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Maciej Wojtal

lines on the record: 64
first: 2022-02-13
most recent: 2022-02-13
sittings or episodes: 1
sources: podcast

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“So, if you would like to chat about Iran, talk about investing in Iran, we obviously know a lot about this. We've been focused on Iran since late 2016. We launched our first fund in 2017. So please go to our website and just send us an email. And I'm happy to reply. I'm also on Twitter where I try to publish from time to time some interesting updates, but definitely get in touch via email. And I'm happy to put you on our distribution list. We do quarterly updates that we send out to everyone who is interested. So please do get in touch.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Help build the oil production infrastructure, ports, airports, highways, all the vital infrastructure. And Iran gets to sell oil at 30% discount. Otherwise, this oil would be stuck underground. So it's a really, really good trade for Iran, but also for China. Then China also gets closer to Iran, which is on their belt and road initiative as one of the most important countries. I mean, it's through which all the freight, all those trains will be going to Europe. Already, I think three years ago, they opened a train connection between Tehran and Xi'an, I think, in China, which cuts significantly the time of shipping via sea routes. So China, absolutely, I think the most important player there, but there are also regional relations.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“So this would be more than Marshall Plan for Europe after war or more than EU funds for the Eastern European countries that access the EU 2004. So it's a big, big injection of investment into the Iranian economy and it's going where it should be, which is the infrastructure. Iran needs infrastructure spending. And because the level of investment for now is so low, everything you invest is very productive. It's like Chinese investing in their own infrastructure 20 years ago. So it makes economic sense. And Chinese want to spend mainly on oil and gas production because then Chinese are getting paid in the discounts in oil. Big discounts, 30% discounts in oil price that they will import over the next two, three decades from Iran. For Iran, it's a great deal. I mean, Chinese will come and”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Basically, can buy Iranian oil and use Iranian oil and sell more of its own Russian oil to the global markets. But this seems to be more like a convenient decoration because it's convenient. So out of convenience, marriage out of convenience, then a strong long-term partnership. With China, it makes much more sense because their interests are aligned. They have signed a long-term, like 25-year cooperation partnership program where China said that they would invest around 400 billion dollars over 25 years, but much of this front-loaded. $400 billion. Iran's GDP is around 200 billion dollars, well, depending which exchange rate you use, right? And from which moment. But let's say it's around $200 billion. So it's twice the size of this investment.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Iranian oil despite U.S. sanctions. They're not doing this directly but indirectly through Malaysia or different tankers, whatever. And I think they also started paying in different currencies than the US dollar. China would love to pay in the Chinese yuan because then they would no longer be relying so much on the US dollar. So it's very important for the security of the Chinese economy. For Iran, getting you once is not great because there is nothing you can do with Yuan's, but they can buy Chinese products with those U1s. So they are definitely doing this in many different currencies. Russia is important. They have big presence in Syria where also Iran had a big presence in Syria. They were both cooperating with Assad. So they were also cooperating with each other. Russia also helping Iran with some exports where Russia”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Speaking, and it's probably would be more and more difficult politically to justify sending young American soldiers somewhere to the region that is not actually that important for the security of the country, even energy security anymore. However, who should care is Europe and China because these are big countries, big regions that need to secure long-term supplies of energy. China understands this. Europe not really. I think they are beginning to understand right now. So China understands and they are speaking to everyone in the Middle East, Iran, Saudi Arabia, Qatar, to secure long-term contracts for oil and natural gas. And this is super important for the Chinese economy. Also, in case of Iran, China has a strong negotiating power because this is the only country that keeps on importing.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Soon that it will be the conservative government that will be paradoxically implementing this. So in terms of domestic politics, no real change. Specifically and importantly, no change in terms of the plan to sign a new nuclear deal with the West and change these relations. Now, the region is fascinating. You have the big superpower, which is the US that is actually removing itself from the region. So Afghanistan is an obvious example, but US is removing itself from the region because, and it's also, I guess, obvious, they no longer need to import that much energy as they used to. So the US is self-sufficient. I mean, they still need to import because they produce the stuff that they can export, but they need to import some other oil products. But on a net basis, an aggregate numbers, they are self-sufficient, so they don't care that much anymore.