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Dede Eyesan

lines on the record: 41
first: 2024-02-04
most recent: 2024-02-04
sittings or episodes: 1
sources: podcast

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“So our website is Jenga Jngaip.com. We share our research there. We try to keep our research open. I love the feedback that I get from readers. So yeah, always feel free to reach out to me if you read one of our research and you have some questions. And I'm also on Twitter. My handle is Dede Dede underscore AASN E-Y-E-S-A-N. So I'm on Twitter and also LinkedIn as well. And I'm always happy to talk about our research and what we're doing from a stock picking view.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“So my focus, I think they're going to be able to achieve the 25% for the next three to four years. So that's in both revenue and eBit and EBIT and profit. There isn't really room for margin expansion with consulting because your costs are mainly people. You shouldn't reduce the salary of people, so you can't really expand by reducing salary. You don't have that much fixed cost. So the margins in IT consulting tend to be quite stable. And Gopher have a policy with I think they're one of the first companies to create a collective agreement within IT consultant in Finland and they try to create”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“Being able to attract hundreds and thousands of people to work for your business, it's actually very hard as a founder. You don't really see many IT consulting businesses created by just one founder. There's usually like a team of four or five people who left another IT consultant set up theirs. That's what happened with GoFor. That's what happened with all of these businesses. So it's actually quite a high barrier of success industry. And I think it's one that we're probably going to see a bit more outperformers going forward. But at the same time, there are a lot of losers out there. So I would say it's a stock picker's market where you really have to differentiate between the really good consultant businesses who actually produce value for money for the clients and the ones that just rely on their brand name and they just focus on their brand name to grow the business. Those ones will be caught out and there's been quite a few bad examples of those type of businesses.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“Business much quicker than anyone else. The Polish businesses also or Eastern Europe businesses also building some expertise there in terms of value for money, in terms of being able to recruit, but that's one area in terms of competitive advantage. Another big area is really, I guess, the relationship with the client, the ratings, the feedback, the ease of working with them. That's much harder to gauge, but it's something that you can gain by speaking to their customers. Quite a few businesses would outsource their whole division to a IT consulting businesses and it's public knowledge that they've outsourced that to IT consulting and they just reach out to one or two people and ask them, you know, how's that relationship going? How do you think Tata is responding, working with them? How do you think go for is implementing those projects? So I think those are the two big areas that IT consulting. The other thing is that just to conclude, it's a low barrier to entry industry, but it's quite high barrier to success in the sense that”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“Bring it into your business, and they are willing to be with you for many years. So even if an employee lives in Tatar, there will be someone else that comes in tomorrow that will be able to continue from where they stop. I think that value proposition makes a lot of sense for businesses that are not really exposed towards recruiting technology savvy people. So you think about construction, just think about the industries where it might be more public sector facing or there's less innovation in general. I think IT consulting does a really good job there. So from a competitive advantage lens, so there are lots of areas to look at it from a competitive advantage. So one of the biggest ones is the people. So how quickly can you attract people? And the Indian companies, they have global domination there. So when you look at Tata Consulting, I mean, the universities in India, they're just incredible in terms of the number of talents they bring and the companies there, Tata InfoSis, WIPRO, they have an advantage of being able to recruit those people into their”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“Technology to their business, to their livelihood is so much quicker. Now what that means is that if you don't have the brightest people in your company, it's going to be very hard to keep up with technology. Like if you're a healthcare business where majority of your employees are healthcare practitioners, it's going to be very hard to know which cloud computing provider should use. How do I do quality testing and all these things? So because there's just so many options out there, so I could use any cloud provider, you know, the level of testing to do it just so much more quicker, so much higher. That's where consulting comes into play because rather than trying to build your own IT team, which can be very expensive, is something you can partner up with a company like GoFo or Tata Consulting. And you have a company that's solely dedicated to learning about technology and using their expertise as people to, you know,”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“I've learned to tie what is exciting to where I see the opportunities. So now I find IT consulting quite exciting because I think the opportunities there are kind of, they're okay. They went quite high from a valuation lens when the pandemic happened and quite a few of them have calmed down from evaluation lens. But I think it's still going to be attractive going forward. Now, with IT consultant, I think one thing you have to realize as investors is that technology is changing and the impact technology has is actually getting bigger. So while I mean some people would argue that the pace of technology has slowed down, but the impact new technology has on business has increased. So just think about how many businesses I've tried to get Gen AI on board within the space of, I don't know, six, seven months. It's much faster than how people bought TVs. I don't know when TV was created. So the impact at which people want to add new”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“That I could just focus doing, you know, productive things rather than billing. So it's common for IT consultants to spend so much time coding how many hours they're spending of projects so they can bump up the revenue they're going to collect from the customers. But they wanted to eliminate as much time as that. That was one of the things I liked about them. And then also I looked, you could also see the customer feedback reviews that public sectors had. And I also, you'd also notice that I think about 82% of its customers come back each year. So there's quite a high level of recurringness and stickiness from a customer base and the win awards both in terms awards from a culture lens. If you look at the NPS score, it's much higher than their local.