WEBVTT - Rajiv Jain Discusses Portfolio Management 0:00:02.240 --> 0:00:06.800 This is Masters in Business with Barry Ridholts on Bloomberg Radio. 0:00:07.200 --> 0:00:10.320 This week on the podcast, I have an extra special guest. 0:00:10.480 --> 0:00:13.880 His name is Regiev Jane, and he has quite the 0:00:13.960 --> 0:00:18.360 fascinating background. UM. He is currently chairman and Chief Investment 0:00:18.400 --> 0:00:22.439 Officer at his own firm, g q G Partners, which 0:00:22.480 --> 0:00:28.200 manages about twenty four billion dollars. Previously, UH, he was 0:00:28.280 --> 0:00:31.760 co CEO and and c i O at Vante Bell 0:00:31.880 --> 0:00:36.599 Asset Management. UH. If you are at all interested in 0:00:36.760 --> 0:00:41.400 a wealth of things from global and international and E 0:00:41.680 --> 0:00:46.600 M investing two portfolio management and the process that goes 0:00:46.640 --> 0:00:49.920 in uh to putting together a portfolio, You're gonna find 0:00:49.920 --> 0:00:55.480 this conversation to be absolutely fascinating. Rajiv Is is both 0:00:55.560 --> 0:00:59.240 humble and soft spoken, but is filled with all sorts 0:00:59.280 --> 0:01:03.240 of inside and wisdom. UM. I know I got a 0:01:03.280 --> 0:01:06.039 ton out of the conversation. I just found lots and 0:01:06.120 --> 0:01:10.080 lots of things that he said to be intriguing and fascinating, 0:01:10.160 --> 0:01:13.880 and I think you will also so, with no further ado, 0:01:14.440 --> 0:01:21.280 my conversation with Regive Jane. This is Masters in Business 0:01:21.520 --> 0:01:25.960 with Barry Ridholts on Bloomberg Radio. I'm Barry Ridholts. You're 0:01:26.040 --> 0:01:29.400 listening to Masters in Business on Bloomberg Radio. My extra 0:01:29.480 --> 0:01:32.399 special guest this week is Regieve Jane. He is the 0:01:32.480 --> 0:01:35.839 chairman and chief investment officer of g q G Partners 0:01:36.280 --> 0:01:40.560 affirm with over twenty four billion dollars in assets under management. 0:01:41.160 --> 0:01:45.760 Regiev was the morning Star International Manager of the Year. 0:01:46.240 --> 0:01:48.960 He runs a number of different funds, the Goldman Sacks, 0:01:49.040 --> 0:01:53.480 g q G Partners International Opportunities Funds, the Partners Emerging 0:01:53.520 --> 0:01:57.360 Market Equity Fund, and the Partners US Select Equity Funds. 0:01:57.840 --> 0:02:01.960 Last year, his Global fund was positive while the benchmark 0:02:02.080 --> 0:02:06.040 was down nine percent. Over the past twenty years, we've 0:02:06.040 --> 0:02:09.240 seen our performance in all of the areas Regeeve works 0:02:09.240 --> 0:02:14.320 in between three hundred and four hundred basis points. Rajiv Jane, 0:02:14.720 --> 0:02:17.960 Welcome to Bloomberg. Thanks verty, thanks for having me. I've 0:02:17.960 --> 0:02:20.440 been looking forward to this conversation because you're one of 0:02:20.480 --> 0:02:23.480 these people who have been shooting the lights out. Uh 0:02:23.600 --> 0:02:27.080 and I think most of the investing public is not 0:02:27.400 --> 0:02:32.359 very familiar with you or your background, which is quite fascinating. 0:02:32.800 --> 0:02:35.640 Tell us about your personal history and how you got 0:02:35.639 --> 0:02:40.960 to running a large asset management firm. Yeah, thanks, Betty, 0:02:41.080 --> 0:02:44.600 So I think first of all, I was born in India, 0:02:44.680 --> 0:02:47.760 grew up in India. Uh, and I got hooked onto 0:02:47.760 --> 0:02:51.080 stocks when I was in high school. Uh. I guess 0:02:51.080 --> 0:02:53.160 my dad wanted to keep me busy doing summer so 0:02:53.240 --> 0:02:55.280 he gave me some those days you get old, you know, 0:02:55.320 --> 0:02:57.600 stock certificates and dividend checks. He is that, why don't 0:02:57.680 --> 0:03:00.280 tell you those and dividen haven't come in? And I 0:03:00.400 --> 0:03:02.360 used to go remember going to broker and he was 0:03:02.720 --> 0:03:04.520 an ex army guy, and he said, look, I need 0:03:04.520 --> 0:03:06.520 to talk to a dad. Why they live He allows 0:03:07.040 --> 0:03:09.160 a high school kid to come to this broker's house. 