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Herb Wagner

lines on the record: 86
first: 2025-09-22
most recent: 2025-09-22
sittings or episodes: 1
sources: podcast

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“I'm really excited about the next five years. We have a phenomenal team here at Fine Point, the combination of great clients, great investment mandate, great portfolio. I'm excited about what could happen on the credit front. So I think professionally the next five years could be the best five years of my life. The other thing that I'm excited about is I've hit the stage in my life where my kids are launched. So I have three kids and my youngest is going to be a senior in college, but they're adults. They're building their own careers. They're building their own lives. They have relationships. So to help them navigate that, but to also to see where they end up and how they grow and eventually to see their families grow is something that I just think is going to be really cool. So I'm excited about that also.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“So at this point in my career, the greatest joy is really mentoring people and then watching them grow, develop, and make a big impact. Being part of that, investing in people, helping people. We've had a number of people here at the firm who have made tremendous impacts for us on the business, on the investment effort. You spend time with people, you get to know people, and you give them advice. But ultimately, when they actually grow and they make a great investment and they're so happy with themselves and they're so proud and impacts the organization is such a fun way, that is really the icing on the cake. It goes back to what we were talking about with the team. We have a great team here. A lot of them are so talented they probably would have done great without me. But there's something that's really fun about seeing that and feeling like you play a small part in it.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'd say two things I love to read. Ever since college has really got into my academic studies, I've just really become a voracious reader. I read everything and get my hands on. I read fiction. I read nonfiction. I read investing books. I read sci-fi. It's relaxing for me, but it also just opens up different perspectives. You learn so much. I've gone through different phases recently reading about the Civil War or reading about old shipwrecks. And then I think the second one would be, I love to exercise. I've been biking to work for over 20 years. Some of the best parts of my day in the morning, 30 minute ride in, and then the 30 minute ride home. Nothing just your thoughts on a bicycle. People have often asked me if that's dangerous, but there's a bike path right down the Charles River that I ride for the most part. But if I'm not biking, I love to run. I still run half marathons in 10Ks and I also like to swim as well. So I feel like I have a lot of energy. So I love to expend it either on a bicycle or running.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“Hands down my favorite leader would be someone named Paul Farmer. He ran an organization called Partners in Health. He passed away probably three years ago. But there was a great book written about him called Mountains Beyond Mountains by Tracy Kidder. Paul was somebody who just was just totally committed to helping people and providing the most vulnerable people with the best healthcare that he could. He was such an inspiring individual and he was so committed. And he's impacted millions of people in all types of different communities. He's just been an inspiration to me to know people like that. You just feel fortunate to have interacted with somebody with that mission and those kind of values. And somebody who dedicates their entire life to helping people. So luckily, we meet a lot of those people. It's one of the coolest parts of the work that we do. My wife has a phenomenal team that she works with who help her on this mission. And so we've been very fortunate to have them along with us, really helping to make an impact.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the most surprising part is actually it's really hard to give away money as dumb as that sounds. There's so much need and you feel such a responsibility to make an impact and help people and you just don't want to make a bad decision. Often you can't measure impact and investment. You can measure whether it went well or not. If you give money to an organization that's providing health care to a certain part of the world or a certain neighborhood, it's really hard to measure success. And so there's not great financial metrics in a lot of what we do. Interesting enough, it goes back to one of the questions that you asked, which is one of the things that we do is we find great people who have built organizations, great leaders, and we really invest in them. So I can give you a lot of examples of people that are making tremendous impact in these verticals. And a lot of it is you're trusting them to make good decisions. But I've been very surprised about it's just really tough to do a good job in that area.