YouSaid · the spoken record

Geoffrey Batt

lines on the record: 64
first: 2019-04-09
most recent: 2019-04-09
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Even then, he didn't have to do that. He was already becoming a famous person. And he could have just walked right by me and not said a word. But he really went out of his way to encourage me and to say very positive things about me when I was feeling very down about myself. And the next time we played them, I did well. I'll never forget that because sometimes you feel obligated to do nice things. And I guess that sort of diminishes the value of the positive thing you've done. It's still positive. But when you really don't have to do something to help someone else, but you do it anyway, even if it's small, to me, I think that has a great deal of value and stood out to me because I was feeling really bad and this guy who I was looking up to came to me and said some very encouraging things and it made a difference. So it was a really cool thing.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“So, our junior year, we were playing, and the first time we played his high school, I had a terrible game. It was at home, and I was humiliated. He just owned a team. But I took a shot and I think he threw it to the other side of the court or something. I just played poorly. I had a lot of turnovers. I don't think I scored very much. And I was really down after the game. And I stayed in the locker room. Everyone had left the locker room and I was just kind of in there feeling sorry for myself. And as I was leaving, he was coming out of the visiting team's locker room. And he could see that I was not in the best condition. And he came over to me and said some very encouraging things. He said, you're a good player, which I'm not sure that's true, but he complimented me. He said, you know, you're a very good player and don't be discouraged. I'm sure the next time we play, you're going to have a much better game. And even though we're peers, he was already looked at as sort of a superstar. It was sort of like Michael Jordan telling that to you.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Played basketball in high school and I turns out that I'm the same age as Kobe Bryant and his high school is like a mile away from mine and so we were in the same league and we played a lot my school played as well we were on the same court as his team yeah I'm not sure it wasn't very competitive and people knew back then that he was going to be great yes he was practicing with the sixers in the summertime when he was a junior in high school and you could just tell that he was going to go places”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“You can't point to a single one where there wasn't incredible violence on a massive scale. Even in this country, we fought a war against England and then we have our independence in 1812, the British are burning down the White House. And democracy will come to some of these places. I would say to a young investor that that's at least a point of view worth considering and testing, using that as a framework, you should take whatever the prevailing wisdom is and try and come up with an alternative model to view reality through and to help explain reality to you and see if that doesn't lead to interesting results. And I think today maybe you'll end up with some really interesting opportunities.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“The Arab Spring terrified people. The US constantly has this sort of belligerent attitude towards Iran, and there's always a question if we're going to go to war or not, and the civil war in Syria was a nightmare, and Yemen is a nightmare. You have protests in Algeria now that hasn't been getting much coverage, but that could become quite significant. Maybe you have Arab Spring Part 2, and it's completely under the radar for the moment. But when you look at what's happening in these countries, It's easy to say it's just the Middle East being the Middle East. It's chaotic, it's screwed up, and I want no part of it. But there's another way of looking at it, which is that turns out that democratic transitions take a long time, and they're really messy. This idea that we're taught in school, that these benevolent men create a new society for the benefit of everyone in posterity and so on. It's just nonsense that really, if you look at the history, that democratic transition...”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“An interesting question. I don't think I answered this. You asked the question earlier, but I looked at Iraq. Was I looking at anything else in 2007? And I looked at Iraq and really nothing else because everything else had gone up so much by then. So we were nearing the end of that bull market, which was pretty unique. People were saying things like global synchronized growth for the first time in a century or something. And so emerging markets were all on fire and developed markets were on fire and commodities were on fire. It was very hard to find anything that hadn't gone up many times during that cycle. Even Palestine had a big bull market. So Iraq was the only thing I could find that didn't. And maybe we're in a situation like that today. I'm not sure. Although I would say the process is more or less the same and maybe there are even more opportunities now than there were when I was looking at it in 2007 because people look at the Middle East today just generally in a very negative way.