0:03:09.160 --> 0:03:12.360 He looks, you see the average around hub, other people 0:03:12.360 --> 0:03:14.440 sitting here. So that's how I ended up getting hooked. 0:03:15.120 --> 0:03:19.840 Came to us when I was you know two, and 0:03:21.400 --> 0:03:23.640 and yeah, I ever, I've been doing the same thing 0:03:23.680 --> 0:03:26.240 ever since. I guess I can't do anything else. So 0:03:26.320 --> 0:03:28.880 let's talk a little bit about your background at Vontabelle 0:03:28.880 --> 0:03:32.359 Asset Management. You were there for a good couple of years. 0:03:32.480 --> 0:03:34.840 Tell us what that shop was like and how that 0:03:34.960 --> 0:03:38.400 led to the decision to launch your own firm. Yes, 0:03:38.520 --> 0:03:41.600 so it was it was a part of a large 0:03:41.640 --> 0:03:44.320 Swiss bank and it was kind of a small boutique 0:03:44.360 --> 0:03:48.040 where first seven eight years that we couldn't even afforded trader. 0:03:48.080 --> 0:03:50.720 So I I used to put in my own trades. Uh. 0:03:50.720 --> 0:03:53.480 So I joined as a CopM for global and emerging 0:03:53.560 --> 0:03:59.360 markets uh in international Actually, And what's the most interesting 0:03:59.400 --> 0:04:03.160 experience I would say, UM would be the I began 0:04:03.240 --> 0:04:06.160 the CEE IO and two thousand two and quickly seventy 0:04:06.200 --> 0:04:09.280 person of the client's virtus. Really yeah, why was that? 0:04:09.520 --> 0:04:11.760 Well because the past performance wasn't great and there was 0:04:11.800 --> 0:04:14.120 a change in PM. So that's my view of saying 0:04:14.120 --> 0:04:17.919 it that I wasn't want to blame. So, so you 0:04:17.960 --> 0:04:20.760 were did you begin as an analyst? Also? How did 0:04:20.800 --> 0:04:24.080 how did you work your way up to portfolio managers? Yeah? Yeah, 0:04:24.200 --> 0:04:28.840 so um, I started at at the U B S 0:04:28.960 --> 0:04:31.800 or Swiss Band Corporation, then as an analyst, and I 0:04:31.839 --> 0:04:34.000 did become a CopM and after a couple of years. 0:04:34.360 --> 0:04:36.920 So what this is a question that I've had people 0:04:36.960 --> 0:04:39.480 asked me. You're the person perfect person to ask this. 0:04:40.520 --> 0:04:43.600 What is the difference when you're looking at stocks as 0:04:43.640 --> 0:04:47.039 an analyst and trying to take an individual equity apart 0:04:47.680 --> 0:04:51.520 versus making the buy or cell decision as a portfolio manager. 0:04:51.920 --> 0:04:54.560 Very different approaches, aren't they. Yeah. Look, I think I 0:04:54.560 --> 0:04:56.960 think the abster right, there's a big difference between the two, 0:04:57.040 --> 0:04:59.719 and I would categorize in two parts of that. The 0:05:00.000 --> 0:05:03.400 first is, as an analyst, you expect to know as 0:05:03.480 --> 0:05:05.680 much as you can, but as a portfolio manager, you 0:05:05.680 --> 0:05:09.800 really don't have that luxury are waiting for getting let's say, 0:05:10.200 --> 0:05:12.599 of the information which is norble. You can't get to 0:05:12.680 --> 0:05:14.400 that level of a certainty. But as an analyst you 0:05:14.440 --> 0:05:17.320 are expected to know more. That's a big difference, and 0:05:17.360 --> 0:05:20.360 I think that sometimes when analysts become pms, they sort 0:05:20.360 --> 0:05:23.039 of missed that. They keep ending looking for more and 0:05:23.080 --> 0:05:27.840 more information, which you know can can can be you know, paralyzing. 0:05:28.839 --> 0:05:31.400 The second part is when you're looking at a portfolio, 0:05:31.720 --> 0:05:34.120 the risk management of the part of the portfolio construction 0:05:34.160 --> 0:05:38.320 part become paramount. You may love the name, and you 0:05:38.400 --> 0:05:40.599 actually tend to love all the names you want the portfolio, 0:05:40.920 --> 0:05:44.279 but when you're constructing portfolio the the you may end 0:05:44.360 --> 0:05:46.440 up taking too much risk in a particularly area. And 0:05:46.720 --> 0:05:50.159 I mean, if you go back to two thousand crises, 0:05:50.120 --> 0:05:52.000 a lot of folks blew up because they had too 0:05:52.080 --> 0:05:55.960 much in an area, because consider risk because we love 0:05:56.000 --> 0:05:57.800 this area and got cheaper and we love it, do 0:05:57.920 --> 0:06:00.920 more and it kept getting cheaper. So oh, you've got 0:06:00.920 --> 0:06:03.000 to be careful about you know. And and most time 0:06:03.080 --> 0:06:05.320 it's the things that we love that kill us. So 0:06:05.520 --> 0:06:08.919 let's talk a little bit about that and portfolio construction. 