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“My wife and I both grew up in the Midwest. I think we have similar values. We really believe in giving back. We've been very fortunate in our lives. But there's a lot of need and there's ways that we can impact people in a very positive way. So we set up a foundation about 20 years ago. Our foundation is not going to be multi-generational. We're going to give all the money away during our lifetime. We really feel like societal problems are compounding a lot faster than I can compound capital. So there's a bigger need today than what there is even in 10 years from now. So let's commit ourselves to being thoughtful about it and actually executing it. My wife runs our foundation. We work together on thinking about the different verticals and how we can make an impact. We focus primarily on global health and employment opportunities for inner city youth and then also in the arts. And so we have three verticals that we have really tried to specialize in and try to focus on. We're going to run like crazy to try to make the biggest impact that we can make between now.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“Goes back to my Paperboy days. So I grew up in the 70s close to Dayton, Ohio, so we were very close to the Cincinnati Red. So as a kid, I was a huge baseball fan. I still remember waking up and I'd get my 40 newspapers to deliver and I'd go straight to the box scores. Remember, you'd open up the newspaper and I'd spend a ton of time just going through every box score, memorizing the statistics for everybody. It just was a lot of fun. So even from a very young age, I was a big Cincinnati Reds fan. Back in 2012 through one of my mentors, I was offered the chance to buy a small piece in the Boston Red Sox. And I instantly jumped at it. I remember talking to my wife and I said, I'm not sure if this is going to be a good investment or not. In fact, it might go to zero, but I want to learn more about the sport. I want to learn about more about the team. I want to get, I want to have a deeper connection to what they're doing. And so she was supportive of that. And over time, they bought a football team in the UK called.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“Actually, really excited for the next five years for a number of reasons. The first one would be we have a great team here. We just passed our 11th year anniversary. We still feel like we're relatively new, but I think over this first 11 years, we have built a A-plus team. And when you start from scratch, that doesn't happen overnight. It really doesn't. We've developed folks, we've invested in people. We have a great team. We spend a lot of time together. We work a lot. And we spend a lot of time outside the office together. I'm fortunate enough. We actually have lunch together every day. The best half an hour of my day is having lunch with my team. So the second thing is I'd say the things that we're doing I'm really excited about. We're concentrated portfolio. Most of them are catalyzed. Going back to what we talked about with reinsurance, reinsurance not correlated to the market. We really like that. Japan, of course, is. We have phenomenal LPs who would believe in us, who have given us a lot of rope to go out and find great investments. I'm excited about the areas that we're offering.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“Today, I mean, we're concentrated in Japan and reinsurance and a couple other things. I'd say our hedging program really has never changed. That's probably the one part of our firm, the investment part, that has remained constant. I talked to you about how on the investing style has changed, the focus on catalyst. We used to hold a lot of cash early on. As the team matured, as I matured, as we started doing things in different markets, we've been fully invested for a while now. So that definitely changed. But also I think the biggest change has just been the markets that we're operating in. We found great investments in places that I would have never thought. And I'm extremely excited about what we're doing.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm very fortunate that I have a phenomenal set of LPs. I have a great team. I have people who are highly energized, who like coming to work every day. And we're really doing different things. The firm today, size-wise, is a little bit bigger than what it was when we first started. But the types of things that we're doing are dramatically different. Because of that, we hire generalists, we hire really good athletes, really smart people who are intellectually curious and can learn almost anything. And we plop them into our model as we go off and embark and looking at a whole variety of asset classes. I would say we have a small number of LPs. We have a small team. We run a concentrated portfolio. We're research-oriented organization. We're value investors. And so a lot of the fundamentals are who we are really haven't changed. What has changed is just the construct of the portfolio. We started out doing a lot of credit, maybe some equities. And if I look at what we're doing.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“In the right seed and developing them and getting them to a point where you felt great coming into work every day was just a lot harder than what I thought it was going to be. To have come from Bow Post and to see what Seth had built and to see how difficult that was, this gives me a lot more respect for him and for that firm. And today, when I walk into the firm, I can't tell you how good I feel, how happy I am. When you see the fruits of that labor. And there's an old saying about you appreciate something a lot more when it's difficult. It took us a while to get to that place, but now I feel like we're at that place.