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“And if there was going to be multiple expansion, you would see, in the case of Sparebank, I think you saw a thousand times your money. You made $1,000 or something on that? Something crazy like that. That's an outlier. In Iraq's case, I think in the next five to ten years, the companies we own could be orders of magnitude larger than they are today in terms of their balance sheets, their sales, and the cash flow that they generate. The question really comes down to what's the multiple going to be. It's impossible to predict. But by definition, a re-rating is going to be some kind of expansion. I would say that in extreme cases, the multiple expansion becomes a huge part of the return, even without it becoming extreme, you can still make a lot of money. Something goes from four times earnings to ten times earnings, and profits grow significantly along the way.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't know the exact numbers for Sparebank in Russia, but I know, at least if the Bloomberg data is accurate, Sparebank, I believe, in 1999 was trading at a PE of about $1, which I would say is pretty cheap. I think by 2007, it was trading at 24 times earnings or something like that. Earnings went up significantly along the way. So that's the beauty of historic reratings is that A country In the case of Russia, it was leaving behind the Soviet model of planned economy and terribly inefficient markets and they were embracing their own form of capitalism, I guess you could say, and unleashing the potential of these companies really for the first time in their history. So you could reasonably expect that the best companies would grow the bottom line 10 to 20 times in a 10-year period.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“But the reality is that there are funds that have expressed interest, but they just can't do it unless there's a custodian. So that's one area where the exchange has not made progress that's been most disappointing for us. In terms of valuations, 2015-2016 earnings were depressed pretty significantly as a result of the collapse in the price of oil in the war against ISIS. But there's been a recovery 2017, 2018, and into this year. And we're looking at stocks that trade at four times legitimate earnings or banks that have anywhere from 10 to 15 percent dividend yields trading at a fifth of their tangible book value, very liquid balance sheets. It's cheaper today than it was when I first invested. And the companies are a lot stronger today.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, yes. And actually, it turns out that it's very safe. In fact, you could make a case that it's safer than having it at a large international investment bank. But we get a daily report every day from the custodian that tells us exactly what our positions are and what we've done for the day in terms of trading. And in the 11 years or so that I've been doing this, I've never seen one discrepancy and we've never had one issue. So they don't do anything else either. It's just simply a custodian. Since there's no margin trading, it's a completely cash-based market and settlements T plus zero. There's no short selling. There's very little risk, if anything happening to the shares. There's no failure to deliver. A person can't sell me stock unless they have the stock. And I can't buy it unless I have the cash funded in my account to pay for it that day in the trading session's over. So there's very little settlement risk and the custody has been very solid.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Of custodians from HSBC or something and has custody, Iraq just doesn't have a custodian. We're working on getting one. But the absence of a custodian really makes it hard if foreign money wants to come in. It's not like it was when Firebird was buying Russian vouchers, you just had custody yourself as the fund manager or something, or maybe a local broker did on your behalf. But these days that's just not going to fly. So the exchange itself is essentially the custodian.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Operating there. We started to see foreign money come in in 2013. The market didn't very well in 2013 and some intrepid frontier market investors came in. And then the moment things went to hell with ISIS, they were gone, never to be seen again. Now we're starting to see for the first time since the problem or the war against ISIS more interest from foreigners and also from major banks. So I won't name the bank, but there's an analyst, the head of emerging market research at a major American bank asked if we could arrange a trip for him to go to Baghdad and meet these companies. So we're starting to get some momentum in that regard. But I would say the key problem we face now is custody. They don't have a third party custodian, which is kind of appalling considering that Jamaica has a third party custodian and that countries that are more screwed up than Iraq, and not to say that Jamaica, but like countries in Africa that are far, far worse off than Iraq is.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“About 700 million or so in EBITDA trades as of 14.5% dividend yield. But forget about ETA. Just look at free cash flow. I think as a free cash flow yield of like 33% or something.