0:06:09.360 --> 0:06:13.120 I think a lot of individual investors, to them, portfolio 0:06:13.200 --> 0:06:16.760 construction is really just the stocks they've collected over the years. 0:06:17.200 --> 0:06:20.279 You obviously approach it very differently. How do you think 0:06:20.320 --> 0:06:24.680 about portfolio construction in terms of what you're holdings are, 0:06:24.760 --> 0:06:29.120 in terms of how they're diversified by either sector or geography, 0:06:29.200 --> 0:06:34.960 and and lastly about the risk you just mentioned. So um, 0:06:35.080 --> 0:06:37.880 the first part is that you've got to make sure 0:06:37.920 --> 0:06:40.200 that the business would be around for long term, right. 0:06:40.200 --> 0:06:42.520 I mean, if you're not sure how the business gonna 0:06:42.520 --> 0:06:44.760 look like five years out, you probably not shouldn't. Shouldn't 0:06:44.760 --> 0:06:46.279 be invested. Doesn't mean you want for five years. But 0:06:46.279 --> 0:06:51.360 you've got to be careful because markets anticipate deturing fundamental 0:06:51.440 --> 0:06:54.400 a lot faster than than we we like to think. 0:06:55.240 --> 0:06:58.080 If if if the drug is expiring in three years, 0:06:58.080 --> 0:07:00.880 guess what, markets started discounting a lot sooner, and you 0:07:00.920 --> 0:07:02.880 see a bunch of names which are selling it very 0:07:02.920 --> 0:07:05.480 low multiples because oh it's still a few years out, 0:07:05.839 --> 0:07:07.520 and it's it's a low multiple, so and so for 0:07:07.640 --> 0:07:10.400 the market is already discounting deterioration, right, So that's part 0:07:10.440 --> 0:07:12.600 of the first risk management. Is that a little bit 0:07:12.640 --> 0:07:16.800 of a value trap situation for people exactly, And I think, 0:07:16.800 --> 0:07:18.720 I think if you look at what has happened last year, 0:07:18.720 --> 0:07:20.840 is the reason why a lot of folks have underperformed. 0:07:20.880 --> 0:07:23.840 And I feel investing is nothing but a journey of 0:07:23.920 --> 0:07:26.880 learning from a mistakes. If you're not willing to evolve 0:07:26.960 --> 0:07:29.920 an adapt you won't survive long term. It's very easy 0:07:29.960 --> 0:07:31.880 to say, look, I found this mouse trap, and how 0:07:31.920 --> 0:07:35.440 wonderful it has worked in nineteen thirties. So my question 0:07:35.520 --> 0:07:37.600 of how many anelets around in nineteen eighties level or 0:07:37.680 --> 0:07:40.200 nineteen thirties maybe the market become a little more efficient. 0:07:40.400 --> 0:07:46.840 So the the low multiple trap is is essentially markets 0:07:46.880 --> 0:07:49.400 being much more forward looking than we would be gave 0:07:49.440 --> 0:07:51.640 it credit for. So you sound a little bit like 0:07:51.720 --> 0:07:55.440 Ray Dalio who talks about mistakes and the learning process 0:07:55.520 --> 0:08:00.720 and improving. How long should an investor expect that journey 0:08:00.760 --> 0:08:03.400 to take before they have some degree of components or 0:08:03.440 --> 0:08:08.240 even um actual skill in managing assets. That that's a 0:08:08.280 --> 0:08:14.120 hard question to answer because it's a function of a 0:08:14.120 --> 0:08:16.200 are you truly trying to look at in on a 0:08:16.440 --> 0:08:19.920 verny broad spectrum, the broader the spectrum chance that you 0:08:19.920 --> 0:08:22.880 will learn a little bit faster. In other words, if 0:08:22.880 --> 0:08:26.280 you if you're focusing on one specific sector only, you're 0:08:26.320 --> 0:08:30.000 too natrowly focused. When you operate in the silo, you 0:08:30.040 --> 0:08:33.160 really don't know the you know the there's no cross pollination. 