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“So, new president versus old president, no change, absolutely no change. There was change in rhetoric because the new guys are calling themselves conservatives and the previous ones were calling themselves reformers. But to be honest, it's the same establishment. It's not democracy. It's the same establishment with maybe different factions, but the main political decisions are still being made by the supreme leader and his council, the government is more about executing those ideas, not about making its own policies. So no change, or actually from what I see in terms of economic policies, what the new government is talking about is actually what the previous government should be talking about. So the big reform to subsidies, for example. This is very important and should have happened long time ago. And it's actually, I think it will happen.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Is actually front run those guys and take advantage of these low valuations and even if you have to wait for the big opening up when finally the US investors are allowed to invest as well. In the meantime, you see that those companies are growing and this growth should only accelerate with the opening of the market. This is the main thing that I find that the most attractive in Iran.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“In terms of realize this potential, quality people, companies that have already gained scale big enough to be able to operate under sanctions because of the big domestic market. The market that, you know, the country that missed everything good that happened in emerging markets over the last three decades. So they will experience all of this inflow of capital, interest rates going down, access to financing, transaction costs going massively down. This is the main point of the investment thesis. And then on top of that, you know because you can actually Google interviews with one of the biggest passive asset managers in the world where they say that Iran is probably the most exciting market for the next decade. These are usually American institutions. So they cannot invest right now and they'll have to wait until they can invest a bit longer. What we can do and what all the non-US investors can do.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“You understand that the real earnings that this can produce are twice as high, so you're actually buying it three times earnings, but the most important thing for a big multinational company would be that you get to acquire very strong brands and distribution network across the whole country for the size of the investment, I mean the whole market cap would be around $200 million. So it's nothing. So it's not a serious investment for a big company and it gives you a great foothold in a big country where good spending power of consumers would be going up. So those are the companies that will obviously benefit. I'm sure they will be taken over. So you have different companies. Some of them will obviously face competition, but some of them will be taken over. But many, many other companies, and this is the main point of the investment thesis, that this country will start growing fast. It has everything it needs.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Strong distribution across the whole market, sometimes in the region as well. The portfolio of different product types and different brands valued at around five times earnings because you have additional discounts if you buy the whole investment holding because”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Regulator is just actually pushing them to sell non-corassids, but they used to love acquiring different assets that had nothing to do with banking. So mines of zinc or some companies. And they are building those holdings, investment holdings that have assets. And very often there are multiple layers of investment holdings. So we have a big investment holding that holds another investment holding that holds and some assets that are interesting. And for example, we're looking at one investment holding that holds companies that produce cleaning products and personal hygiene products. So washing powder, those type of things. And these companies together, they have around 20% of the market share of a market that is 84 million people plus the export markets in the region. And these are brands that have been around for 50 or 60 years, non-cyclical.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Those industries, the local companies will suddenly face a different reality because before with no foreign competitors, sometimes you see lazy management of a company, but it's just products are selling themselves. This will not be possible. It's the same for some exporters where some managements are just the quality of these people. It's just terrible. Some of them are very impressive, but some of them are terrible. increasing profits every year thanks to the currency depreciation because it helps them to stay competitive and they will have to improve operations and the quality of management in the future but on the flip side there are many companies that are just obvious takeover targets for example we're looking at one investment holding this is a thing in Iran you have investment holdings so banks for example banks love or used to love now the”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Absolutely. There are companies that will suffer from suddenly facing professional competitors. So you already have in Iran on a small scale companies like Nestle, Unilever, some big tobacco companies. So really, really big multinational companies that would like to increase their presence. They cannot right now because countries under sanctions, they already have some operations. They're allowed to keep them, but they cannot increase the scale of their operations, but they will. I know many companies, I speak to many companies, multinational companies that are present in Iran, they're all thinking about expanding as soon as they're allowed to. I hear about big companies or even sovereign wealth funds that have a list of big investments that they want to do in Iran. They're just waiting for the green light from the White House. So it will be happening. And in some of”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Then it's probably gold, then cars, because it's difficult to import cars. So used cars is actually an asset class that holds its dollar value. So you can hedge, people hedge the currency exposure to sustain their real spending power by buying cars when the dollar goes up. But stock park is just more complicated.