaker 1: time and extreme severe negative macro scenarios. But it'll be 830 00:51:12,800 --> 00:51:16,239 Speaker 1: interesting to see um sort of which wins out and 831 00:51:16,280 --> 00:51:20,359 Speaker 1: whether there are companies that really sustainably thrive even during 832 00:51:20,400 --> 00:51:23,600 Speaker 1: what is expected to be an extremely sort of difficult 833 00:51:23,680 --> 00:51:27,560 Speaker 1: time for the foreseeable future on a macro front. Yeah. 834 00:51:27,600 --> 00:51:30,000 Speaker 1: The other thing I was thinking is that Burton and 835 00:51:30,040 --> 00:51:33,040 Speaker 1: Ivan sound like they would be good financial journalists, you know, 836 00:51:33,120 --> 00:51:37,759 Speaker 1: sending fourteen emails to Yeah, sending fourteen emails to try 837 00:51:37,800 --> 00:51:40,000 Speaker 1: to get one meeting and just sort of like wearing 838 00:51:40,080 --> 00:51:43,319 Speaker 1: down the CEO of a company in order to get 839 00:51:43,360 --> 00:51:46,759 Speaker 1: that interview. That Yeah, that sounds a very journalistic. Yeah, 840 00:51:46,840 --> 00:51:48,720 Speaker 1: very much so. And I would listen to a podcast 841 00:51:48,760 --> 00:51:50,520 Speaker 1: of there's two they should do one for each country 842 00:51:50,520 --> 00:51:54,960 Speaker 1: they go to. Yeah, that'd be interesting. Okay, well, now 843 00:51:55,000 --> 00:51:58,359 Speaker 1: that we've created a competing podcast to All Thoughts, uh, 844 00:51:58,600 --> 00:52:01,880 Speaker 1: let's wrap it up. Oh, this has been another episode 845 00:52:01,960 --> 00:52:04,759 Speaker 1: of the All Thoughts podcast. I'm Tracy Alloway. You can 846 00:52:04,800 --> 00:52:08,160 Speaker 1: follow me on Twitter at Tracy Alloway, and you should 847 00:52:08,160 --> 00:52:12,680 Speaker 1: also follow our Bloomberg colleague Felipe Paschecko. He actually wrote 848 00:52:12,719 --> 00:52:16,880 Speaker 1: a really good article about what Ivan and Burton have 849 00:52:17,040 --> 00:52:20,319 Speaker 1: been doing and their travels in various emerging markets. You 850 00:52:20,360 --> 00:52:24,360 Speaker 1: can follow Felipe on Twitter at Felipe A f I 851 00:52:24,920 --> 00:52:28,520 Speaker 1: L I P E pasheco p A c h E 852 00:52:28,920 --> 00:52:32,640 Speaker 1: c o uh. And I'm Joe Wisn'tal. You can follow 853 00:52:32,680 --> 00:52:36,040 Speaker 1: me on Twitter at the Stalwart. Follow our producer on Twitter, 854 00:52:36,160 --> 00:52:40,000 Speaker 1: Laura Carlson Laura and Carlson. Follow the Bloomberg head of podcast, 855 00:52:40,040 --> 00:52:43,400 Speaker 1: Francesca Levi at Francesca Today, and check out all of 856 00:52:43,400 --> 00:52:47,080 Speaker 1: our podcasts at Bloomberg under the handle at podcasts. Thanks 857 00:52:47,080 --> 00:53:07,759 Speaker 1: for listening, e