0:08:33.679 --> 0:08:36.679 I feel I'm a better US manager because I do 0:08:36.720 --> 0:08:40.160 emerging markets and vice versa. I'm Barry rid Halts. You're 0:08:40.240 --> 0:08:43.720 listening to Masters in Business on Bloomberg Radio. My special 0:08:43.760 --> 0:08:46.480 guest today is Ragief Jane. He is the chairman and 0:08:46.559 --> 0:08:49.960 chief investment officer of the twenty four billion dollar firm 0:08:50.280 --> 0:08:53.640 g q G Partners. So let's talk a little bit 0:08:53.640 --> 0:08:57.320 about the launch of of the firm. You co invest 0:08:57.400 --> 0:09:01.280 alongside with your clients. I think you've you've said previously 0:09:01.720 --> 0:09:05.679 something like your own assets are in your funds. To 0:09:05.720 --> 0:09:11.080 discuss the idea behind eating your own cooking. My personal 0:09:11.120 --> 0:09:13.680 belief is that managing somebody else's money as a privilege 0:09:13.920 --> 0:09:16.520 it's an order to manage somebody else's money and our 0:09:16.559 --> 0:09:20.280 decision to impact how our clients do and whether they 0:09:20.360 --> 0:09:23.520 have a dignified retirement or not. Right. So when we 0:09:23.559 --> 0:09:26.120 talk about if you have to ask things, I personally 0:09:26.120 --> 0:09:28.320 feel if you have to ask a single question anybody, 0:09:28.320 --> 0:09:31.679 the question would be what percent of your network are 0:09:31.720 --> 0:09:34.640 you willing to put in your own funds? Restless talk 0:09:35.120 --> 0:09:38.920 because that that that gives you a very good view 0:09:39.080 --> 0:09:41.840 of a how they think about investing, because you become 0:09:41.920 --> 0:09:45.520 much more absolute oriented, right, whether you think about taxes 0:09:45.840 --> 0:09:50.160 or you know, after tax returns, uh, the fees and 0:09:50.160 --> 0:09:52.880 so on, so forth. So it's sort of encompasses almost everything. 0:09:53.520 --> 0:09:55.760 And I have vast majority of my wealth. I don't 0:09:55.760 --> 0:09:59.320 have money in any other long only manager longshore private degree. 0:09:59.320 --> 0:10:01.880 If we don't allow only personal trading a GQG, for example, 0:10:02.559 --> 0:10:05.240 every employees and investor. And I'm quite proud of the 0:10:05.240 --> 0:10:06.800 fact that we have quite a bit of skin in 0:10:06.800 --> 0:10:10.600 the game. That's quite interesting. The the expression I recall 0:10:11.120 --> 0:10:13.720 from years ago was I can't hear what you're saying 0:10:13.760 --> 0:10:16.720 because what you're doing is speaking so loudly. That seems 0:10:16.720 --> 0:10:20.880 to apply dead center to this doesn't it. Thank you, guys, 0:10:20.960 --> 0:10:25.000 it does. So, so let's talk a little bit about um, 0:10:25.040 --> 0:10:29.480 about how you go about selecting stocks and making the 0:10:29.520 --> 0:10:33.040 decision to to get rid of them. You've described your 0:10:33.440 --> 0:10:37.360 quote clinical approach to shedding positions when they no longer 0:10:37.400 --> 0:10:42.720 fit your thesis. Explain that there's been plenty of evidence 0:10:42.760 --> 0:10:44.880 and I can tell you with my own experience that 0:10:45.760 --> 0:10:49.480 buying is easy. Selling is whether where the trouble starts. 0:10:49.600 --> 0:10:51.760 And there has been recently been academic you know, work 0:10:51.920 --> 0:10:54.080 on that that portfolio managed to do a pretty good 0:10:54.120 --> 0:10:57.440 job buying. It's just selling. When when when things tend 0:10:57.440 --> 0:11:01.199 to go wrong, and and and and and people describe 0:11:01.200 --> 0:11:03.000 me as a kind of a ruthless seller, I'm happy 0:11:03.040 --> 0:11:05.200 to go back again and revisit. And sometimes I would 0:11:05.200 --> 0:11:08.960 sell just to clear up my mind and revisited. Um. 0:11:09.040 --> 0:11:11.440 When when we talk about selling, it's the best selling 0:11:11.480 --> 0:11:14.280 happens when things are subtle, not when they are in papers. 