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Individual investor so we can buy them at strong discounts, like 30 discount to the underlying share price, right? So if you have a company, we're buying one of the commodity producers, the company itself was trading at five times earnings and we were buying rights, share rights. That time, I think it was 30% discount to the underlying share. So we were effectively buying it less than four times, three and a half times earnings. So those type of situations are also possible on top of the already very attractive very low priced market. Another reason is that for low valuations is that there is not enough investment capital in Iran, not only foreign capital, but also local capital. There are many wealthy Iranians, but the traditional asset platform for them is real estate. One third of Iranians invest in real estate. Cash, there are no mortgages. Just, you know, if you have any cash, you put it into a flat or into some land.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“For them to realize they usually, I mean, always there was an interesting survey in Iran among individual investors that asked local investors, how do you make investment decisions? So the most popular answer was that they ask a friend, they look for advice on social media, and then that it was a random choice. But it's probably not surprising, but this just shows you it has good and bad outcomes for other investors. Very good thing about it is that the market is inefficient. So you can find undervalued assets, especially when you look at different types of instruments. Sometimes, you know, companies issue share rights and those rights, because you have to hold them for two, three months before they get converted into ordinary shares, then you can sell on the market. You know, no one wants to buy them because it's a very long time horizon, you know, two to three months for the...”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“And again, it's between four and five times earnings. And software companies that we have that are available on the market are probably at eight times earnings and they are growing, obviously, high margins and so on. So the market is very cheap. And there are reasons for it. One thing is that interest rates are quite high. They're at around 20%. So the competition from deposits is high, but still if you were to make an investment decision and you can you have an inflationary economy, you can put your money in a deposit at 20% or you can put money into companies that pay between 10 and 20 or 15 and 20% dividend yield to end their earnings are actually growing and they're hedged against the currency depreciation and inflation. And then obviously you would be buying stocks, but 90% of the trading in Iran is coming from individual investors. So we take stock.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“And it's, well, we think it will pay the dividend yield to will be around 21%. 21% from a stable pharmaceutical business, nothing to do with any sanctions, easy to buy, liquid, listed in Tehran. Those type of opportunities. And this is the reason why the index has been performing so well despite the really bad macro, despite the really negative pessimistic scenario that was playing out for Iran over the last decade or 13 years of the index. And you look at, we have a cement company, not because we are very bullish on cement. There's actually oversupply in many parts of Iran, but it's a regional product. It's difficult to export it. But they are located on the border with Iraq and have an Iraqi subsidiary and whatever building products you sell in Iraq, everything gets sold at strong prices and they are getting dollars for.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Analyst. So when I look at forward P, it's around 4.8 at the moment for the top 100 companies, which means that you are able to find companies at four times earnings, at three times earnings. Now, the average expected dividend yield 12 months from now, again, for those 100 companies, it's around 12%. The average, you have many companies, for example, we have one from a pharmaceutical company in our portfolio that is price-it.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Because of the natural gas crisis and price hikes and not enough supply and so on. The first company that I bought was utility company that was supplying chemical gases and sweetwater to petrochemical plants. And it had a monopoly position in the region where it was located. It was valued at four and a half times PE paying 20% dividend yield and all their contracts were priced in euros. So it was hedged against the currency depreciation. Oh, the petrochemical, the fertilizer producer that I mentioned also exports a big part of their production so they are enjoying strong global prices in US dollars. When you look at the whole market, let's say you have 600 companies, but we actually get consensus estimates for around 100 top companies by top companies. I mean, the biggest and the most covered by local.