YouSaid · the spoken record

Harvey Sawikin

lines on the record: 69
first: 2018-02-06
most recent: 2018-02-06
sittings or episodes: 1
sources: podcast

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“Well, like for example, countries that already have sort of normal custody where anybody can go in and the institutions can go in, certainly if their currencies are either pegged to the dollar or the euro or they're in the euro, some of our, those are the indisha. And, you know, there are countries we call post political, which means that they can have elections, different parties come to power, but it doesn't really change anything. So in Estonia or Lithuania, they've had all these different governments in the last few years, but the path is already set in stone. They are moving more and more to EU convergence. That's it. But then you have countries where elections are still absolutely critical. So that's really more of a frontier market where you're facing the prospect of a big loss if the wrong party gets elected or if they shake things up in a bad way.”
2018-02-06 · Invest Like the Best · Harvey Sawikin - Emerging Market Opportunities - [Invest Like the Best, EP.75] · IDENTIFIED FROM THE TRANSCRIPT · source
“Apply a different investment approach to the more developed emerging markets than to frontier markets, which require a different approach. And you just, when we come to a frontier situation, we have to put on our different hats and different glasses and say, okay, what are we looking for here? What's the play?”
2018-02-06 · Invest Like the Best · Harvey Sawikin - Emerging Market Opportunities - [Invest Like the Best, EP.75] · IDENTIFIED FROM THE TRANSCRIPT · source
“This company or not. And can be a fairly subtle analysis. But then when you have a country where the politics and everything is ticking over perfectly, and that happens too, like I would say, for example, the Baltic states recently, you know, they have it all going just as it should be. And there will pay a little bit more for the equities. You're not going to find these dirt cheap bargains, but you'll find things that are still, you know, forty percent to fifty percent discounted to Western Europe. So that for me is a good value. And to blend it together. Oh, so to go back to one of your earlier questions, what do we do now? But as we've matured as a company over twenty years, we have a lot more of more developed emerging markets.”
2018-02-06 · Invest Like the Best · Harvey Sawikin - Emerging Market Opportunities - [Invest Like the Best, EP.75] · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't think we have any hard and fast rules like that a country has to have ex inflation and XGDP growth or whatever. Each country presents its own factors. We kind of balance them all. And we'll be a little bit more generous in terms of going into a country where, let's say, the politics is a little dicier if the valuation is more than compensate you for it. So, for example, even in Ukraine, which we still don't believe in from a macro point of view and political point of view, there's a couple of stocks that we own just because they are compelling. And you can look at them and say, okay, in all the likely bad things that are going to happen in this country, how will this company fare? For example, if they devalue the currency, is this a problem for them?”
2018-02-06 · Invest Like the Best · Harvey Sawikin - Emerging Market Opportunities - [Invest Like the Best, EP.75] · IDENTIFIED FROM THE TRANSCRIPT · source
“In emerging markets of politics has ceased to be a big deal, you can get blown out of the water, which is what happened to people in Egypt, and nobody saw that coming. All the gem funds were in Egypt, and they all got blown out of the water when Mubark was taken down. Recently, more recently in Poland where they went very to a very populist government that shook things up in a negative way in Hungary. So Central Europe politically became much”
2018-02-06 · Invest Like the Best · Harvey Sawikin - Emerging Market Opportunities - [Invest Like the Best, EP.75] · IDENTIFIED FROM THE TRANSCRIPT · source
“Real estate. So one of the questions you have to ask is Is this going to be a stock market? And is there a place for a foreigner in this stock market or is it all sewn up by insiders? And is there anything to buy that's any good? And so those are some of the factors. And I think people and also the political, I think we started another one of Firebird's original insights was that emerging markets, investors probably focused eighty percent on valuation and economics and maybe twenty percent on politics when it really should be more like 50-50. And so for example, a big part of our decision to go into Russia was an analysis of the political situation. And subsequently, you know, in all the Mark II we've gone into, politics are a big deal. And anytime you think”
2018-02-06 · Invest Like the Best · Harvey Sawikin - Emerging Market Opportunities - [Invest Like the Best, EP.75] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think it's more like they're focusing on maybe not exactly the right things. Like they're looking at a country that's big, like Iran. Iran has been talked about in the last couple of years as the next big thing. And I know several people who've been trying to invest in Iran. But the fact, because it's a big economy, it has a lot of potential, but it's not country that is set up for outsiders to make money. You know, I don't know a lot about it, but what I do know is that the Revolutionary Guard has a lot of control over all the levers of power, including the financial markets and listed companies. And so you have to ask yourself, is this a game where I can play? Now, there are some markets that never worked as emerging markets as stock markets, but people did quite well in private equity. I would say Latvia as an example. We had a couple of things in Latvia. We never really made any money there. People did quite well in private equity, especially in”
2018-02-06 · Invest Like the Best · Harvey Sawikin - Emerging Market Opportunities - [Invest Like the Best, EP.75] · IDENTIFIED FROM THE TRANSCRIPT · source
“Cuba has been the next big thing literally since 1994. And for the various reasons why I always thought no one's ever going to make any money in Cuba. Vietnam was the next big thing for twenty years. It actually started to do well in recent years, but yet a long, long wait before it did anything.”