0:11:15.559 --> 0:11:18.040 And when things that are subtle, it means does the 0:11:18.040 --> 0:11:20.679 thesis actually hold or has beginning to shift a little bit? 0:11:21.480 --> 0:11:23.240 And I think, I think, I think that's where you 0:11:23.280 --> 0:11:26.319 almost have to be willing to be wrong and admitted 0:11:26.400 --> 0:11:29.120 you're wrong. In fact, one of the tests I feel 0:11:29.160 --> 0:11:33.760 for for my analysis is have you found new ways 0:11:33.760 --> 0:11:37.520 of losing money? Explain that new ways of losing money, 0:11:37.720 --> 0:11:40.320 like investing is said, is a journey of learning from mistakes. 0:11:40.320 --> 0:11:43.920 How do we expand our investing horizon horizon means you're 0:11:43.920 --> 0:11:47.600 our brand, our breadth, not time horizon, and that means 0:11:47.600 --> 0:11:50.120 that you have to experiment sometimes in areas that you're 0:11:50.120 --> 0:11:53.040 not invested before. If you've wily invest in financials, you 0:11:53.080 --> 0:11:56.560 keep investing financial guests forward. Last decade hasn't been too 0:11:56.559 --> 0:11:58.599 good for you in the nineties, if you didn't know 0:11:58.600 --> 0:12:01.000 how to invest in financials in tech, you wouldn't have 0:12:01.000 --> 0:12:03.240 done well in the next decade. If you only did that, 0:12:03.280 --> 0:12:06.120 you probably wouldn't have done well either. So you need 0:12:06.160 --> 0:12:08.760 to be able to experiment, and many talk about experimentation. 0:12:09.640 --> 0:12:12.760 Losses have to be small, But that's how you would learn, 0:12:12.800 --> 0:12:16.400 because the only way you really learn is by putting 0:12:16.440 --> 0:12:18.240 some some money on, you know, on on on on 0:12:18.320 --> 0:12:20.680 on on those stocks. Paper trading doesn't get it done. 0:12:20.679 --> 0:12:23.840 Paper trading doesn't get it done. It overstays the reality because, 0:12:24.600 --> 0:12:27.600 as somebody has said, the money is made by the 0:12:27.640 --> 0:12:30.320 how thick is your stomach aligning rather than now how 0:12:30.400 --> 0:12:34.040 much i Q you have? That's really interesting. What about 0:12:34.040 --> 0:12:37.840 the selection process you You seem to have come up 0:12:37.880 --> 0:12:40.720 with the process that's a little different from everybody else, 0:12:41.400 --> 0:12:45.880 as the results have shown, What are you doing, um, 0:12:46.000 --> 0:12:49.960 when you're thinking about building a portfolio and making individual 0:12:49.960 --> 0:12:55.520 stock selections. First of all, um, balance sheet matters, right, 0:12:55.559 --> 0:12:59.440 so so so that this you need to eliminate weaker 0:12:59.480 --> 0:13:03.679 companies worst. In other words, that's an easy one negative 0:13:03.720 --> 0:13:06.360 screen get exactly. So it is not about trying to 0:13:06.400 --> 0:13:08.920 find the best company, is avoiding the worst. In fact, investing, 0:13:09.040 --> 0:13:10.840 like a lot of things in life, it's sometimes easier 0:13:11.679 --> 0:13:13.719 to to identify what shouldn't be done rather than or 0:13:13.720 --> 0:13:15.880 it should be done, because that just increases the odds 0:13:15.880 --> 0:13:19.320 of success. So you avoid mistakes, and even if everything 0:13:19.320 --> 0:13:22.400 else is okay, you're way ahead of people whose portfolios 0:13:22.400 --> 0:13:25.200 are filled with mistakes. Exactly. In fact, I've kind of 0:13:25.240 --> 0:13:28.160 joked around the reason why I've survived over the longer 0:13:28.240 --> 0:13:30.559 run is because you just avoid blowing up, and enough 0:13:30.600 --> 0:13:32.840 people blow up and you'll be top quartile just because 0:13:32.880 --> 0:13:34.760 you don't blow up. So I think I think from 0:13:34.760 --> 0:13:37.880 a process of perspective. First of all, you take out 0:13:37.880 --> 0:13:41.120 the weaker balance sheets, and the second part is think 0:13:41.120 --> 0:13:43.880 about the capital allocation decisions managements have made. In other words, 0:13:43.920 --> 0:13:47.760 how much what returns have degenerate on intremental instremental capital 0:13:47.760 --> 0:13:50.560 that they put in the business? Return capital is probably 0:13:50.600 --> 0:13:53.800 the single biggest you know measure that that that I 0:13:53.840 --> 0:13:56.920 feel one has to look at. Valuations comes distant second 0:13:57.000 --> 0:13:59.760 or third really, So so let's start with that first piece, 0:14:00.000 --> 0:14:03.280 screening