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“About the business. I learned quite a bit about the culture of the team at the management level and also at the employee level. So one of the things I like about GoFor is that there's just so much insight into the business. So one, they report their revenues monthly. So literally every month that you can see the revenue data. So before the Q3 result comes out, you know what's happening already. You can have an idea about that. Then there's a go for blog where employees from GoFor write about, you know, things they're experiencing in the business. So one of the cool things I learned about Go for was that this was before Jen AI. So in 2017, they created their own internal chatbot to eliminate the need of middle management within GoForce. So GoFor have a very lean mid office, very, very lean. I think it's like maybe 10, 20 people. And this is a business that has about 1,400 people. And that says a lot about the culture because they wanted to eliminate as much time as possible.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“And why it thought was attractive. So with GoFour, I mean, when I looked at them, they had compounded between 2012, I think that's when the financial start 2012 and 2020 had compounded both revenue and profits by above 30% each year. Two-thirds of that was organic growth and a third of that was inorganic growth. So they started making acquisitions in 2017 and 2020. And this was mainly to expand the expertise beyond Finland, so into Germany, and then also build expertise in private clients. So that's where they were mainly acquiring. And it's quite common for IT consultants to acquire smaller IT consulting businesses. It's part of the strategy. That's what the big guys do, like Accenture and Title Consulting. So GoFor had a good track record of growth. And I was trying to figure out why exactly do they have such a good growth track record? And how long could that last for? So while I was learning about...”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“And if they don't have the people to do it, they're going to look at IT consultants like GoFor to do it. And that's pretty much what they've been doing for some time. So initially started off with the public sector focus, but then after they got listed, they started expanding more into private space and having private clients like Kone who do private clients and customers. And the business model is re hour basis. So they charge the customers on a time-based lens. And then with the public sector, sometimes the contracts, so they will bid for a tender and if the offering is attractive for their customer, so it might be, for example, Ministry of Transport in Finland. If they find their offering more attractive than the other competitors, they'll pay go for which they did in earlier this year. And those contracts tend to be more long-term and more recurring in nature. So that's GoFor's model. And I'm happy to talk more about the financial.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“About 30% of the business. So they initially wanted to build software, but then their software business, I don't think you actually ever took off, but then they realized if you can't build a software business, this was after the financial, sorry, after the tech bubble in 2001. So they realized if you can't build a successful software business, it would help other businesses with their software. So they cover a range of ID consultants or things like quality assurance, things like installation, management, restructuring of software of web design, web, you know, arrangements, all sorts of things in IT consulting. They do quite a bit of broad range. And they're originally focused on the public sector. So Finland is one of the most innovative countries in the world. And I think on some indexes, it's actually the most innovative country in the world. So from my thinking was that this is a country that if there's a new technology, the public sector are more likely to want to be enabled by that technology.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“So before we got to go for, I did a deep dive on the IT services industry, mainly because of global outperformance, because I always looked at consulting as a name, commodity, wacky kind of business. But then when I did the study on global outperformers and I saw how many IT consultants were not just doing well, but then there were actually profitable businesses. They were growing each year and actually benefiting from things like cloud computing and the big shifts happening in the world in technology. It made me realize that there might be some IT consulting businesses that will be able to grow quite well. And slightly in a predictable, recurring way. So I did that deep dive and I looked globally for businesses that might be able to achieve that going forward. And one of the ones I concluded on was go for. So go for then IT consultant based in Finland. And they started in 2004 originally by four co-founders who I believe still own a”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“So I think evolution has a good quality, but I don't think it has a strong mood. And because it doesn't have a strong mood, I don't think the valuation should be trading at, I don't know, 30 times or 40 times. I think 28 times, 27 times, for me, I think that's something that's a bit more optimistic. Well, I think that's something that makes sense for evolution gaming. Now, the problem is that three years ago it was at 60 times endings. And if you're expecting it to get back to 60 times endings or 50 times ends, I don't think that's going to happen. I don't think it should happen. And if it does happen again, I'll probably be a seller of the stocks. I think it will be overvalued there. So I don't think it's true.