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“This is the most exciting part about Iran. So, I guess we should have talked about it. After I've seen the country, I got interested in the people in the top-down macro view and the potential and so on. Everything looked really great, but the single most important factor that made me go there, quit my job, set up a fund that will invest in Iran and so on were the valuations. And the valuations, they're not only cheapest in the liquid world, let's say. They are like once in a generation, I think, potentially. Look, we are buying, for example, fertilizer producers at, well, last time we did an estimate. It looks like 3.2 times forward net earnings by forward, I mean next 12 months of a company that is producing fertilizers has access to gas and is just enjoying the situation in Europe where the fertilizer plants are being shut down.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“To intervene on the currency market up to a certain level, this is limited by the size of the reserves. So because the majority of the inflation is driven by FX, they're trying to affect the FX market to stabilize inflation. Not very successful when you're under sanctions, when you don't have reserves coming from oil exports. That's why inflation has been running high since 2019. But it's important to note that before the sanctions of the previous US administration, inflation in Iran was in single digit. It was around 8-9%, 10%, let's say, for a quite long period of time. And then it moved up to 50% or whatever because of sanctions. And there is no reason why it shouldn't go back to where it was, let's say, around 10%.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Funny basically they try to raise taxes or maybe collect taxes more efficiently so they're trying all the good things to make the system work more efficiently but they're also printing more money and this increases inflation which obviously decreases the real value of real so the currency is dropping going back to inflation you asked about the monetary policy There is no official interest rate set by the central bank in Iran as you have the Fed funds rate or interest rates polishes in developed countries they try to control inflation mainly by limiting the interest rates that commercial banks can offer on their deposits or charge on their loans so they're targeting directly the rates at the commercial banks but also they try”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Which definitely makes more sense. Now, going back to those different exchange rates and the chart. So you saw some pretty drastic moves. But then again, you're only looking at the official chart where the drastic moves end at 42,000. The real rate is 280,000. So those drastic moves were even stronger. And the currency, as I said, is the asset that is the most sensitive to geopolitical pressure. So whenever you had, for example, over the previous four years, five years of remaining sanctions, so sanctions being imposed by the previous US administration, it was the currency that was reacting. Also, because of lower oil sales, so again, sanctions affected oil exports. With lower oil sales, Iranian government is running budget deficit that is much higher than it used to be when the oil sales were at 2 million barrels per day. Exports. So they have to”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Local prices, all the local costs, you don't get any subsidy. And so also the price of the product at which you will be able to sell to be profitable will also not be subsidized. It will be just a market price. And this market price will be always higher than the subsidized price of an important product, in this case, that is where the official rate is used. So that's why I said that this rate is actually killing domestic industries, because I was looking for producers of some essential food products in Iran, for example, butter. And I couldn't find any. And I realized that, no, it's actually cheaper to import it from Turkey because of the government subsidy than to produce it domestically in Iran despite the lowest wages in the world. So it's just unwise. They are removing it and plan to replace it with different types of subsidies, like direct cash handouts to the poorest segment of the population.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Sometimes it collapses to 0%, but the average spread is around 10%, and this functions well. So the government is trying to get rid of the official rate because this is basically subsidy. But this subsidy is not working well because it causes corruption. So you can read stories every now and then about some friends of some minister or some other official person who got access to this rate to import iPhone instead of food or pharmaceuticals. It also is just not very wise because if you can import food at this rate, it means that it's very cheap for the importers. It's very cheap to buy, for example, Turkish butter or some other food product. And what this means is that there is no incentive to produce it locally because if you want to produce stuff locally, you have to use”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“But it's only available to individuals. So when you're an individual Iranian, you want to buy a couple of thousand dollars, you go to one of the exchange houses or to the bazaar actually, and you can buy dollars there. And on the bazaar, one dollar is around right now probably 280,000 reals. So we have 42,000 on the official rate, but you don't care about this rate. You cannot use this. You have the NIMA rate. 250,000 and you have the market rate around 280,000. Most of the time the spread between the market rate and the NEMA rate, so the individual, let's say, and the corporate, the liquid rate, is around 10%. Sometimes it expands to 20 or 30% when there is some stress, when suddenly individuals go and rush to buy dollars because there is some UGD geopolitical tension.