out the negative the weaker companies. What are you 0:14:03.400 --> 0:14:06.200 looking for? Are you looking for lots of dat Are 0:14:06.200 --> 0:14:10.960 you're looking for no real growth in revenue and income 0:14:11.160 --> 0:14:14.000 or you're looking at the management team themselves or all 0:14:14.040 --> 0:14:18.080 the above and more management team is is second. First 0:14:18.080 --> 0:14:20.880 would be numbers. In other words, you know, leverage is 0:14:20.880 --> 0:14:24.000 an easy one, but also in terms of, you know, 0:14:24.040 --> 0:14:26.800 the sicklicality of earning stream relative to their own sector, 0:14:27.240 --> 0:14:30.640 the returns that the generating related their own space, because 0:14:30.760 --> 0:14:34.440 you can't compare a bank and and and a European utility, right, 0:14:34.560 --> 0:14:36.000 And I think I think when people talk us talk 0:14:36.040 --> 0:14:40.280 about quality, they look at much more on an absolute 0:14:40.280 --> 0:14:42.800 based across the board. But banks the best time to 0:14:42.840 --> 0:14:47.480 buy banks is actually when the numbers don't look good, right, 0:14:47.960 --> 0:14:50.760 that's not necessitude for staples. In fact, if you look 0:14:50.800 --> 0:14:56.280 at even technology last forty year, if you back test 0:14:56.280 --> 0:15:01.480 the numbers, the most expensive dis style has outperformed the 0:15:01.880 --> 0:15:05.320 cheapest DECIDL in tech and in pharma. So, in other words, 0:15:05.360 --> 0:15:09.760 momentum is much more powerful than value in those sectors. Okay, 0:15:09.800 --> 0:15:12.280 so I want to be over you know you're overstating 0:15:12.280 --> 0:15:14.680 the momentum issue. It's not momentum issue. It's much more 0:15:14.680 --> 0:15:16.720 about well, first of all, it is the balance she 0:15:16.760 --> 0:15:18.920 it good. And the second thing is the growth coming through. 0:15:19.360 --> 0:15:22.920 So growth is important. But but but but you need 0:15:22.960 --> 0:15:24.960 the combination of those, and then you look at the 0:15:24.960 --> 0:15:27.840 management and then you look at the valuations a lot 0:15:27.840 --> 0:15:32.320 of because think about this face if if if, if, 0:15:32.440 --> 0:15:35.520 if you're moving to Florida, would you call a realtor 0:15:35.600 --> 0:15:38.640 say get you know, give me the cheapest neighborhood? No, 0:15:38.720 --> 0:15:41.760 of course not. Why do you do that in stocks? Well, 0:15:41.800 --> 0:15:45.920 because there's this belief that UM on average, if you're 0:15:46.760 --> 0:15:49.440 um pe ratio or price to book or whatever your 0:15:49.480 --> 0:15:53.520 preferred metric is, UM, the cheaper stocks over long periods 0:15:53.520 --> 0:15:56.920 of time should outperform the most expensive stocks. That at 0:15:57.000 --> 0:15:59.480 least is the common belief that's out there. Well, see that, 0:15:59.800 --> 0:16:01.800 I've a lot of problem with averages. Averages like your 0:16:01.800 --> 0:16:03.840 foot might be enough on, your head might be in freezer, 0:16:03.880 --> 0:16:08.600 and on average you're dead. That's that's a fair um, 0:16:08.640 --> 0:16:10.800 that's a fair description. So so so I think I 0:16:10.800 --> 0:16:14.280 think you gotta be careful about averages because in especially 0:16:14.360 --> 0:16:18.960 this day and age, there isn't enough appreciation that how 0:16:18.960 --> 0:16:21.440 many how many bison alis of operating thirty years ago 0:16:21.800 --> 0:16:26.520 verses today? If that amount exactly? And what about fifties 0:16:26.520 --> 0:16:28.960 and sixty And you see managers showing how well priced 0:16:29.000 --> 0:16:31.520 to book at work in ninet thirties, Well, it's wonderful. 0:16:31.600 --> 0:16:34.120 You're fooling yourselves. You're not fooling anybody else. That doesn't 0:16:34.120 --> 0:16:36.840 work anymore. It didn't work in the seventies, in the seventies, 0:16:36.840 --> 0:16:39.880 So Marcus, do get efficient. I mean, let's not kill ourselves. 