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“There's room for improvement there. And of course, the valuations drop quite drastically over time. And now they've announced a buyback. So it will be interesting to see how they keep executing further. And the one thing I'll say about evolution, I mean, among all the portfolio companies we own, when I look at execution from management, I'll probably rate evolution probably the highest among them. And if you go back to the prospectus and you look at the things written in the prospectus of what they were trying to achieve and what they've achieved today, it's just amazing. They've consistently created new games, fine-tune new games, built studios all over the world in India in so many different areas. They've expanded really well into the US as well, which not many people thought they were going to do. Then initially when they went public, they were just a new EU. They've done really well there. So it's been phenomenal just saying the level of execution the team have done at evolution.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“There, there's sports betting. You think about DraftKings. And I think ASPN is now expanding in there as well. And then also there's land-based casinos. So when you think about evolution gaming from uncertainty entertainment, you realize the market is actually really big. So does evolution have a moot in iGaming? Yes, it does. Does it have a moot in uncertainty entertainment? No, it doesn't. It's still far off from a moat. So there's still a long way for evolution to go. I mean, it's a 20 or roughly $20 billion business in US. It still has a long way to go to really build a moat in its business. And it's doing well. I mean, as a business with, I don't know, 60 plus percent AP margins still growing 20%, although that growth rate has dropped from 50% four or five years ago. It's still doing quite well. Still has strong solid market share in I game in. The acquisition of NetEnd when he tried to expand into RNG has not done as well. But I still”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“So we've held evolution since 2019 and it's been, I mean, I've had the opportunity to learn a bit more about, you know, the i gaming industry. But one thing I'll say I differ from most shareholders is that five years ago, evolution was a company in the i gaming industry. Now today, given the size it's at, it's no longer just i gaming, it's really uncertainty, entertainment. That's what I call it. It's about a business that entertains its customers with a fact of uncertainty. Now as a customer, I've never used anything evolution. I found it about eye gaming when I looked at the stock. When you think about as a customer, as a consumer, where exactly can I be entertained by risk reward or uncertainty? There's a stock exchange, there's a stock market, Robin Hood, and that's what people did in 2020, where they were literally just gambling on, you know, the stock market. There's crypto as well. So same thing happened.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“32% each year. It had little to no debt on its balance sheet. It was growing about 15% each year. And when we bought our shares there, it was trading at about 17, 18 times We're going to look at technology in other emerging markets that are like South Africa, because one, Silicon Valley has their own mindset of how technology should look like because they're based in US. But then in the emerging market because of the geography, because of the consumer population, because of the GDP, it's going to be look a lot more different. So they literally went across all the BRICS countries and invested in e-commerce and technology-based businesses there. So the really successful one was 10 cent and I mean, they owned about a third of 10 cent and I started learning about gaming sector and, you know, we chat as well. And then 2019, if you looked at 10 cents, it was literally a flawless business. And we bought a stake in Naspers and we held that up until we closed the fund. So focus on the global strategy in 2021. So that was the thesis for NASPAS.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“So, when one of the customer's vehicle was actually stolen, if Katrak sends someone, there was nine in 10 chance, almost 100% chance that was going to be recovered at some point. And again, you have to zoom out again with South Africa. South Africa, if you look at the top 10 cities with the highest crime rates, South Africa has three cities in there. So the crime rates in South Africa is quite high relative to Africa and also relative to the world. So it kind of made sense why a business that was trying to address something with crime rates was based in South Africa. The other thing I liked about Tatrak was that they were expanding outside South Africa. So I think they're the largest players in West Africa as well. And a bit of the founding team were based in Singapore. So from a technology lens, they were quite globally minded in terms of they were trying to expand beyond just South Africa. So if the South African currency depreciated, the revenue that they're making that were in foreign currency would also do quite well. So overall, it's a big, was a good business. I mean, it earned a bit much.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“Of prosus who owns shares in 10 cents. It's complicated, but it initially stood out. So Karew Kartrak then, it's a fleet telematics business. So basically they build a hardware that you put in your car or your trucks and there's also the subscription element or software element of it where you're able to track your vehicles, your cars over time. There are lots of players in that field, so there's also MIX Telematics and there's some friend businesses as well. But what Cartrack did was that they looked across the whole value chain. So when you think about a vehicle, if it's stolen, you can track the car, but then it doesn't stop it from being stolen. And when it's stolen more than happens, what car track did was that they added another division, which was the recovery division. So basically when your truck is stolen, car track had a team of people that would actually go into the field to actually try and recover it. And that division was very successful. So he had a 97% recovery rate.