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Corruption, but also killing domestic industries. So let me first comment on different exchange rates. You have the official exchange rate. As I said, no one can trade on this. It's only for the importers of essential goods. Then you have the NEMA rate. NIMA is the platform where all the biggest exporters and importers are required to buy and sell hard currency. This is where the biggest liquidity is. If petrochemical companies sell or other exporters sell products abroad and they give paid, then they have to sell their hard currency everything that they don't need for imports on this platform. So this is the biggest liquidity. And over there, $1 is around 250,000 RIA. That's a big gap, right? 42,250,000. And there is also a bazaar rate or market rate or black market rate. It's not a black market. It's also legal.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“So it's actually more complicated than what you were seeing on the chart at the moment because you are looking at a chart of the official exchange rate. And to make things more complicated, there are a couple of exchange rates in Iran. There is the official. There are actually no one uses. The official rate is the rate that only importers of essential goods can use. So when you're importing food or medical products to Iran, you can go to the central bank, show them what you're buying and ask them to sell you dollars at the 42,000 rate. This is basically a subsidy so that imported essential goods are not too expensive for the population. There are in the process of reforming this because it's a really bad policy that has many negative unintended consequences, many.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“So import substitution actually was even a bigger, stronger effect or had a stronger impact on earnings than in the case of exporters. So that's super interesting and exciting when you look at Eurone because you have all this, this goes back to the depth and the diversity, how well diversified is the local market. And because you have so many industries listed, you can always find something interesting happening somewhere.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Obvious, but then these weren't the biggest beneficiaries, the biggest beneficiaries were actually local producers, domestic producers that were selling in the domestic market. Why? Because their competitors were suddenly gone. First of all, priced out of the market after a 70% depreciation of the currency. Even the Chinese companies exporting to Iran were no longer competitive. But also it was just simply too difficult to export to Iran because of sanctions. So what I said at the beginning, organizing logistics or shipping, insurance payments and so on, this was either expensive or just impossible. So local producers, despite the economy not expanding, so economy just going sideways, the oil part of the economy was declining obviously. So with stagnant economy, those companies suddenly were showing big sales growth because they were gaining market share because the imports collapsed.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Not only on the macro level, statistical data, but on the company level. So the reporting is quite strong, the regulatory requirements, reporting requirements are more strict than in Europe. Most of the European markets, in my opinion. So this is very helpful. So also, when we want to study the history of the Iranian market and how different industries, different companies were reacting to different regimes, different phases of the cycle, let's say, we can go back, look at the share prices, which show us, okay, what happened on the market, but then we can also pretty much correlate it against the developments with the financial data to understand, okay, so who was actually benefiting? And then we drilled down dig deeper to try to understand, okay, so what actually happened that caused sales in this particular industry to accelerate the growth, to accelerate in the period, for example, of sanctions. And with exporters, it was pretty...”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Different types of different industries, different types of companies were benefiting from what was going on in Iran. So initially the exporters were the obvious choice, the obvious pick to focus on when the currency was depreciating. But what happened next? And we studied 15 years of the Iranian historical data of the index where we looked at different periods of not only stock price performance, but also of corporate earnings.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Then, even I would say even more astonishing under a period of strong sanctions, which was during the previous US administration, where they proven their resilience, which is also the resilience of a big part of the economy, which is manufacturing export driven. And especially when you look at the companies that expert in the region, so not the big exporters that sell to South Korea, Japan, and so on, because they got affected by sanctions and their volumes dropped. But the regional exporters companies exporting paper to Afghanistan or to Pakistan or companies exporting food or cement to Iraq, they were not affected by sanctions because they're trading in oil and also the regional trade was much more difficult to stop for the US than the big exports out of the country. These are the returns, but it's also quite, very interesting how”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“In a country like Iran, where the stock market and all the assets are strongly affected by the macroeconomic drivers, such as the FX or the inflation or trade disruptions and so on, well, you have to have a strong understanding of macro because profits will be more driven by macro in those periods than by the quality of the management of the company, for example. So this is what we were doing initially. We were invested in companies that would benefit from the opening up of the country. Then we switched our portfolio to focus completely on companies with the highest sensitivity of earnings to the dollar exchange rate. So initially these were exporters with the biggest leverage actually. So where every appreciation increase in the rate of the dollar was affecting the earnings the most. So these are the returns quite astonishing of a long period of time, albeit with a higher volatility.