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the thing I didn't fully recognize when I started FinePoint was how difficult it was going to be to start a firm and get it to a point where it was highly functioning. When I look back at Seth and Bao Post and what a phenomenal culture infirm that he built, I took it for granted a little bit that was going to be easy. We really want to have a firm with a culture that's very strong, including the highest ethical and moral standards, intellectual honesty, perfect alignment of our own interests with the interests of our LPs, always asking ourselves when we have difficult questions, what's in the best interest of our LPs? We want a culture of transparency. We want a culture of kindness, culture of respect. I firmly believe that everyone as firm deserves a high level of respect, whether you're the man at the end of the day who's cleaning the office or you're the president of the firm, everyone deserves a very, very high level of respect. So getting all those ingredients right and hiring all the right people and getting everyone”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“One of the biggest mistakes was that value investing has changed over the years. I mentioned the old cigar butts, which turned into buying cheap stocks, doing stuff in emerging markets. If I look at FinePoint, we first started the firm, we were doing mostly things that I had had success with historically. But what happened was you think about buying cheap stocks and great businesses without a catalyst, that doesn't work anymore. So sometimes you have to get punched in the gut a few times and have some bad experiences before you change. That ultimately ended up in us focusing on a more catalyzed opportunities. So I would say the biggest mistakes that I've made have been not adapting quick enough to what's happening in the financial markets, somehow getting stuck on the past and thinking about, well, this always worked before, so it should work today. I had done some successful stuff in the emerging markets. And then we ended up doing the same kind of investing.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“So off we go, we can make decisions, we can trade bonds over the weekend, we can move fast, and that ends up being a big advantage.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“Could take six months to a year from the time it gets into the portfolio. Sometimes you have a day to make a decision. And so those are the ones actually that are really fun, but this require a lot of focus. The one that comes to mind, the recent one is Silicon Valley Bank, when that was really melting down. You had not a lot of information and you're often trying to make decisions based upon this limited amount of information. Markets are incredibly volatile. Same thing happened with Credit Switch, which was, of course, exactly the same time. A lot of it for us is I'm really thinking about what's our downside. How much money could we lose? What's the return profile? And it goes back to what do we know and what don't we know? Often I have found those types of fast movement investments tend to offer really attractive returns, but you have to process a lot of information very quickly. But there is some percentage of our investments that we do have to react in a very short period of time. And I do think it's one of the advantages of our size. We can move fast. You're looking at the investment committee.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“We are highly collaborative firm. We're all aligned with our partners. Nobody has their own P&Ls here. Everyone is really aligned to find the best investments. What I found is the best way to run an investment process is we'll have analysts who will go out, work on investment. I tend to work on investments pretty closely with people. When they bring it to the group, we'll typically do that two or three times. We'll have large conversations around what we're looking at. I will be having conversations almost daily, if not weekly, with the individual analyst. And then ultimately we only have one portfolio manager at the firm. That's me. And so I have to give the go-ahead on an investment. Where the model comes in that we just talked about is so we will look at the model, look at how this investment stacks up versus other investments, what the model is recommending in terms of sizing, how I feel about that recommendation. Does it seem right based upon my experience? And then based on that, we'll execute on the investment. We have a large majority of our investments that go through this process.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“Important to say that the model really is a starting point, it helps stoke conversations, it helps based on all your history what the model is telling you and then forms a great basis for a conversation and then we go from there.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“When you think about the return characteristics of a Japanese stock versus a credit instrument versus a reinsurance contract, they are really different. We have developed this tool that we built internally that really is a variety of quantitative and qualitative factors that helps us think about the return characteristics across these different verticals and how we should think about sizing. Now, the quantitative factors that go into it will be things such as what's your base case, what's your 90th percentile, what's the risk if you get everything wrong, how much money do you lose, what's the timing? Is there a catalyst around it? We have a large number of qualitative things that we think about as well. So do we have a history of success doing this type of investment? Does it have a catalyst? We have a category for the herb conviction score. So how strongly do I feel about this? How knowable are the inputs? How knowable is the risk? Does the analyst have a history of success doing this?”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“Only lose the premium that we put up. But the thing I love about it is that this didn't exist a year ago, two years ago, three years ago, but because of the explosion and the size of these funds, we were able to find it.