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Five days a week still only two hours Sunday through Thursday and the market cap is around $5 or $6 billion today. They had a couple IPOs that were pretty important to mobile telecom IPOs and one of them is a company Asell which is majority owned by Qatari telecom company and has an enterprise value of about a billion dollars against”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Is incredibly durable and strong, I guess, in a way reputations were made. If you survived the financial crisis in 2008, 2009, and you came out on the other side stronger, people saw you in a much different way. Jamie Diamond was running the fortress sort of bank. If there's going to be one bank, you wanted to have a lot of money in, it was JP Morgan because of the way he carried himself during that crisis. I look at Iraq that way.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Had elections, they still had a legitimate Democratic election during a war. Not only that, but the political party that had dominated since Saddam was overthrown finally last year lost its control of the premiership. They have a new prime minister now from a completely different party. Politically, although there are periods where it might not seem like this is the case, over the long run, they seem very much committed to their political system and to doing their best to make it work. The fact that they've endured these very traumatic events and came out on the other side intact and in some sense stronger than they were before tells me that they are going to make it. It's like a bank going through 2008, not needing TARP money or something. Now you know, wow, this bank.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“You have some measures of stability politically and things go to hell again four or five years later. The country rallies together. There's this incredible sense of sort of nationalism and patriotism that we have to defend our countries from these really menacing jihadists that are trying to impose a medieval caliphate on us. They rallied together and fought them off and liberated these cities. Now, there's still major problems, of course. When I look from a bird's eye view, I look at Iraq's durability going through crises like this, where like these ones and coming out intact on the other side suggest that there's an underlying strength to this society that really I wasn't aware of before. So in a way, the more battle tested something is, the more information you have about it. You can say, okay, they've been through this before and the political system didn't completely break down.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, yes. In a way, it's more interesting because when I first invested there, the Civil War had just ended and they were going through this period of stability that wasn't going to last for very long, as I unfortunately found out. They had the rise of ISIS started really in 2013 and really reached its peak in 2014 when ISIS took major cities in the West and the North and about a third of the country was part of this so-called caliphate. But the reason why I would say that today is more interesting is that these were really important tests for the country. So you have a regime change, an external regime change. U.S. comes in and overthrows Saddam, imposes this new system on the country. It's not received well by key minority parts of the population. They reject it and you have a civil war. Then that civil war ends.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“And then on the left, you had people accusing me of being like a warmonger and the neocon. I'm not a neocon. I don't really affiliate with any political party and I'm not eager for war anywhere in the world. And I definitely don't think that war brings democracy to other places. I mean, the recent history pretty much demonstrates that that's invalid, but realized from this experience with this tweet going viral was that it's so politicized in this country, there's almost no point to trying, I just feel like it's such an intractable problem that I don't think there's anything that I could do to change people's view. I think what is just required is time. People just have to get far enough away from it where they don't think of it that way anymore. But in the early days, I would go on TV and I'd go to these conferences all around the world and present the case to investors. Yeah, and contrarians would buy it, but most people want no part of it. And when you went on TV,”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“I tried doing that early on. I went to conferences and presented, went on TV a few times, and I'll give you a better example. This happened a month ago. So I have a Twitter account. I think I created the account in 2012, but I never used it. And I made my first tweet about the Iraqi market in February, I believe, of this year. And it went viral. I think there was over 3 million views or something for my first tweet. All my other tweets get like nothing. I said Iraq has come a long way since Saddam was overthrown in 2003 and I lay out the case. It turned into this sort of political Frankenstein where The prominent Fox News personalities were retweeting what I was saying as evidence that the Iraq war. Yes.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's a huge market, exactly. And it's new, it's relatively new. So they get excited about the potential growth. But the risks in Nigeria are in a way greater than the risks you face in Iraq. But because Iraq has this sort of enduring negative perception, people just stay away from it. It's really become the leper of the frontier and emerging market investment universe.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“There was even a point in time in Nigeria when you would find companies like this trading at 20 or 30 times trailing earnings. And what's frustrating from our point of view is Nigeria in a way is more screwed up than Iraq is. They have a problem with Al-Qaeda or an al-Qaeda affiliate called Boko Haram that controls the northeast part of the country. Their oil production has been declining for a decade. Their GDP per capita is well below in rocks. And Iraq has got a measure of macro stability that Nigeria really never has. And people get really excited about Nigerian consumer product companies because there's”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Phase where we have just local investors who are more interested in rights offerings and stock dividends than they are about company fundamentals. And very few foreigners have come in to follow us. I don't mean to say this in an insulting way, but the fact of the matter is you have an unsophisticated group of locals who are more or less determining the price level on any given day. And they're not relying on fundamentals to do that. So it's been a bit frustrating in that regard because Baghdad soft drinks its revenues have, I believe, tripled in the last 10 years and cash flow from operations per share has compounded at about 20% for the last decade. But the stock is maybe doubled. And if Baghdad soft drinks was called, I don't know, like Pakistan soft drinks, it would be trading at 25 or 30 times earnings. It would have had a significant rerating.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“No, not in our experience. Not yet at least. Our existence as a fund has been characterized by completely inefficient pricing of these assets. You have very severe mispricing of these stocks. A stock could be mispriced by being overvalued or undervalued. And fortunately for us, it's been strictly undervalued. You want to stick around long enough to get to the point where Mr. Market gets manic and it's a very optimistic view and starts assigning very high multiples to companies' earnings. But to just explain the concept of voting machine is this idea that in the short term, stocks are driven by popularity and sentiment, which is not a very good or efficient way of pricing an asset. But over the long run, Ben Graham, I guess, believed that fair value of an asset would be reflected in the stock market because market participants are going to accurately weigh its value. We've just been sort of stuck in the voting machine.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Is actually better than he was. He sleeps at the factory, although I guess Elon Musk sleeps at Tesla. So I'm not sure that's necessarily a good thing, but I guess that doesn't necessarily mean that you're going to have an efficient operation. But we found that there were examples like this, that these guys were profit-driven. They were really looking to capitalize on the economic turnaround that was taking place in the country, and they were looking for these sort of distressed but very promising companies. And they were putting private capital at work to transform it and doing it in a way that very much resembled what you would find in the West. It's one of the great success stories in the Iraqi stock market.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Probably shouldn't say his name just because he tries to stay away. He still has a stake in the business, but he's not running it anymore. And he just likes to stay out of the spotlight. But the guy running it now.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“You'll see that you'll all be better off. You'll make more money if you do things my way in a year. If I'm wrong, fine, and I'll go back to your system. But if I'm right, then follow me. A year later, the company was fully certified for quality control and quality assurance for Pepsi, which they hadn't been before. I think production tripled. They had their first profit. So it was an example of private capital in Iraq taking this ailing franchise and transforming it into the strong very profitable business that we find today”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“People who were still employed were very unhappy because he had instituted a performance-based pay system, which was a radical concept in a formerly sort of socialist country where you get paid even if you don't show up to work for a month. I think he stood up like on top of some piece of equipment with a megaphone and was shouting to them, look, you have to understand, give me a year to do it my way.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Some period of financial distress Pepsi floated them a $30 million loan, I believe, after Saddam was overthrown, and by 2008 or 9, they weren't able to service the loan anymore. They were about to default on it. So this businessman, not entirely sure the story is accurate because you're never really sure in that kind of place. But as I understand the story, he went to Pepsi and said, look, I've got a couple backers. I want to take over the company. He bought the loan from Pepsi and converted it into equity. Took a controlling stake, fired management. They had 3,000 employees when they needed 1,000. So he fired 2,000 people, which doesn't go over very well in a country where they have guaranteed employment. And after he did that at their main production facility, he went the next day and there were these 2,000 people basically riding demanding their jobs back. And he had to bring down private security to get them to leave. And the other thousand...”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Our largest holding is a company called Baghdad Softrinks, which is the Pepsi Bottling and Distribution Business for Iraq. And it actually was in the 90s created as mixed-owned enterprise, the sort of thing I mentioned earlier, where the government had a stake in it. And it was terribly inefficient as a result and unprofitable. But this local businessman looked at the company and its prospects. And I guess as an important parenthetical, Pepsi is by far the dominant software in Iraq, which is the opposite of most places. Coke usually has 60, 70% market share and Pepsi's 20 or 30 or something. But in Iraq, Pepsi is 70 to 80% market share in Baghdad and maybe a little bit less than the rest of the country. But it's by far the dominant soft drink brand. And this guy looked at a way this company was being run. And he saw a mismanaged company, but that had a great deal of potential. I think Baghdad's software was going through.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Or probably, yes. And especially if the business is a really good business and the business itself has what you believe is a bright future, then you want to take very big stakes in those companies. Going back to Buffett, in the early days of his partnerships, he would have 25, 30% of his assets in one stock. And that's what we find ourselves doing now. Do we want to have more money in companies that we have less conviction about just for the sake of diversifying? Or do we want to put less money in those companies and concentrate on the ones that we have the most confidence about? I'm not saying that there's a definitive answer to that question, but from our point of view, that's worked out well for us.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“One of the benefits of being involved in this for as long as I've been doing it is that you develop very good relationships with management. We sit on the boards of companies now. And you really can tell which companies are run by the talented entrepreneurial person, which companies are transparent. You have 11 years of history with them. And really what's great about that is you can...”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“But what you find in these markets in Iraq was no different is that there's a very limited number of companies that you consider investable for a variety of reasons. There might be a high growth company that's super opaque and you can't really figure anything out about it. And the CEO won't meet with you and you just don't want to put money into something like that. Because how do you know if it's real or not? And then there are a bunch of these other companies where they're just effectively state-owned enterprises. They're not profit-driven. They're constantly having rights offerings just so they can continue paying salaries and things of that nature. But then maybe you find five or ten companies that are investable. Yeah. And then when I started, I had the exact opposite approach of what I have today, which is I'll just equally weight each of these names because I'm still learning about the companies. And since I can't really say that I have that much more confidence in one company over another, I'll equally wait. But now.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“0809. This was like you read these stories about Jesse Livermore going to like bucket shops or stuff, just writing numbers on a board. And that's kind of what it felt like, except it was legitimate. It wasn't a bucket shop, so to speak. But it's how you would imagine the US being 100 years ago. There may be, I don't know, 60 or 70 companies listed, but maybe 20 of them were suspended from trading because they hadn't produced an annual report in like four years or something. The market cap was, I believe, $1.8 billion, which at the time was smaller than the Palestinian Stock Exchange market cap, which is sort of fascinating. Because here you have this country with $150 billion barrels of oil. Palestine has nothing like that. Palestine doesn't really have an economy. I mean, they have a very informal economy, but nothing like Iraq has. And their stock market is larger than Iraq's. That doesn't seem to make much sense. It doesn't seem like a rational pricing of the assets here.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes. That's when this informational asymmetry that you have, I see things that no one else is seeing because no one else is really bothering to look. They've just believed what they've seen on TV and they don't want to bother with it anymore. I've found this gem here and it's just me. I'm the first person from America this person's ever met. Then things become extremely interesting.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Reason. And when you meet guys like that, then you really have an extraordinary opportunity because you can forget about this sort of old Ben Graham security analysis investment where you're buying something at a discount to its liquidation value. Here you're talking about a company that's got a capital allocator, a guy who knows how to allocate capital at very high rates of return. And at the same time the stock might trade at three times earnings or four or five times free cash flow. The top and the bottom line is growing at 20% a year on a per share basis. That's when you really think to yourself, I've found something. You know, you meet these CEOs who are Daffy or just they were put there because their cousin was some powerful person in the bath party or something and stay away from them and then you meet the person who is, I don't want to say like a Bezos or a Malone or something.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“So it's pretty easy actually. You meet a guy, you want to talk about his business, and he wants you to send him CDs when you get back to New York, you can sort of cross that one off the list. So that was my first trip there. I was getting stuff like that from some of the companies. But then you also meet CEOs who are the exact opposite you find. And this is what makes this sort of country or this sort of transitional situation interesting. What I found is that pretty much anywhere in the world you go, you're going to find entrepreneurial people. There's going to be smart people who love business. They love solving hard problems. And they're very driven. And what you find in places that have decades of terrible experiences is that the entrepreneurs there are in a way more resourceful out of necessity than they would be in a stable environment. These guys, the really good ones, are as impressive as you'll find anywhere else in the world for that.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“He's a cowboy. At the time, I was just beginning my due diligence in the companies, and they had a lot of these what are called mixed own enterprises, which are hybrids of state-owned companies and privately owned companies or publicly owned companies. So half would be owned by the state, half would be owned by the public. They were these sort of seductive companies in a certain sense because they maybe had market caps of like 10 million bucks and they had $150 million worth of land or something. At least that's what it looked like, trying to figure out if that was true. There was no real operating business, but is it really selling for 0.1 or 0.2 times tangible book? And if so, could we buy a big stake in it and then just sell the land? Exactly. Is that even possible? You'd meet with the CEOs of these companies and they would ask you, instead of wanting to talk about their business, they'd ask you if you could send them CDs. Do you have good fellows on CD? I really love that movie.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“You want to hear from a banker? No. And that bank pretty much blew up. We didn't own it, which was good. But yeah, that was a pretty interesting encounter to hear a banker explicitly and candidly say to you that”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Are there any Iraqi bankers who could fit that bill? And the first bank I met with, I'm not going to name it, but the CEO, I asked him about something. I think he was lending to taxis. It was like unsecured loans to taxi drivers or something. Why aren't you requiring the taxi itself be collateral? And he said, well, that makes people less likely to want to take out the loan and so on and so forth. And then he said to me, but between you and me, I'm a bit of a cowboy. And that's not...”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, go back to Berkshire Hathaway, and I promise I'll tie this in. You asked me about a trip to Iraq, and I mentioned Berkshire Hathaway, but I believe it was in the early 90s when they had made their first investment in Wells Fargo, there's this very memorable section of their annual letter where they say banking is no favorite of ours anytime a banker or an industry is levered up at the time, I guess, 20 to 1, managerial skill is paramount because they make a 5% mistake with their assets. It wipes away your equity. And so we're usually trying to buy companies as cheaply as possible, but with a bank, we're more concerned about managerial quality. So we'll pay up for a very well managed bank. We don't want average banks at great prices. We want great banks at even slightly unreasonable prices. Because, again, managerial skill is everything in that regard. So I kind of was thinking about that as I was meeting with these bankers.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Career risk. If they were to write, you know what? Actually, the Iraq war is going much better than is being reported. If you're at the liberal think tank and you say that, you're going to be immediately accused of being a neocon or something. Like this is some kind of betrayal for you to suggest. And even if you're trying to be apolitical, if you're trying to say this is the reality, you're going to be attacked for it and your career might suffer as a result. So I found that you really can't rely on anyone other than yourself and your own research to figure this stuff out.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, exactly. And the same with the journal, right? Sure. If Cornell West had a weekly column, op-ed column at the Wall Street Journal, I'm not so sure the readers would be happy about that. Just like the people at the New York Times weren't happy when Brett Stevens started writing for them. But yeah, you find the mainstream news media simply isn't structured to provide this type of service for you. And that is very much at odds with what we're taught to believe. This is how you become informed as a citizen in a democratic society. And you also find that the experts are actually completely unreliable. You might find out of like 20 or 30 experts, maybe one or two that are useful. But often what you find is that the experts at think tanks, they don't have any skin in the game. And it doesn't matter to them whether they get it right or wrong. In fact, if you look at their track records, they've gotten almost everything of consequence wrong. Yet they still have these lofty positions. In a way, they face...”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Through that experience that you see, you're dealing with these incredibly complex environments or a complex state of affairs. And what you find is the news media is just not set up to convey complex messages to their audience. They just can't do it. The risk for them is too great. The moment you try and explain complexity to your audience, you're going to lose them. They're going to change the channel. They don't want complexity. Yeah, they want sound bites, they want their own views reinforced. That's why there are people who are loyal to a particular newspaper, the New York Times, they want a specific message from the Times, the Times were to deviate significantly from that. They risk alienating their readers.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Visit companies definitely grow the stock exchange, meet with as many companies, CEOs as you possibly could, meet with brokers, but also then just sort of be a tourist, go to a restaurant, order some food, how easy is it to hail a taxi and how much does it cost if I go into a store? Is everybody paying in dollars, which is actually very telling? Or are they paying in local currency? If they're paying in dollars, that's not necessarily a good sign. If they're paying in local currency, it suggests there's some measure of confidence in the local currency, which is good. But mainly when you go for the first time, you just want to see, is the reality on the ground, at least as I see it, match more with what the media is telling me or more with what the data is telling me. And in this case, it really mapped onto what the data was telling me. So I would say that's a critical feature, a critical part of the process, spending time in the country and seeing for yourself what it's like. And it's really...”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“When you're there, you do see how dysfunctional it can be. Traffic lights might not work properly. The water in certain cases might not be potable and you don't even want to shower in a hotel and so on. But that's completely different than, say, this is a country in a civil war and this is hell on earth. Like people aren't playing recreational tennis in hell on earth and when there's bullets flying everywhere.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Bombs going off. This is what was going through my head. I was entering a war zone. And what was most fascinating about it was you get in a taxi and you drive away from the airport to your hotel. And it's just normal. It's completely normal. It's a messed up city in a messed up country. Don't get me wrong. And especially then. But I can't get this one image out of my head. It's so mundane here, but it seems so out of place to me there. As we were driving, first of all, there were tennis courts along the road, and there were just two guys playing recreational tennis in like the middle of the afternoon, right? Like kids kicking a soccer ball around and you get to like the more commercial district and you see like women window shopping and you can start to see wow this is the same sort of thing that people do everywhere else in the world. To the best of my knowledge no one shot at us yet and I haven't heard any explosions.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Analyzing this country, right? But also sitting in New York City analyzing this country from a distance and making this claim that the New York Times and the Washington Post and the CNN, they're all wrong. And I'm this guy who's been studying philosophy and I've got it all right. So, okay, well, I should go there and see if that's true or not. So the data is telling me that this is a much better and I got to go see for myself. That's when you really can start to tell. Now, the danger is that you go to a place one time and you think you've got it all figured out because you've been there. You could easily become overconfident and you certainly want to avoid that. But when you get there, part of you is not really sure if you're right. Maybe I've lost my mind. Maybe I've made a horrible mistake. Maybe this is the most dangerous thing I've ever done in my life. And as you're landing in Baghdad's airport and taxiing up to the terminal and getting out, I don't know. There are bullets going to be flying everywhere.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, you do have to go to the country. And I know that when you started the podcast with Harvey Sawekin, you asked him your best or most interesting travel story or something. And I was thinking about that. What would my answer to that question be? And my first time in Baghdad was pretty interesting. You know, you have this idea sitting in New York City.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source
“We're dying in the war every month, and there were agencies that were keeping track of this sort of stuff. What I found just sort of leapt off the page. You have this country that's being portrayed as a failed state, fighting a civil war, and that it's just hell on earth, but oil production is increasing. How on earth is that possible in a failed state? Failed states typically don't increase oil production. Oh, I see that CPI inflation.”
2019-04-09 · Invest Like the Best · Geoffrey Batt – The Nature of Transformational Returns - [Invest Like the Best, EP.128] · IDENTIFIED FROM THE TRANSCRIPT · source