2018-02-06 · Invest Like the Best · Harvey Sawikin - Emerging Market Opportunities - [Invest Like the Best, EP.75] · IDENTIFIED FROM THE TRANSCRIPT · source
“Romania and Bulgaria, then we did Kazakhstan, then we did Georgia in 2004. And even today, we're always looking to see. I've been to Ukraine actually the whole team has been to Ukraine over the last year just to see. And, you know, unfortunately, we keep trying and we keep seeing it's not ready. So I think that anywhere in the world you go right now, you're going to find sort of a next big thing. Usually it's one that people are not looking at. There's always a next big thing that people agree on, and I always get the feeling that it's never going to”
2018-02-06 · Invest Like the Best · Harvey Sawikin - Emerging Market Opportunities - [Invest Like the Best, EP.75] · IDENTIFIED FROM THE TRANSCRIPT · source
“The truth is there are things today that are, if not one hundredth, they're, you know, ninety percent discounted, they obviously they tend to be the countries with the biggest hair on them, such as Ukraine right now in my region. And actually in my region, we have in our fund mandate probably 35 countries. We're only active in nine. Some of those other ones are countries that are just even after twenty five years of freedom from the Soviet Union, they're still not ready. They develop down the wrong path or whatever. But catching one when it changes is very important. And over the years, we've caught a bunch of them because Russia was our first, but then we caught the Baltics, we got in early in Estonia, on Hansabank in december ninety four, made seventy five X until we were taken out by Swedbank in two thousand six, I believe, 2004.”
2018-02-06 · Invest Like the Best · Harvey Sawikin - Emerging Market Opportunities - [Invest Like the Best, EP.75] · IDENTIFIED FROM THE TRANSCRIPT · source
“It was extreme valuations not accessible to most investors, investing alongside of Russians who were scooping up shares. The smart Russians were scooping up shares, while your average Russian didn't understand the value of what they had been given in the voucher privatization, so they sold it, they sold their voucher for a bottle of Aka, they never had any belief that it could be worth anything. But there were a lot of Russians who understood what it could be worth, and many of them are now billionaires.”
2018-02-06 · Invest Like the Best · Harvey Sawikin - Emerging Market Opportunities - [Invest Like the Best, EP.75] · IDENTIFIED FROM THE TRANSCRIPT · source
“We realized that companies were being auctioned off at one percent of the value of Western comparables. So the first auction we participated in was for an oil company which had as much oil as mobile. Mobile at the time had a forty billion dollars market cap, and this company had a forty million dollars. We understood that it would in the voucher auction have a forty million dollars market cap. So we said, look, this company does not have to become as good as mobile. It only has to become only 95% worse than mobile and will make five times our money. And sure enough, and we participated in that batch of auction, sure enough, at the peak, I think that company traded at maybe a sixty percent discount to mobile or to Exxon. So essentially it went up, I don't know, forty times to the peak.”
2018-02-06 · Invest Like the Best · Harvey Sawikin - Emerging Market Opportunities - [Invest Like the Best, EP.75] · IDENTIFIED FROM THE TRANSCRIPT · source
“And he said, You know, we've got to get over to Russia to check this out. This looks like it could be something big. And Ian Haig, who is another co-founder, who's still my partner now, was a Russian expert, and they spent many, many hours talking about the Russian history and culture and language and approached it from every angle. And I was looking at it from a legal point of view, from a tax point of view. So we looked at it from every angle and we said, you know, this is doable. This is not nearly as bad as people think. So that was kind of the approach was we're going to do something here that's complicated, that is not set up for you easily, and will be the first foreigners in there doing this, and we're going to buy things. Oh, and then sort of buried the lead. The most important thing was that when we looked at the valuations and the voucher privatizations,”
2018-02-06 · Invest Like the Best · Harvey Sawikin - Emerging Market Opportunities - [Invest Like the Best, EP.75] · IDENTIFIED FROM THE TRANSCRIPT · source
“Ten times already, and the insiders are already looking to lighten up. And he said, we should do a fund where we do what the traders do on the desk, where we make it, our fund is the PA. We won't have a PA. This is the PA. So that was the insight. And I think even today, I still think in those terms. I mean, obviously we now have, so we started with looking for markets that were really baby markets without custody where we had to go in and figure things out.”
2018-02-06 · Invest Like the Best · Harvey Sawikin - Emerging Market Opportunities - [Invest Like the Best, EP.75] · IDENTIFIED FROM THE TRANSCRIPT · source
“My original co founder, Dan Cloud, he had a very brilliant insight, which I think is something that it remains true today about emerging markets investing. His insight was that he saw lots of people making fortunes on emerging markets, but the emerging market funds never seemed to do very well, fidelity and Templeton, even Mark Mubius, his fund his returns were never that impressive. And Dan said, you know, the reason is the guys who make a lot of money, they're doing it in their PA. These are guys who are sitting on trading desks buying Thailand when it's at pennies, and they set up accounts at local brokerages and they get in when the insiders are buying. And the Templetons and Fidelities of the world only get in once there's already custody and even GDRs and whatever. And by then it's up to them.”
2018-02-06 · Invest Like the Best · Harvey Sawikin - Emerging Market Opportunities - [Invest Like the Best, EP.75] · IDENTIFIED FROM THE TRANSCRIPT · source
“While the vouchers were kind of complicated because basically they were only supposed to be owned by Russians, so you had a Russian you would sort of pay a Russian broker to do it on your behalf. They would tender the vouchers and then they would receive the shares with a pre-agreement to transfer the shares to you when they received them. So you were taking, yes, you were taking some risk. This is why the Templetons of the world couldn't have done it. But since you were out of essentially out of pocket the money and were trusting a broker, we found a broker very early on that we trusted. Pretty soon Credit Swiss got in there, CSFB, and they became like the sort of main trader in the vouchers and developed, and they made a lot of money for themselves doing that and for the clients.”
2018-02-06 · Invest Like the Best · Harvey Sawikin - Emerging Market Opportunities - [Invest Like the Best, EP.75] · IDENTIFIED FROM THE TRANSCRIPT · source
“And it had the smell of opportunity, like people say to me sometimes, Oh, you start when you started out in Russia, you was so risky you took such a big risk. Why did you do that? And I would say, no, you don't understand. I was absolutely sure I was going to get rich. I had no doubt I was so confident I couldn't wait to buy Russian stocks. I was so sure of it.”
2018-02-06 · Invest Like the Best · Harvey Sawikin - Emerging Market Opportunities - [Invest Like the Best, EP.75] · IDENTIFIED FROM THE TRANSCRIPT · source
“I said, I'm going to starve now. And I turned a corner and there was a McDonald's. It was only the second McDonald's in Russia. And I've never, I think the only time I was so happy to go to a McDonald's was when I was probably seven years old and they opened the first McDonald's in New York up on the upper west side. I went with my mom. And so God bless McDonald's. And for the first few times I went to Russia. And then I discovered there were some other restaurants. I just didn't know where they were. And on that same trip, we went to the voucher auction to buy privatization vouchers, which was held in an old Lenin post office which had been turned into an exchange where they were trading like metals in the morning and then in the afternoon they were trading privatization vouchers and it was unheeded guys were running around with fur hats exchanging these packs of vouchers I recall it like it was yesterday”
2018-02-06 · Invest Like the Best · Harvey Sawikin - Emerging Market Opportunities - [Invest Like the Best, EP.75] · IDENTIFIED FROM THE TRANSCRIPT · source
“Wow, that's really tough question. You know, I'd have to say my first trip to Russia in January of 1994, because it was like stepping into a John Le Coray novel. It was just grim, gray, dirty, smelly. And I went right in the dark of winter, and I stayed at the Moscow hotel, which is now the four seasons at the time. It was just disgusting, and I went out. They had a cafe. I couldn't eat. I couldn't find anything to eat. And the cafe, the food was inedible. There was some sort of thing, like some sort of jellied thing that looked, it was all inedible. I said, okay, there's got to be some restaurants around here. And I started walking. And I couldn't find in a freezing cold. I couldn't find any store with any food. The stores that were open had no food, and there was nothing else open.”
2018-02-06 · Invest Like the Best · Harvey Sawikin - Emerging Market Opportunities - [Invest Like the Best, EP.75] · IDENTIFIED FROM THE TRANSCRIPT · source