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“One of the things that we've been spending time on is an opportunity that's arisen because of the explosion in the pod shops and also the quant funds. This is not a new dynamic. The quant funds and then these pod shops have gotten very, very big. They employ a lot of leverage, which of course allows them to invest even more assets. So we actually have recently found a derivative in an Asian market that we're buying for 10 to 20 percent of what we think is worth. So 80 to 90 percent discount. And it's so little result of the fact that there's a market in Asia that has such a large demand to be short because of these funds. So these indexes, there's a massive demand to short them. And so we can construct derivatives on the other side of that. It just gives us asymmetric return. We put a little bit of capital to work and we can earn multiples of our capital based on reasonable assumptions. And our downside is defined because we can”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“That were in the process of seeing if they meet our bar or not. I do feel very fortunate that our investors allow us to invest in different markets to operate with an open mandate. They look to us to be the person who decides how much equity exposure do you have versus credit. I think they like that about us. I actually think it's one of our biggest assets.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“Mid 2000s, you got into that market. Most people who are buying risk and who own bonds knew it was insane. They knew it was being propped up by this easy financing that was taking place. And so you talk to them, but they said to you, we have to invest. There's so many of my peers who are doing something very specific to what their mandate says, and they have to invest. We don't have to do that. So when credit's not interesting, we're not going to do it. When reinsurance isn't interesting, we're not going to do it. If Japan changes, we're not going to be doing Japan. I think it's one of the biggest benefits to what we do. Financial markets are so large, and I've done so many things over the years. A lot of it I could never predict. If you would have said to me, hey, Herb, when you started FinePoint, what's the chance that you're going to have over a majority of your assets in Japan? I would have said you're crazy. And here we are. That's where we are. Or if you would have said we knew stuff in the reinsurance space, I would have said, what is that? And that's the great part about our model. And behind those areas, we have a number of other things that we're working on.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's the opportunity. So, one of the things we've heard from talking to Climate Scientists is that the world's getting warmer without a doubt sea surface water temperatures are rising. And so we've seen that. What they'll tell you is that it increases very slowly. Year to year, you don't have big changes in the risk of a large hurricane. Over 10 years, 20 years you do, which is kind of what we've seen. But it's a slow-moving increase in risk. That's what's fascinating to us is because you can have these year-to-year changes in the pricing that is really, really dramatic. The thing that I talked to you about, the one in 10 year risk might go to over 50%. Next year, it could be 30% or 20%. And so one of the benefits of our model is that we won't invest. We'll move on and we'll be doing something else. If I look at credit, for example, there's great times to be invested in credit. There's not great times. When I think about structured products, and I think about subprime, the subprime bet trade back in the”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“Thing that's fascinating about reinsurance is that a unit of risk, say there was a vanilla measure for a specific risk or isn't, let's say there is, the way that it's priced across different structures, vehicles, and different markets is dramatically different. So actually one of the hardest parts about reinsurance is just sourcing the risk. It's an opaque market. It's a lot of bilateral contracts. To answer your question about climate change, we are very worried about climate change. We spend a lot of time thinking about how do you price it? What does it mean? We spend a lot of time with scientists really trying to develop a view on that. I say where I come out is take that one in 10 year risk that we talked about. I don't know if it's one in 10 years. I don't know if it's one in 11 in nine years, one in eight years, one in seven years, even one in six years. I'm not sure, but I know it's not one in five years or one in three years. And that's how it's being priced. Often what we see is it's priced so dramatically.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so we build a basket of financial hedges on top of our portfolio. When vol is low, and then when vol is really high, we typically sell them. And so we have a dynamic hedging program that we employ. I worry a lot about Taiwan. I worry about an earthquake. Like you can have another, Japan has a history of horrible earthquakes, obviously, which led to a nuclear disaster. I think Japan has demographic changes that we talked about. One of the ways we deal with the demographic changes is, as I mentioned, the government's incentivized is really trying to get foreign investors to come in. Most of the companies that we invest in actually are most of their businesses outside of Japan. So that's one of the ways that we deal with that. But I do believe these hedges that we buy protect a lot of our downside in these scenarios because it's dynamic, we tend to really load up on the hedges when they're cheap. And then we sell them. So we ended up selling a big chunk of our hedges, for example, around Liberation Day when that happened.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“Thing we should at least talk about is there's a lot of risk in our portfolio that we have no control over. The significant geopolitical risk in Japan, every market, they think about China, Taiwan, there's a lot of geopolitical risk. We got other global pandemic. We could have a recession. We could have high inflation and interest rates. And so we actually have a pretty robust hedging strategy. Since we're fundamental investors, we hedge currency, commodity, and interest rates at the investment level. So for example, we hedge the yen. We don't have a view on the yen dollar. We think about ourselves as being dollar investors. So we hedge anything that's not dollar back to the dollar. So that's something we do. Same with rates. We don't have a view on rates that we hedge that out whenever we buy fixed income instruments. And then on top of it, we say we own a basket of financial assets. We have no view on the risk of those events happening, such as a recession. But often the way the markets are pricing, you can buy protection against those risks in a variety of different forms at very cheap levels.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“And these insurance companies need capital to underwrite risk. And so the way risk is priced in that market is also changed pretty dramatically. I would say reinsurance because of a lot of losses that have taken place and because of the insurance companies having lower amounts of capital, like that's another that we see great opportunities right now.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“Risk from rating agencies or regulators. We follow the market for a long time. We saw this event. We saw how risk was starting to get priced in 2023. And it was significantly different than anytime in the past. The way I characterize it is if you underwrite a risk that has a one in 10 chance of happening, historically I would get priced that you get paid $15 or $20 to take that risk. That number is over 50%. So the pricing around a unit of risk in Florida wind now is significantly different than it's ever been in the past. We spent a lot of time underwriting the risk, the market, and we've built a decent size exposure to that. We actually have four verticals that we operate within the reinsurance space. The other thing that has really been significant, that's repriced risk, is a California wildfires from last year. Those are very devastating, once again, significant loss of life, but you've had a lot of insurance companies pull out of California.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I'd say there's two other things. I continue to be really excited about the credit opportunity set for the next three to five years for the reasons that we discussed, even though we have a much smaller exposure today. That's an area that we're excited about. And then the other thing we're doing right now is we have some exposure in the reinsurance is an area that we looked at for a long time, never invested. The event that really repriced the market was Hurricane Ian when that hit in the fall, I think, of 2022. That was a very devastating hurricane to hit western Florida. It caused almost $50 billion of insured losses, significant loss of life. When that event happened, you had a run up of a few years before that with bad hurricanes. You've had really high construction cost inflation. You've had higher interest rates. And so what we found was we got into is insurance companies in Florida had pretty big holes in their balance sheets. And they were writing risk and they were being forced to offload that.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“Fascinating to me, too, is we've had success, others have had success. Asset management is competitive. Do you think when you see firms that have outsized returns, you'd have a flood of folks running to a place. But it goes back to the barriers to entry. The barriers to entry are high. I remember the early days when we were invested in Japan, and you go to see a Japanese company, you have to go through a process. You have to go through the junior IR person, then the senior IR person, then like the controller, then the head of accounting, and then the head of accounts payable. Maybe you'll get to the treasure and the holy grail of the CFO is maybe five years later, you get to the CFO and the CEO would never meet with anybody. We don't always go straight to the top, but often we do. But we have a reputation that we've developed over there where people trust us as stewards. They trust us as investors. They know that we're doing things for the right reasons. We're long-term oriented. So that's really a big difference today than what it used to be. I'm very excited about our effort there.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“When we first started doing it back in 2017, it was a new market for us. There was a lot of changes that were taking place. We weren't certain. Our relationships were newer. It was a smaller part of what we did. As we did it more and started having more success, the things that we were underwriting were actually happening, stock prices were trading to what we thought they should. Events were happening that we thought were likely to happen. So we had more and more success. We built out a great team who manages the effort. So as we got more confidence in the team in what they were doing and how they were engaging, the exposure continued to grow. And then if you fast forward today, it's a very large exposure for us. People ask me all the time, how much longer will it last? And I really feel like Japan, I think, is the third largest equity market in the world. Minority of companies have actually gone through these changes. I don't know if you're in the third inning, the fourth inning, the fifth inning. The number of people invested in Japan really hasn't changed that much.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“Would rather find great companies and great management teams. I'd say today what we have found is 20 years ago, I don't think people understood what the activists were doing and why and what the benefits were. Now I think market really understands, okay, there's an activist who bought stock in a company that has massive cross-share holdings, huge cash balances, owns all their real estate, very bad margins. And so investors say, wow, that's an opportunity. And so if there's an activist that gets involved, what you see today is there's a lot more support. They say, oh, everyone is doing this. This is really good for the market. It's good for society. There's buy-in amongst the asset management community. There's buy-in amongst the government. And so when you start to see activism take positions and advocate for change, everyone piles in behind them. And there are instances where you still have companies that fight them really hard. But just the culture around activism has just really changed.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“And then other companies like to follow as well. Some industries that are very slow to change, and they really haven't adopted the benefits of better governance. I don't exactly know what percent of companies are actually taking positive action, but it's a well lesson of majority. I think eventually most companies will do it. We're still in the infancy. I'd say the last few years, you've seen a lot more of an impact than the five years before that. So I think that's really positive. But they're definitely our industries who, because there's a leader, because there's someone who champions the cause that a lot of other people see the benefits and then they follow.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“The answer is yes. It was interesting about Japan is typically when you see a company in an industry start to make significant changes in their stock prices go up and they start to reap the benefits because now they have excess assets to buy other businesses. What happens is you start to see other people follow in that same industry. IT services, for example, Hitachi was really one of the leading companies in this area. So they started making a lot of these changes and really started to sell off listed subsidies.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“Reinvesting those businesses into growth businesses. Once you start seeing that and the numbers, that's when the Japanese market started to get excited. We saw that and really started engaging and figuring out who's serious about these changes. And luckily, we've been doing it for nine years now because we need to see a lot of tangible change. We need to spend time with people to really understand, do they believe this? If you look at 20 years ago, there was a big push for activism in Japan that largely failed. Today, the market is ready for it. So if you look at it today, these reforms are accelerating. The government continues to push hard. Companies that make these changes, stock prices go up, and everybody wins. We feel like we're part of this revolution that's taking place. We're helping Stuart companies. We're helping realize a lot of these positive benefits. And so that's the core of our investment effort.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“This number. I think over 90% of the market is passively managed. There's very, very few fundamental bottoms up investors in Japan. So when we go in, we roll up our sleeves and we engage with these companies, other people aren't doing that. And we can really have a differentiated view. Every investment that we make, we spend a lot of time with these companies. It could be years before we actually make our first investment. We're not going to invest just by what they say to us. We need to see them start to do things. What's fascinating about Japan because these opportunities are so big, you could see them do things for years and stock prices don't react at all, where we can actually gain conviction on what they're doing as we started making these investments. What we figured out was the companies that were making these changes, the stock market was recognizing the increase in value, but generally not until the seventh or eighth or ninth inning. Once they started seeing the benefits of a lower cost of capital, higher margins, selling off bad businesses.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“To do anything for us if we buy stock and we meet with them and that we don't like what we hear, then we just sell the stock and move on. What we found in the early days, there was companies that were starting to adopt these changes. And when they started to adopt these better governance changes, the opportunity is massive. So think about a company that's for 50, 60, 70 years that always paid low dividends, always held on to their earnings, had massive cross-share holdings, owns all their real estate, has no leverage at all. If you start to get them to say, okay, let's think about your cost of capital. The way to reduce your cost of capital is to take a little bit of leverage out at 1% or less, recapitalize your company, maybe buy back some stuff, or maybe reinvest or buy or reinvest in a growth business. Heart of the opportunity for us is there's very few people like us over there. So Japan is most long-only managers, most asset managers underweight Japan still. I'd never been able to exactly.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“Are very important in Japan. The government is very important to Japan. You need to be on the right side of the government on every investment that you make. That's very important. The government, I tell people, is the biggest activist investor in Japan. The other barrier I always hear about people investing in Japan is they'll tell me, oh, the demographics are a disaster. I mean, the birth rate is low. Everyone knows that. The death rate is high. There's very little immigration. The population is shrinking. All true. What the government's figured out is because of these demographic challenges, they need to attract foreign capital. And so they have been doing a lot to try to make it easier. So what's interesting about Japan is you have this tailwind of governance reform that's actually being led by the government and being adopted by a lot of folks. And so to answer your question, when we go over there, how do you underwrite a Japanese company? We're not trying to invest in the market. We're trying to find people CEOs, boards who really understand the benefits of better governance. We're not activists. We don't push people.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“You're exactly right. The barriers to invest in Japan are enormous. So the cultural barriers are huge. The language barriers are huge. The accounting is different. The time zone is different. I mean, I can't tell you how many times I wake up at midnight or one o'clock for a telephone call. So it's tough. It's difficult. We probably spent over a year underwriting Japanese companies spending time over there understanding all of this before we made our first investment. Fast forward to today, we have five people on our team that speak Japanese. And so we understand the accounting. We understand the cultural differences between the two. I was always amazed when I first started going to Japan, we'd have investment meetings. We'd have the Japan team and we go in and I'd come out and I'd say, wow, what the guy just told me was A. And the Japanese guys were like, no, no, no, no, no. He wasn't saying A. He was saying B, C, and D. And I was like, what? What you realize is they communicate in a totally different way. Relationship.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“When you go to dive deep on Japanese companies sitting in Boston, you have cultural differences, you have language differences, how do you get up the curve to the level of depth that you would want to take significant positions?”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“Japan. And then households, they're all net cash. And so households sit on massive cash balances. They generally don't like to invest in stock mortgage. So if you look at the economy collectively, it's actually not that levered. You compare that to the US, for example, our sovereign debt now is getting close to 100%. Our banking system is well capitalized, so we're similar there, but our companies have a lot more debt. And individuals are very levered. And so for some reason, there's a bias against Japan because of this one number, which we just didn't think told the whole picture.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“Of this time. So in 2014, he came up with a corporate stewardship code. In 2015, the corporate governance code. So the corporate stewardship. One of the things that's fascinating about Japan is most experienced investors have some horror story about investing in Japan. And so when I started getting into it, what I realized was people don't like investing in Japan. There's a real institutional bias against it. You had a big asset bubble that exploded in 1990. And this has caused a lot of pain. And there's a lot of people just have a bias against it. So second thing I learned was people would say to me, oh, there's so much sovereign debt in Japan. And there is. There's debt to GDP for Japan is 250%. But the central bank ends up owning a large chunk of that debt. So the actual net number is a lot smaller. Japanese interest rates are lower. But what's fascinating about Japan, I think what people miss is that when you're looking at the leverage in an economy, you have to look at every level. So the Japan sovereign leverage is high, but not of the central bank is actually manageable. The banking system is well capitalized now. Corporates...”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“As a value investor, I've had numerous friends and folks who've gotten excited about different Japanese opportunities, once, twice, three times a year. Before FinePoint, I really never had invested in Japan. So we do work on these companies. We generally always found the same problem. Great company, cheap price, poor governance. They would accumulate in a lot of money and the money was set in the balance sheet. They weren't reinvesting it. And so they weren't creating value. And also disclosure was difficult. The accounting was difficult. And so it fell into the category of unknowable. So we ended up not investing. So the big change that happened was 2012 when Shinsou Abe came into a second term as prime minister, he started to recognize that when you have these great companies that are generating fat profits and all this money just sits on the balance sheet of these companies, they don't do anything with it. It's actually destructive for the economy. And so he was really”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“Definitely is a lot of pattern recognition in this business. Sometimes you see a really big shock that happens or you talk about an industry that something happened that just went through that securities were repriced. Or it could be a company that files for bankruptcy out of nowhere. Or it could be a company that goes into liquidation. So sometimes there'll be a sudden event that will attract your interest and you'll start pulling threads to try to figure out is it interesting or not. One of the first things that I always go to is there something that we can anchor ourselves to in terms of value. I can never lose more than a certain amount of money. So really defining the upside and downside very quickly of an instrument is something that we try to do very quickly. Now often you can't. And so therefore you have to get paid a lot more. But what I found is that in these situations that are fast moving and opaque, if you can ground yourself in some kind of downside scenario and get conviction around that.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“For the credit markets, it could be spreads, how are single B spreads, how are triple C spreads, where are those being priced? Other markets, it could be price-to-book ratios, price earnings ratios. But then you have some markets like reinsurance where there's not really any normal metrics that you can look to. Some of that comes through conversations, a lot of this just comes through reading. I'm a big believer of just ingesting as much information as I possibly can. There's markets that are very easy to follow financial metrics, and there's some markets that are very hard.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“Wouldn't say it systematically having an open mandate, that is one of the biggest assets of our firm, but it's also one of the biggest challenges. So we've built a lot of process around making sure that we're aware of where the global asset markets are priced. So we have a committee that's set up, has a number of senior individuals at our firm that really tracks a number of metrics to look at where opportunities are being priced in different markets. So there are certain markets that we have had a lot of experience and a lot of success that fit well within our mandate. Those are the markets that we have metrics that we follow. We say to ourselves, we really want to go a mile wide. And then once we find something that we think has some of the characteristics that we look for, then we really go a mile deep. Then we start doing a lot of diligence to understand how assets are being priced. And then when we start to think things are interesting, we'll bring in more resources, really marshal the troops, and then underwrite individual assets.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“Time. You have these big events that happen and you run to them and you say to yourself, can we underwrite this risk? And is this risk attractively priced? What I found over the years from the outside, I think it seems overwhelming because there's so much to look at. But when you're in the inside and you're making the sausage and you're sitting around a table with your colleagues and you're going through what's happening in the world and how assets are being priced in a specific market, and is there a catalyst and can we have conviction? It actually becomes very clear”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“Really close eye on every component of the credit markets, we are laser focused on. If I think about Japan, Japan was something I had looked at every year for a long time, but because of these changes that started to take place in 2014 and 2015, then we actually started investing. So I was an investor in South Korea for a very long time. That was something that we know well. There's a number of markets that we have exhibited a lot of the characteristics that we look for, that we have a lot of relationships in, that we talked to folks on a pretty regular basis. So we keep in a close eye on. So when something happens, when you have an event like, for example, 2016 when oil prices collapsed, there were certain components of the credit markets that got really attractive during that time. We knew the companies, we've invested in that area, so we were able to take advantage of that. If you have a geopolitical event, for example, you had Greece essentially defaulted and they almost defaulted a second.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“Starts with really just generally having an understanding for what's happening in the world and some of the key markets that we see potential opportunity. So we're looking for areas that have been volatile, things that we can understand that we can underwrite. One of the areas that we have gravitated away from over the years is take emerging markets, for example. So the sovereign risk, the macro risk often are the most important risk in any asset that you're looking at in a specific emergent market. We don't think we're good at that. We haven't had a lot of great reps. Years ago, I would say I was better at that, but I think the uncertainties have grown over the years. Also take, for example, when the Chinese property developers all blew up, whenever Grand blew up back in 2023, we'd spend a lot of time trying to figure out, could we understand the risk? We ultimately decided we couldn't because so much of it was dependent upon the government and also so much is dependent upon the accounting and how the banks treat these different developers. And it was very hard to get really good insights on that.”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, when you have a global opportunistic mandate and there's a lot of things you don't know, how do you figure out what you're trying to canvas to then learn enough to know when you want to dive deep?”
2025-09-22 · Capital Allocators · Herb Wagner – Opportunistic Value at Finepoint Capital (EP.460) · IDENTIFIED FROM THE TRANSCRIPT · source