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“So when we had Karu, then was called Car Track, the cold product is called Katra. The Karu name is very strange because it has five O's, but I think he has its place in South Africa that the founder had some affinity towards. So that's why he called it Karu with five O's. But when we invested in those companies, we were running a South African only strategy. So for the listeners, I grew up in Nigeria and I wanted to invest in Africa. I wanted to invest in somewhere in Africa because I thought, you know, this would be something out that would be fun. When I thought about the currency risk, there were really only two countries I felt had a bit of a stable currency, which was Egypt and South Africa. And Egypt being an Arabic-speaking country, I felt culturally just been too difficult for me. So we focused on just South Africa. When I decided to focus on South Africa, I did an A to Z on the 180 plus listed companies. And Kare and Naspa, so we actually invested in NASPAS, which is the”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“So, when I think about businesses, I break them down into quality growth value. And really, you're looking for businesses. Same thing Warren Profit said. You're looking for businesses with good economics, that businesses that are growing, profitable return on capital. You're looking for second thing, you're looking for businesses with a competitive advantage. So it might be high barriers to entry. The management might just have a very deep level of execution, high switching costs. Third, you're looking for things with honor-oriented management teams. not necessarily found and led businesses where the management is really aligned with shareholders and they have a deep level of own orientation. And then lastly, you're looking for businesses that have a marginal safety in terms of a valuation viewpoint. So I don't think that's rocket science. I think we're all looking for that. But it's really, one, it's having the level of energy to go through so many businesses and go really deeply in terms of the research to understand these things. That's really what I'm trying to spend my time doing as an investor.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“Amazing AI company, you know. Of course, I knew I was going to take over the world, but then they were unprofitable. There was actually a proper risk of bankruptcy. And it wasn't really clear that they were going to have, then they were meaning gaming. I mean, this was before they expanded into auto and data centers. They were mainly gaming chips. So it wasn't really clear that, you know, they were really going to get that more tailwinds over time. That is too tough for me. I wouldn't try and, you know, look for those type of businesses. I like things a lot more easier.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“So the two airports of Thailand, Texas, they've always been monopolies. I mean, well, Texas specific isn't really a monopoly because you could do a business in other areas of Texas. But where they're on the line is also integral for oil and gas operations that you have to pay them some form of rent. And they also make money from using the water on the land. So that was something that they were able to also grow as an additional source of revenue over time. And then they can also sell some of the land and make money of that as well. So that was a monopoly in its own form. I would say but not, I mean, not many of the outperformers were monopolies. Some of them had technical barriers to entry and they were able to build on that competitive advantage over time. They're quite difficult to really size up, especially when you look back in 2012. A very good example in the US, NVIDIA, that was an outperformer. But then 2012, they were unprofitable and there wasn't really clear signs that, you know, I mean, now you would say, yes, there are clear signs.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“Can't bring this down, and then that's a really good example. I think that's a business that has a 90%, roughly 90% eBIT margin because it's zero on CapEx. So that's the type of business that I think I would love to have owned as an outperformer. But yeah, just to conclude, yes, it's really having the stomach and having the level of research to hold a comedy during those volatile times or during the pandemic or during short reports, those sort of things. I think that's a real difficult bit with our performers.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“There might even be natural monopolies. So a very good example of an outperformer from the book that we did a case study on. I think I would have, if I knew about them 10 years ago, I should have invested in was Airports of Thailand. So Thailand, they have about 44 airports all owned by, I think almost all loaned by airports of Thailand. It's a listed company went public, I think just after the financial crisis and it was an outperform between 2012 and 2022. And if you think about the Thailand economy, it's done really well in medical tourism, number one. Number two, it's done really well in tourists. It's also done really well in tourism overall. It's grown really quickly and then also as an airport, as a business model, it's just a fantastic business model. When you think about the aeronautical revenue, like the airlines have to pay the airport money every year for every trip they do. And then also there's the growing non-aeronautical revenue. So you think about the retail stores in the airports.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“Finding out performers, and then there's investing in our performers. And there's no reward for finding them. There's a reward for investing in them. So I think when I really ask myself, you know, where exactly would I find the least difficult in terms of investing and holding on to our performers, I would say, one, these are areas that are within my circle of competence. And for me, I like consumer businesses because I find it easier to understand when a cosmetic brand is failing compared to like a chemical business, I don't know, in India is struck me. I have no idea if a chemical company is struggling. Professor Cosmetic business, I can speak to the consumers. They tell me, you know, I prefer this brand of another brand. I think this sure brand is doing much better. So I like consumer businesses and I find them easier to track their product relative to the competitors. The other types of outperformers are areas where I think it's either a deeply oligopolistic market or”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“I think a better way to frame it is the least hard. If our performers were easy, oh my god, I'll have all the outperformers I could possibly think of, but it's a very hard game. And one of the reasons why our performance is hard. It's not finding it. It's actually holding on to them. So if you're going to hold on to a company for 10 years, like just think about the amount of times that stock is going to drop 25%, 30%. Are you going to have the stomach to actually go through all that volatility? Some of these companies are outperformers. There were short reports written about them. I mean, now if a short report is written about a company on Twitter, everyone's going to say, yeah, I'm selling it. But are you going to have that stomach to really go through that volatility and do the research, understand the comedy so deeply that if someone tells you, yeah, they're doing fraud, you're going to say, no, I've done the research. I don't think they're doing fraud. I think it makes so much sense. I think it's an honest management. Are you going to have that stomach and that level of research? I think that's really the difficult part of investing in our performance.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“Beyond just the generic drugs, you're going to move more into services, so quality hospitals, quality diagnostic centers, technology services. Not many of them are listed, but I wouldn't be surprised if in the few years you see a lot more listed companies. One of the listed companies that I've been studying, Kristena Diagnostics. And yeah, one of the players in this area. So I'm also studying that value chain and really trying to understand where exactly the potential for outperformers for the future there. And to conclude, there are chemicals and chemical divisions or chemical businesses have done really well in India because they've benefited from the increased outsourcing of, I don't know, like cosmetic products, for example. So India's done quite well there. I haven't really looked into the chemicals from a value chain lens, but it's one of the projects I have for next year.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“Autoprades, those are cities where they're really going to benefit from this exponential growth with India and India's economy. And again, the value chain there for me is consumer electronics. Now, zooming more into consumer electronics, there's the manufacturers, producers, and then also the retailers. I'm a bit more interested in the retailers because with the manufacturers, there's a lot more competition as an Indian player. There are few Indian manufacturers there, but I think there's a lot more competition in the”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“So before zooming into the value chain, I think it's really important to put where India is in perspective. So India is a country that has GDP per capita of about 2,500. 2,500 is really, really low. And if you look at S&P and Moody's and all the estimates out there, there's a lot of estimates on India being able to grow about 6%, 7% this year and for many years for the future. I mean, there's a big chunk that India will be the third largest economy by the end of this decade. So you really need to put that into perspective. And when you think about that, I kind of imagine myself if I was in India, what would really be benefiting from that growth? And one of those big areas I think are the necessities really. So you have a lot of households that don't have ACs, don't have refrigerators. You know, the basic amenities. And I mean, you look at like, I guess mainly the rural parts. So you think about areas like the Hindi heartland, like Bihar, states like Bihar or Jakarta.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“And also, when you look at the penalties for false accounting or for reporting late or not reporting at all, I think India is definitely doing some work there.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“I don't have a strong expertise on the regulatory view. Regulatory aspect in India. But I mean, one thing I would say is that there's definitely been a lot more progress in terms of as a shareholder, in terms of the information companies need to put into their prospectus. So I was looking at a few Indian comments earlier this year and I was actually quite amazed by how much information they had shared about the business, their stores, the economics in their prospectus. And I'm guessing there was a bit of encouragement from a regulatory view there as well. And also when you have the mutual fund industry in India growing, mutual funds in general have quite a bit of sophistication in terms of the question they're going to ask management. I think that also plays a regulatory view where your potential shareholders are of higher quality and gonna ask you much more tougher questions. I think that's also going to play a big role when you think about the level of reporting in India. But I mean, I'm guessing there's definitely been quite a bit of effort.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“and how software margins and is growing 50% each year. You really want to question how that adds up and is really just asking those really basic questions and I guess spending a bit more time on ground trying to familize yourself with other shareholders and also with management and just really asking those questions, understanding the culture. I think that's the way to overcome the governance issues in India.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“Managers and the accounting was just not real. I mean, so many issues. And this is not just India. This is emerging markets and companies that are trying to grow really quickly. This is what happens. The one thing I would say is in India and emerging markets, you have to place a lot more focus on quality. And what I mean by quality, not just quality from a business lens, also quality from the terms of when you assess management. You assess management and assess the employees and you assess its customers and the real relationship the business has with its customers. You have to assess all those factors. And I mean, if you're investing in the US and quality growth valuation, if quality was just 50% of your, I guess, your investment process in India, another emerging market, I'll make quality maybe 75%. So you really need to place a lot more focus on that quality factor. And you really need to think about the business case and if you have a business that produces quality.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“I think one of the byproducts of having so much success so quickly is that it attracts so many potentially bad players. So when I think about this relative to India stock market, I mean, if you look through 1992 when the stock market was really formed and organized well, to today, there's just been so many success stories. Success stories mean cases of companies growing from one rupee per share to 10 rupee per share and then 100 rupee per share. Now what that happens is that you're going to attract people who want to take advantage of the system. So they list bad companies or they just want to benefit from that super fast growth in stock exchange. And as a result, you've had certain frauds, you've had so many frauds in the Indian stock market. From my personal experience in terms of looking at companies, there was a recent one with a comedy called Brightcomb Group and they're still listed, but there was just so much inconsistency going on. Fake bank accounts being created by”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“So Thaiward has a population of 26 million. And if you compare that with the UK, it's 67 million. But then again, Taiwan has over 2,000 businesses listed and it's way more than that, I think it's twice as much, almost twice as much companies are listed in Taiwan than listed in the US. If you compare South Korea and Germany, I mean, the two really innovative countries, but then South Korea has four times as many listed businesses in Germany. And Germany's GDP is more than double that of South Korea. So you can see that there's just so many businesses listed in South Korea. So while these countries would produce a lot of”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“So there's a strong correlation with outperformers when you look at the innovation, you look at the market size or the consumer market, there's quite a bit of a strong correlation there. So in Europe, one of the most pretty much innovative countries like Germany, Sweden produced a lot more performers than the ones that are less innovative. And the ones that had big markets also did quite well. The UK has a big market. They did quite well. Sweden doesn't have a big market, but then they have a very strong competence in exporting to big markets, so they did really well. So when I take that perspective in Europe and I apply it in Asia, again, focus on the big markets are beyond China, the other big two big markets, you know, you have India, you have Japan, you have South Korea. Now, one thing that not many people, I did realize until I did this study is that there are a lot more companies listed in Asia than anywhere else. So while US companies are much larger and, you know, you have trillion dollar businesses in the US, in Asia, there are much, there are a lot more companies.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“Terms of the development of stock exchange. So there's been a lot of progress for the future. One thing I do see is that IFRS has kind of made investing from a global lens much easier. So you think about recent changes like IFRS 16 and how the Chinese accountant standards have also incorporated that into their own reporting. It becomes much easier to compare companies in different geographies. So, I mean, that's also been one of the big factors, I guess, with China. And I think it's from an investor, it's one of the reasons to be, I guess, more a bit more optimistic going forward.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“The potential for upside is much less. And that isn't just with China. I mean, it's pretty much throughout Asia because if you look at each country, apart from India, majority of the largest companies tend to be the banks, utility businesses, energy businesses. And they just have a much lower growth profile. So from a compounding lens, they're much tougher. From a reporting governance view, one thing I would say is there's been a lot of improvement in China. I mean, one thing we have to put into perspective is that, you know, the US market has had more than 100 years of existence, whereas if China, most of the businesses only went public in the 90s. So they really only had 20 years and investing is something that requires all parties involved. The investors have to have the knowledge base, the shareholders have to be able to also have to have the knowledge base that's required. So it needs all parties involved. And China has only been 20, 30 years in this.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT
“Thanks for the question. I think as an investor, it's safer to expect the discount to always be there. And what that leaves a stockpicker from an action view is rather than projecting 20 times earnings, you project 10 times earnings and you just make sure the margin of safety is much bigger in the investments you make in China. So, I mean, the three areas that we try to explore. So one of them being the fact that there are a lot more state-owned enterprises. If you look at the top 10 largest companies in China, six out of 10 of them are state-owned. And if you compare that to India, it's foreign and US is much less. So you have a lot more state-owned businesses. And most of them grow much slower. They grow much slower from an earnings view. Their profit margins are not necessarily as high as the private businesses outside. So for example, I mean, they grow much slower and the quality can sometimes be less. So, I mean, that's one of the big factors when you look at the banks in China, you look at Pingan and the other big firms.”
2024-02-04 · We Study Billionaires · TIP605: Untangling Global Outperformers w/ Dede Eyesan · IDENTIFIED FROM THE TRANSCRIPT