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“The majority of the stock market, the majority of the companies that are listed on the stock market are positively correlated with the US dollar. And many of these companies are actually dollar assets that just happen to be listed in Tehran. So they are not only hedged naturally hedged against the currency depreciation, but many of them actually benefit from the depreciation of the Iranian real. Imagine you're an exporter. The currency goes down. So dollar goes up by 50%. Your revenues go up by 50%, but your costs remain in real that is depreciating. So you're much more competitive. Your margins are increasing. And if your revenues are going up 50%, your earnings are going up much more because of operational leverage. So that's why we were focusing on, you know, we had to change strategy many times. So this is not in line with what Buffett said that just don't overcomplicate their investment strategy.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Sign the market had an initial quick rally of, I think, 30-40% in dollar terms. Then it started going sideways. 2018 was tough because this is when the currency dropped by, I think, 75% in one year. So Iranian real versus US dollar. Now, what that caused is that the following year, so 2019, Iranian equities in dollar terms pretty much doubled. and this was the best performing market in the world in dollar terms. And then the following year, so 2019, it also was a very strong year. So 18 sanctions, 19 strong bull market that continued into 2020. Overall, from the beginning of 2019 to the end of 2020, the market in dollar terms tripled more or less or even a bit more than that, despite US sanctions. So how was this possible? It's because”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Sanctions, UN sanctions, it had a populist president in the meantime who actually caused the depreciation and the UN sanctions, the sentiment about Iran, it's either sanctions or it's about to be war in the region or something like this, right? So with all those bad things happening around Iran, the stock market still outperformed S&P 500 and I mean total return here and there. This is astonishing. I mean, I was surprised when I checked this. Obviously with huge volatility, the volatility is coming from the FX because the FX is the asset class that reacts to all the geopolitical tensions. So you had many drawdowns, like up to 40, 50% drawdowns. But then you had strong rallies because the market was rallying after the currency drawdowns. We can talk about this in a moment how it works. But this was astonishing. So 2016 was a big hope because the nuclear deal was just”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“13% per year annualized. So if you invested in Iranian equities as a foreign dollar investor back in May 2008 and held it for the following 13 years, you would be annualizing 13% in dollars per year. Now, S&P 500 over the same period is around, it's a bit less, it's 12.5%, I think. Doesn't matter if it's a bit less or a bit more. It's similar. And S&P 500, obviously the biggest economy in the world, the most innovative economy in the world in the meantime, you had technology boom, you had Apple, right? You had Amazon, all the good things that happened there. And Iran is the country that has been under sanctions since 2008. It had two episodes of currency depreciating more than 70%. It had US”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Don't really check the performance in the local currency. So the honest question is, I don't know because in a country where you have high inflation, the stock market will always be booming in the local currency. So it doesn't matter if it went up by 1,000% or, you know, 2,000%, then as well as Zimbabwe, when you look at the stock market in local currency, they have some stock markets, also look good, but they are not a comparison to Iran because they don't have real functioning economies with proper companies. So when you observe them in dollar terms, there is nothing interesting. In Iran, in dollar terms, so there's a couple of things to say here. First of all, the main index was launched in May 2008. So it has 13 full years of historical data. And it's astonishing to observe that your dollar return from Iranian assets over those 13 years was more than”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Population, there is absolutely no knowledge about its local economy and about the local capital market. The capital market exists, that there is a liquid deep, diversified stock market where you can buy the cheapest assets in the world and you have no competition from foreign investors.