0:16:39.920 --> 0:16:42.480 The question how are you evolve to incorporate that? I mean, 0:16:42.680 --> 0:16:45.480 you can buy dozens of ETFs to you know WHI 0:16:45.480 --> 0:16:48.400 should run on quality. So if you're backward looking quality, 0:16:48.480 --> 0:16:51.720 it has stopped working. I'm Barry ritolts. My extra special 0:16:51.720 --> 0:16:54.520 guest this week is Regiev Jane. He is chairman and 0:16:54.640 --> 0:16:58.000 chief investment officer of the twenty four billion dollar firm 0:16:58.280 --> 0:17:01.360 g q G Partners. He runs a number of different 0:17:01.440 --> 0:17:05.600 funds UM, all of which have outperformed. Over the past 0:17:06.119 --> 0:17:10.480 UH twenty years, he has handily beaten his benchmark. Last year, 0:17:10.480 --> 0:17:14.240 his global funds UH was about nine hundred basis points 0:17:14.800 --> 0:17:19.359 above the benchmark, which was down about nine percent for 0:17:19.400 --> 0:17:23.480 the year. Uh. Let's talk a little bit about international investing. 0:17:24.560 --> 0:17:27.879 One of your biggest holdings is India makes up about 0:17:27.880 --> 0:17:31.720 twenty seven percent of the fund bullpark. Uh. Why are 0:17:31.760 --> 0:17:34.320 you still enthusiastic about India? What do you think is 0:17:34.359 --> 0:17:38.119 happening there and what companies have caught your attention in 0:17:38.200 --> 0:17:41.000 that country? Yes, so India is big only in the 0:17:41.000 --> 0:17:43.639 emerging market fund and internactionally you only have five percent, 0:17:44.320 --> 0:17:46.960 And similarly in global I think I think, I think 0:17:47.960 --> 0:17:50.199 the couple of things one is well, first of all, 0:17:50.240 --> 0:17:55.080 there's a risk of me being biased, so I think 0:17:55.080 --> 0:17:57.760 I think gotta be careful. So you have home country bias. 0:17:57.800 --> 0:18:01.679 Even after you leave the country, they like you, you 0:18:01.840 --> 0:18:03.960 feel you know it better, right, So that's one saying 0:18:03.960 --> 0:18:06.400 you gotta be careful. You you should surprise folks over 0:18:06.480 --> 0:18:08.320 France chance, so they would have more in France. So 0:18:08.400 --> 0:18:13.240 home country bias excess. But I think in this case, um, 0:18:13.280 --> 0:18:17.680 there's a differences, particularly now. India wasn't always that big. 0:18:17.960 --> 0:18:20.040 The reason is because if you look at what's happening 0:18:20.040 --> 0:18:23.960 around the world, there's earnings pressure. So domestic oriented businesses 0:18:24.000 --> 0:18:26.800 are actually delivering better earnings growth. And India is a 0:18:26.880 --> 0:18:30.080 very large domestic market. China is two, and so in 0:18:30.119 --> 0:18:32.880 Brazil in the within the emerging market context, the same 0:18:32.880 --> 0:18:35.439 in US actually right, I mean multinational rejects for a 0:18:35.440 --> 0:18:37.600 lot of China are not exactly doing that well. For 0:18:37.920 --> 0:18:40.399 domestic orientage stocks are just doing better. So India is 0:18:40.440 --> 0:18:43.160 a big domestic market and you can get fairly high, 0:18:43.880 --> 0:18:47.240 high quality, predictable businesses which are still selling it reasonable 0:18:47.280 --> 0:18:50.879 valuations UM. And hence we have higher exposure in the 0:18:50.920 --> 0:18:53.679 E M punt. So so let's talk about Russia. You 0:18:53.760 --> 0:18:58.320 were quote massively underweight Russia for eighteen or so years. 0:18:58.359 --> 0:19:02.480 Now you say you're overweight Russia. What has changed, um, 0:19:02.600 --> 0:19:06.320 either in your view or in Russia itself to have 0:19:06.440 --> 0:19:10.400 that big shift. But first of all, from a philosophical perspective, 0:19:10.560 --> 0:19:13.159 investing is all about change, is not about static. In 0:19:13.200 --> 0:19:16.120 other words, Singapore might be wonderful place, but if it's 0:19:16.160 --> 0:19:19.880 deteriorting that's not you know, that's a problem in Russia. 0:19:20.040 --> 0:19:21.280 I'm not saying it's going to be next with de 0:19:21.359 --> 0:19:24.800 Land or anything like that, but it's improved quite a 0:19:24.840 --> 0:19:27.320 bit compared to it it was five, ten, fifteen years ago. 0:19:27.520 --> 0:19:30.960 Corporate governance has improved, um. And they talked about managing 0:19:31.080 --> 0:19:34.119 companies which are actually very well positioned and as selling 0:19:34.160 --> 0:19:36.600 for very attractive prices, so that there's a big difference 0:19:36.600 --> 0:19:39.560 for let's say ten twenty years ago, and that's I 0:19:39.640 --> 0:19:42.560 was very better rush. I'm talking about twenty years now, 0:19:43.080 --> 0:19:45.560 uh till a few years ago. Uh and today it 0:19:45.600 --> 0:19:48.479 looks actually reasonably attractive. Some of the folks who have 0:19:48.480 --> 0:19:52.240 have pointed out that Russia is always cheap, But the 0:19:52.280 --> 0:19:54.280 concern is rule of law, and how do you know 0:19:54.400 --> 0:19:58.480 that the state isn't just gonna arrest your CEO or 0:19:58.640 --> 0:20:01.879 or capture assets. How confident can you be investing in 0:20:02.000 --> 0:20:06.359 Russia that the normal rules apply. I thought you were 0:20:06.400 --> 0:20:09.159 describing China. See you gets arrested in stock collapses, right, 0:20:09.160 --> 0:20:12.600 I guess it happens in other countries. It happens happened 0:20:12.640 --> 0:20:15.640 here also, we've had people arrested and the stocks haven't 0:20:15.680 --> 0:20:17.720 done that well, but it seems to be a little 0:20:17.720 --> 0:20:20.680 more endemic to certain countries. Now, you're absolutely right, I think. 0:20:20.680 --> 0:20:23.600 I think first of all, that's where you got to 0:20:23.600 --> 0:20:26.199 see whether the business interests are aligned with the with 0:20:26.280 --> 0:20:28.600 the government policy and what the you know, what the 0:20:28.600 --> 0:20:34.200 outlook would be longer term. So um So, one interesting fact, 0:20:34.600 --> 0:20:37.679 if you do the last twenty years, Russia has been 0:20:37.720 --> 0:20:41.119 one of the best performing markets versus China and mostly 0:20:41.160 --> 0:20:43.640 other markets, by the way, and which is not how 0:20:43.680 --> 0:20:45.920 people think about it. Uh. And the reason is that 0:20:45.960 --> 0:20:48.640 you can get some really high battered true businesses which 0:20:48.680 --> 0:20:51.000 are very well aligned with what the government policy is. 0:20:51.600 --> 0:20:56.200 And and and ironically because of the capital flight issues, 0:20:56.240 --> 0:20:58.560 actually a lot of companies pay a lot of dividends, 0:20:59.359 --> 0:21:03.239 so you basically getting dividend return on business that are 0:21:03.240 --> 0:21:06.359 still growing at reasonable you know, at regional prices. So 0:21:06.520 --> 0:21:09.000 I think I think it's a combination of the two. 0:21:09.720 --> 0:21:12.080 Um So, if you can buy a business where the 0:21:12.119 --> 0:21:14.840 bond heels are, foreigners are willing to buy bonds of 0:21:14.880 --> 0:21:16.840 the same company at four and four and a half percent. 0:21:17.320 --> 0:21:20.600 Why the stocky link twelve percent? That's a question, right, 0:21:20.640 --> 0:21:22.480 I mean, the corporate governors should apply as much as 0:21:22.480 --> 0:21:24.800 the bond site. But but but if you can get 0:21:24.880 --> 0:21:28.000 truly good business like spur Bank for example, uh it 0:21:28.000 --> 0:21:31.600 has sixty pc deposit franchise in in a deposit market 0:21:31.600 --> 0:21:35.120 share in Russia and the banking system is consolidating rapidly, 0:21:35.760 --> 0:21:39.480 I mean, it's it's meaningful consolidation. Over the last five years. 0:21:39.480 --> 0:21:41.880 The central banker and Ubulina has done a very good job. 0:21:42.400 --> 0:21:46.080 But it's yielding almost eight percent growing plus rows selling 0:21:46.080 --> 0:21:48.439 at six time mornings. So it is I think. I think, 0:21:48.440 --> 0:21:52.040 I think you can do a lot worse in other places. 0:21:52.080 --> 0:21:55.080 So do you bring a different sort of fundamental analysis 0:21:55.119 --> 0:21:58.159 to different countries? Do you have to think about stock 0:21:58.200 --> 0:22:02.520 selection and let's say China or Russia differently than you 0:22:02.520 --> 0:22:06.600 would think about Singapore or Vietnam? How do you look 0:22:06.640 --> 0:22:09.840 at each country with their own unique political situation You 0:22:09.880 --> 0:22:13.680