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“So good to go there by yourself and actually not only do your own investment research, but get to know the country, start to understand it, its culture, its population. So this was a very surprising, positively surprising thing to observe. And I had no bias. I mean, I had never met an Iranian in my life before my first trip to Iran. I went there for the first time in 2016 when the JCPOA was signed. So the Iran nuclear deal was signed. The UN sanctions were lifted. and it became legal for non-US people to invest in Iran. So this is the first time I went there. I didn't have any contacts. I just made a couple of appointments via email with local banks, with local brokers, and I was just going out and meeting people, meeting in the hotels, meeting in the restaurant, and enjoyed every minute of it. So Iran not only has the worst PR because of those misconceptions about”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Christian minority and the Zoroastrian minority so that they are also represented in the parliament. Again, the situation with women. So I guess that people in the West who don't know, who don't understand Iran probably only notice that women in Iran have to wear hijab, right? This is compulsory to cover your head. But when you look deeper, actually the majority of students are women from the top universities in Iran. When you start to get to know the local families, you understand that households and household budgets and the most important decisions, they are run by women. They actually control the households. And when I meet with women in professional jobs working in banks and so on, they are the best educated with the best English doing really important jobs. With countries like Iran, it's so important. It's so”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Travel there by yourself, you see that if you go around different cities, you meet people. If they speak English, they will approach you and have a chat with you. They don't have too many tourists, so everyone is curious. Everyone is super friendly. So not only neutral, they're friendly and want to have a chat, want to get to know you. It's a very tolerant society. So obviously Iran as a country is Muslim. It's a Shia Muslim country. You have big minorities. Sunni minorities, Jewish minorities, Christian minorities. I was going around sightseeing different churches, was going to Jewish synagogues, Zoroastrian churches, Christian churches, and everyone is doing his thing. There is no police in front of the church. It's open and the society is tolerant. More than that, you actually have permanent seats in the Iranian parliament for the Jewish minority.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Money driven by individual retail investors. So you have one to two million retail investors that invest probably around $100 on average. And this makes the market very inefficient, which is very interesting as well for professional investors. It's a bit like China A years before hedge funds started investing there or Vietnam at an earlier stage before institutional investors got involved. So this was what struck me when I started learning about Iran. One thing is how well developed the countries then absolutely how I enjoyed meeting and spending time and talking with the local people and they are super friendly. I mean another misconception about Iran because of political reasons the whole country is often portrayed as the country of I don't know terrorists right or some dangerous place out there and when you go to Iran”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Companies listed across 50 different industries. And there is no oil and gas on the stock market. So it's not a proxy on oil prices. You have petrochemicals, telecoms, steel companies, pharmaceuticals, lot of different manufacturing companies, software companies, consumer staples, FMCG companies. So like really a proper well-diversified market. The market cap is around 250 billion dollars, so probably one of the biggest frontier markets if it was classified as a frontier it would be one of the biggest frontier markets with proper liquidity. So the average daily liquidity last year was around $400 million. $400 million of trading per day in Iran with no foreign investors. All foreign investors are, as I said, less than half a percent of the market cap. So it's all local.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“These are good things about having sanctions for a couple of decades that you don't have a choice. You need to develop all those different industries so that your economy can function properly. So yes, it is surprising because when you look at Iraq or Saudi Arabia, it's more than 90% of GDP is coming from oil. And in Iran, those commodities, so it's not only oil and gas, it's also metals like iron ore, zinc, some other industrial metals deposits as well. This is an additional feature of the Iranian economy that can help to kick-start the growth and help finance infrastructure investments, for example. So this is important. But the biggest opportunity is actually in the non-oil part of the Iranian economy and in the human resources. That's the main resource of the Iranian economy. And this is also reflected in the stock market. So what struck me, I mean, I was very surprised to learn that the stock market has 600”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“The best country in the world. Now, when it comes to the economy, indeed, Iran has the largest combined oil and gas reserves in the world. But it is only, right now it's actually less than 10% of GDP. It used to be 15% then because of sanctions and now Iran is exporting much less oils, so it's less than 10% for sure. And the rest of the economy, it's a well-diversified economy. You have a lot of manufacturing. They produce more than a million cars per year. So all the industries related to car manufacturing, the steel industry is huge, auto parts, then petrochemicals industry is very important. So all this makes it a well-diversified economy that is self-sufficient to a large extent. So they don't import a lot of goods. They do have to import some essential goods, some food products, some pharmaceutical products. But the majority of what they consume is actually they can produce themselves.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT