YouSaid · the spoken record

Rob Citrone

lines on the record: 69
first: 2022-07-11
most recent: 2022-07-11
sittings or episodes: 1
sources: podcast

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“Change is really a positive thing. Sometimes we all are afraid of change. When I've made changes, they've generally been very positive things. We should never be afraid of change. From change comes growth. I think that's a great way for one to grow. I think I would have made more changes along the way.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“Always do the best job you can do no matter what, and treat everyone, doesn't matter who it is, like you want to treat yourself.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“In 2019, we had two large positions that were required regulatory issues in the US and the U.S. government to make certain issues. And under the Trump administration, things changed dramatically and they were never consistent. So we had two ideas that I think were great ideas while researched. I think we knew as much about them as possible, but the regulatory things changed and they changed the rules of the game on us and we lost a fair amount of money and they were big positions. Positions were too big betting on regulatory things, the size in terms of liquidity. We want to change our mind and made it very difficult to reduce the position. So I learned a ton from that.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“short-term focus. I'll get tons of questions like how come the last three weeks this or that or what happened three months ago in April? Time to me is a continuous We give weekly performance. I mean, I think that's kind of crazy. But we do it because our investors require it and want it. And so we want to provide as much transparency in everything we can to our investors that they require. But I think it's a short-term miss of people's views. It's impossible to manage money on a short-term basis.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“I guess people that are really fool of themselves, that kind of bothers me. I think it's one of the reasons that we live in Disney. If you live in Disney, you're pretty down to earth and want to enjoy life and want to do good things for others. So I think those who are fool themselves and don't help others, I think is probably my biggest pet beef.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“Probably playing golf with my friends. We play a game called Wolf, which adds a little bit of wagering into it. Maybe sometimes it's a little wagering with a little golf along the way.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it really is going to depend on how well we perform. As I said, I think it's going to be a tough market. It's possible the markets may bottom in the next six or seven months, but probably at much lower levels than here. So how we can navigate that next 18 months to two years, I think, would go a long way to determine what the business looks like two years from now.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“Really responsible for your investors. You got to feel like it really is on your shoulders and you really want to do well by them.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“I said, you have to love what you do, you have to do it for the right reasons. You have to do it because you love doing it, not for the money. All of us are highly competitive, but I really value the track record, the integrity, and the trust that investors have placed with me for so many years. I just think that would be so disappointing to fold up a shop during difficult times. The other thing is I was a big wrestler in junior high in high school, and there's a lot of tough times when you wrestle, and you wrestle some really pretty good wrestlers that are more experienced or a lot stronger. And you always battle back. That experience has been fantastic for me. I came from a very humble beginnings. My grandfather was a coal miner outside of Pittsburgh, and he went black lung when I was born, so he had to move in with them, and he couldn't obviously work in the mines anymore. And so they baked Italian bread, my dad, helped distribute it to the town and get the clients and that. And we didn't have enough money for a crib, so I slept in a drawer. You come from that. This other stuff is not so difficult. I feel so blessed, so excited for what I do every day. I think that's what you need. You need the tenacity. You got to feel...”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“Instead of closing down, I think we distinguished ourselves by sticking with our investors, we made their money all back and more in less than a two-year period. I'm very proud of that. That's the way we operate, and we cherish and value our investors tremendously. When we lose money and don't do well, I really feel for my investors. That's the hardest part of the business.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“Had the right size organization, but we did it in a very thoughtful way. We didn't just cut people across the board. Anybody that we had to let go, we tried to help them any way that we could and find something new. And I think we did a really great job of that. I'm very proud of that. What we did is just go to the key people that I felt were the most important in the lifeblood for discovery and give them packages that would be attractive enough for them to stay and the opportunity going forward. And I think we were very successful in doing that. I had to take a lot of money out of my own pocket to support the organization for the last couple years, but I'm glad I've done it. And I think we're in a great position going forward from there. I see a lot of these funds. I don't want to pick on anyone fund, but there's a couple of them that have had a bad year or bad two years after, like you said, strong performance, and they just close it up. In fact, I wanted to close it up and start it again and get rid of the high watermark and support the organization of my own resources. But the other thing we did in 19, we thought we had a really bad year. We get back our fees to our investors. I basically said, look, I think we just did a lousy job. I feel terrible about that. I don't feel like I earn any of my fees. Anybody who stays, I'm going to give credit back to your management fees.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“Seen art recently, maybe we saw a little bit 09 and increasingly hedge fund managers that had great success, assets were large, and then had a contraction in assets and, as you said, folded up to go from where you were at the peak some years ago, $14, $15 billion, to still real money, but say $2 billion today, what was that like in terms of what you had to do to the organization to keep going?”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think you develop that. I mean, I could sleep anywhere at any time. I could sleep on planes. I can sleep anywhere. No problem. And then when I wake up, I'm very alert and I can operate for 10 or 20, 30 minutes and then go right back to sleep. I think I've been able to develop that over the years. The key is the first three and a half hours that you sleep. So I always try to get to bed before 11.30 because you need that first three and a half hour rim sleep. If you get that three and a half hour rim sleep, studies have shown that you'll be much more rested. Sometimes if you're not disturbing that first three and a half hours, that's better sleep than seven hours disturbed in the first three and a half hours. They can call me during that time, but not very often, and it's only if it's something really big happening.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“I have some diversions outside of the business that I love. I'm a huge sports fan, big fan of Pittsburgh teams. I'm a Pittsburgh Steelers fan. That's a great outlet for me. I also enjoy my kids and my family playing golf. Make sure I go out and do that on the weekends. I think that's important. I try to stay very healthy, stay fit. I eat better now than I used to eat. I get my blood tested every quarter and have different supplements and things like that that I take to make sure that everything's in balance. And so I actually feel better with more energy than I've ever felt. using medical technology to be better and to be more fit and healthy.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“So with this twenty four seven trading around the world and markets that are open all the time for twenty, thirty years, how have you gone about sustaining your energy to do this on such a difficult schedule?”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“Proven to be able to make money in different environments. It's also a dedication. There is a high correlation between hard work and success. Those who work the hardest put everything into it and that's a priority for them. These are the ones that tend to do the best and they're never satisfied. They're always searching for the next best idea. And the thing that Julian always used to say and something that we try to do with Discovery and emulate that is we have good ideas, but we want to place the good ideas with better ideas. So we're constantly looking for better ideas to replace the good ideas that we have. So the ones that can do that effectively. And also a good analysis has been to change his mind. The worst analyst is the one who just gets dug in his position and just says, okay, no, no, no, even though the facts have changed, my view hasn't changed. That's the dangerous analyst. Being able to change your mind is a very valuable thing in this business. You have to be able to do it.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“That was a bigger issue when we were larger and needed really big ideas. Now, when I look at my portfolio, all our ideas are so different than other people's ideas. I've gone through my top 10 longs, very few hedge funds would have any of the names I have in the top 10. The same thing on the short side. So I don't really think it's an issue anymore, maybe in 2013, 14, 15, that period of time is a bigger issue. But today, we're doing so many independent things, so many interesting things because we do a lot in EM and other places. A lot of the managers that I speak just don't do much there. Or if they do it, if I'll talk to a currency guy, he may have one or two currencies that I have on. It's a very eclectic portfolio in a way and an eclectic group of people that I speak with. So that crowding issue is not anything that I see as an issue anymore.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“I like to speak to a lot of the senior people in some of these leadership roles, whether it be economic ministers in certain countries or central bankers, very, very thoughtful. Central banks talk a lot to each other. I never really understood how much they do speak to each other, especially now through the BIS, they meet quite frequently and they do share ideas and thoughts. That's always very helpful to me. I have a lot of outside connections.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“Not, but I'll also text and email. Technology is so much better today, it's so much easier to communicate with your analysts on a frequent basis if you need to. But again, I think it's really important to try to not get groupthink within the organization to be thinking and talking to people outside the organization that also look at these markets and these positions and see what they think and what's their view and how are we different and why are we different and what is our competitive edge and do we have an edge?”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“The problem is I had too many people to communicate with, and I had a lot of people who would communicate with me when I should be communicating with others. So that was the hard part. The other thing is, as I mentioned before with George and Julian, they used to cross-reference all ideas outside the firm. So when you have too many people at the firm, you don't have enough time to do that. What we lost for a few years was I didn't communicate enough with all my other outside contacts. And so I need that time to be able to do that. So the smaller team helps me with that. My team is incredibly valuable in putting the ideas together and helping me come up with ideas and refine the ideas. But then I need to verify them outside as much as I can. I really work quite a bit. We do things globally, obviously. So we have a 24-hour trading desk. I get woken up at 3 o'clock in the morning every night and have for 23 years. I see the close of Europe. I see the open of Asia. Everybody gives me an edge. I can feel what the markers are doing a little bit. We do some trading around that in a fair amount. It's been very helpful over the years. But I'll communicate with my analysts mostly verbally. I like to see them in person when I'm in the office or do a Zoom.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“Lower, they're going to be lower. But I think hopefully in these tough markets in the next couple years that people will see that hedge funds have a place, that it's a great investment vehicle. We've gone through ups and downs and I love the business. I love what I do every day. I feel like I have a front row seat of the world. The amount of contacts and insight and things that I have, whether it be Ukraine, Russia, or China or the US even, Argentina, Brazil, Turkey, it's pretty phenomenal. I love it and I think you have to love it to do this business well and to stick with it.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“Think it's a unique experience. I launched the fund in 99 right after Russia. Tremendous opportunity to invest at that point. In fact, the Turkish equity market in the month of December in our fifth month doubled. The market doubled. The whole market doubled. We made 22% that month on a net basis. But nobody wanted to invest because they were like, oh, I just put the money in the Nasdaq. That was right before 2000. It just goes up every year by 25% or more. We started the fund with $5 million with $1 million of fee pay money. Four of it was mine. You can't start a hedge fund today with $5 million. Then we grew with a lot of performance, but also brought in assets. And I think at our peak we're about $15 billion. So a little bit too large. Grew too fast. Too many people. I diluted our ideas and diluted my time. I'm very cognizant of that. So we now have a much smaller team, very experienced, but we only have our best ideas. I'll never get back to that kind of size. It's just too large in these markets. And quite frankly, liquidity is worse today than it was 15 years ago, 10 years ago even. It's a great business. It's a wonderful challenge. It gets some of the most talented people in the world doing this.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, we'll get to 2025% net short if we really get incredibly concerned. And that's in equities or credit. Currencies or rates could be significantly more short. They're just not as volatile. We think of equities vol as the highest and then credit is about half of that and then currency is about a third of equity vol, generally speaking.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“We have probably about 10 themes on at a time, and then each of those themes may have 10 to 15 positions, so we're between 120 to 150 positions. Actual individual securities may be larger than that because we'll take baskets. For instance, if I'm short banks in Turkey, I count that as one position and maybe five different banks”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think ultimately there's going to be a fantastic short in Italian debt. I don't think it's yet. Next year there's a very important election in Italy. I think you could have a real blowout and spreads there and something could crack in Europe. So that's something we're watching very closely. We're currently short the DAX. There's no energy companies there and a lot of big industrial companies. And as I said, the energy situation is very difficult for them. I think you're going to see significant misses in earnings in the DAX as a whole. Right now, the DAX, we think, is the best way to play the situation in Europe.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think Europe is in serious trouble in this Ukraine Russian situation has just made it worse. I think Europe is, if not in recession now, be in recession within a few months. The fact that you got 14 different countries in the Euro and they all want different policies just makes it so difficult. And I think it's going to be very difficult as they have to hike interest rates here and you're going to see all of a sudden protect it, but it's not that easy because of the rules and the laws. So I think we might see an accident in Europe in the next 18 months or two years as they try to come out of this big problem with the Russians. And this energy problem is huge. Their natural gas prices are six times what they are in the United States. The manufacturing facilities, they're not competitive. They need to shut them down. How this going to work, I don't know. They need some resolution to the Ukraine-Russian situation as fast as possible. Otherwise, I think Europe is in really serious trouble.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“Technology is still a fantastic. I think it'll be a mild recession. I think we'll be there very quickly by the end of the early next year in the US, but it also is going to be somewhat of a global recession. I mean, maybe China, if we get an okay outcome at the People's Congress, and China will recover some next year from an economic perspective because of what they've had with the COVID, I think technology is going to be one of the areas in the next year is going to be very, very challenged, probably a lot of good shorts are coming out of there. So we don't really find much in technology on the long side at the moment. But I think long term have to be there. I think it's really just a fantastic long-term opportunity.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“For a while, we felt that any developed bond market didn't make any sense. In fact, they were generally good shorts, and we were short most of them. Unfortunately, we covered a little bit too early. I don't really like any of the developed sovereign yields here. In fact, I think one of the best opportunities in the world, quite frankly, is in Japan, where they have the YCC program, where they have tenure rates pegged to 25 basis points, zero to 25. There's no way that's going to hold in this environment. That's one of the best fixed income shorts in the world today. You may not make 100 basis points, but it's 50 or 75 basis points to be made in the long end on the short side there beyond.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“So difficult to invest because it's been so much political uncertainty and political chaos in the countries. You would think with commodities strong and that there would be some great opportunities, but it's just very difficult to find those. And I think you can play them through Western companies that have operations in Africa, and that's probably the best way to play it. I just think the stability of the government suggests it's been so poor. And South Africa had some bad leadership, and they're trying to come out of a real hole that the past president put them in. But I think they're really behind the eight ball and not very constructive on that. We don't really see much in Africa, unfortunately.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“We think Brazil can be a fantastic opportunity, and we think very depressed asset prices there. You want to make money on rates coming down, ultimately as inflation is peaking. Well, you can try in the U.S. at 3.5% rates, or you can go to Brazil where they're 14% instead of 100 basis points, you can make 800 basis points. So that's something we're pretty excited about in the future and the equities there as well, and the currency is incredibly competitive. And you get 12% net yield down the Brazilian currency as an example. Even Argentina, which is a basket case right now, going to have an election next year, we think they get a real significant change to market-oriented policies, and we think the country can recover very quickly. Next year might be the best performing market in the world on the back of that election.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“We're certainly bullish on the U.S. long term. We're bullish on India. We think India will be the new growth country of the world. They've done a lot of reforms over a long period of time. There's some political risk if something happens to Modi. I think he's been great. But I think it's ingrained now in the country. I don't think they're going to go backwards. And it's a big market. The English language is a very helpful thing. The rule of law there is very good. That's the country that we have huge long-term interest in. As I mentioned before, I think Latin America is going to recover dramatically. I think Brazil's been in a 10-year recession. First time I can ever remember in my 30 years of an election in Brazil where the political risk really isn't rising very much. In fact, it's pretty stable because both candidates are known and more towards the center. One's on the left, a little bit, one's on the right, but they're not that far from center. Brazil, I think, has a great opportunity with commodity prices where they are. Congress we've seen in place in Brazil now for a number of years. And I think at least a reasonable either continuation of Bolsonaro or Lula coming back. It'll be Lula 1, not Lula 2 in our view, and he wants to be the candidate of the mark, and he's mentioned that privately to people that we know.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“50 times your money on any regime change in a very quick period of time. So there are some tremendous opportunities going to come out of this, but it really is a problem for the world and a problem for this globalization, which was so prosperous for so many countries and so many people for so many years, I think, is now unfortunately going to reverse. And I think this is going to mean lower growth, higher inflation, and just a really tough environment if things don't change. We'll have to see what happens in October and November, but I'm very nervous about the continuation of the current regime, and I think it's really a disaster.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“I really think that we're in a process of moving to a massive Cold War of the West against China and Russia. I think that's terrible for returns and NASA prices, and it's really bad, obviously, for Chinese assets. Obviously, Russian assets are already decimated. That's not going to change. But the interesting thing is if something were to change in Russia, if there would be a regime change or a big shift in what they're doing, there's an opportunity investment of a lifetime in Russian assets. These things are so depressed. And I saw it happen in 1998. A lot of the oligarchs that are around today and a lot of wealth generated happened after the 98 crisis. They bought their companies for a song. They're even cheaper today. And I saw some stocks trading right before they froze them in London and the US. Some of these ADRs and GDRs trading at valuations that you don't want to support that regime, but these things were trading at 199th of where they traded six months ago. They're dominant companies in their country, and some of them are dominant companies in the world in terms of energy. Just a small amount of investment in those stocks that some people can retire on it.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, we think the currency in China is a great short, so it's one of our larger positions. We're short of the CNH. We do have some individual equity shorts there. We've been short China since August last year, but we have tempered it at the moment because there is a chance that G doesn't get the second term, which we think is maybe a 15% chance, and also a chance that he does get it, but with a lot of reformers around him. In that case, I wouldn't be bearish on China. I think it actually could be positive. But if the current situation continues and we have the same kind of advisors and same kind of standing committee, and the reformers really aren't there, then I think China's in serious serious trouble.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“in the leadership decision at the People's Congress later this fall. Two things I love to know about the rest of the year. One is what happens to the Ukraine-Russian war, which I still think remain a quagmire, unfortunately, but there was a resolution there. That's a big event for the world and for markets. And the second thing, who is going to lead China and what is the standing committee and the advisors look like going forward? I think those are the two most important questions to know from an investment perspective for the remainder of the year.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“I start by thinking about what I think overall about the markets and risk in general? What do I think direction of equity markets is? What do I think direction of the dollars and what's the direction of interest rates? From there I begin to populate the positions by where I think the weaknesses or the strengths are. Over my investing lifetime, the U.S. has definitely been the main place to have your capital. It's been an incredible place to have it beyond any others by far. China rivaled it for a little while. I think that's really changing today. What I see happening in China is very concerning to me. I see a leader that is all about power. I think the economy is secondary and he doesn't really understand that he may be destroying the long-term growth prospects for the country. If he stays in power, which looks like he's going to, and he's got the same people around him, the same advisors, I think China is going to ultimately become uninvestable market. And there's a lot of private equity money, global money stuck there, and they're the largest component of the EM emerging market equity index, over 30%. So there's tons of foreign money in China. And I think this is a big, big risk. And I think the whole key will become what happens.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a huge advantage to be able to have more tools in the toolbox and then be able to go to that toolbox when it's interesting, either long or short. So we'll then hone in once we find a few things. Like, for instance, we think maybe the best short in the world is Turkey right now. Turkey CDS has gone from about 400 over now to 800 over. We think it's going well over 1,000. The country is going to experience a traditional currency and credit crisis, as we've seen in EM, with really bad policy. If minus 50 billion in reserves, they've spent the entire deposits in the banking system for the individual that's been spent. People in Turkey don't understand that their dollars aren't there anymore. The market isn't fully aware of how difficult the situation is inflation is not running away and Turkey 70, 80%. They still intervene in the currency. At some point, it's just going to blow up. So that's a great example where we're spending a lot of time on Turkey, where six, seven years ago, we were doing nothing in Turkey. But having been to Turkey and have a lot of contacts there, it gives us a big advantage. Myself bless my team. My team's been around for a long time and a lot of experience in these markets.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think a couple things. One is you've been doing it for 33 years, you have a great context and a lot of experience. And the other thing is just a network. I mentioned Julian and George's Rolodex. I think that my Rolodex into these local key players and a lot of cases policymakers in a lot of these countries is very important. And so there's a lot of times that things aren't interesting. Like, for instance, Latin America to us have been interesting for the last decade to a large degree. There's been not a lot much to do. And we actually think now going forward, it might be very interesting. So I can easily pick up the phone or go and travel and meet people that I've known for years and kept in touch with. They can get me.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“How did you think about covering the world across asset classes in a competitive landscape and everything that you're doing is something I know you've done for a long time. I've always marveled at your ability to stay on top of everything that's happening”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“As an example, it's important, I think, to do both, and Tiger did both. I think I was influenced a lot by what Tiger did and how they did it and how Julian did it. I think it's a great model, and we've replicated that for 23 years.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“We use a top down and a bottom up strategy where we have macro analysts looking at the macro situation and then bottom up individual SOC analysts that help us pick the securities. And I would say that we generate probably 80% of our ideas from our macro side of things, but then we can populate them with securities that are much more efficient using the bottom-up analysis. We learn a lot from our bottom-up analysis as well on the macro. So they kind of feed each other and they play in beautifully. One area we've always had analysts in is in technology. I think if you don't understand what's going on in technology in this world, you're at a big disadvantage, even if you're just a macro investor and just doing macros. So I think it's always helped us quite a bit. Also, I find that in a lot of these markets, especially in emerging markets, the equity markets are really the most inefficient markets. They tend not to react as quickly as the currency or the debt. So a lot of times we can take advantage of that. And in some of the equity positions we will have, we will do like a basket approach in a certain country or want to be short financials or something in a particular country and we'll pick the five or six best banks to be short.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, when you brought all this together, discovery, say 20 years ago even today, you mentioned stock experience, you mentioned emerging debt experience, and then currencies as well. And I'm curious how you brought it all together into what your investment strategy has been.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the best shorts are ones where there's either a fundamental flaw in the business model or ultimately going to go bankrupt. Those are really the best shorts. If you could find all those shorts, they'd be fantastic. A lot of shorts you can't find. There could be catalysts who can correct them 30 or 40 percent. And those, you just have to know the difference between the two. That's why the conviction level is so high. So normally as a stock goes down, conviction level might go down in terms of you set at the lower price. It may not be as attractive to be short. And that's true. And you just have to know which ones could have financial distress and which ones might not. It's really an art. It's a lost art these days. You don't see as many people shorting individual stocks, but I think now's the time to be shorting individual stocks. It has been for the last few months, and I think that's going to continue for a while.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm curious how you bring those two things together. So, on the one hand, you've got this asymmetric risk and you got to be careful when you're shorting socks. On the other, you're saying things as they're going down, you want to keep the position on if you have conviction. And I imagine if something's going to go down 90%, it goes down 80% and then it gets cut in half. But when these things get small, they can also rip against you. So how do you balance that desire to monitor your risk with the conviction that you need to press shorts?”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“Point we were down pretty large on the shorts in April with the package that the Treasury put together from Mexico. These things squeezed against us, but we kept them. But I remember when I left, we were still short, both of those companies that were basically bankrupt. Five years later, Julian calls me and says, Rob, can you find any of those Trebosa certificates? He says, I can't get any of these certificates. And I need to close these short. Somebody's got to have them somewhere's wallpaper or something. Please find me some of these certificates. The first two shorts I ever put on Tiger, the day I left, they were still there and they were essentially bankrupt companies.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“They don't get them 40 or 50 percent. They go down 90. If you have that conviction and you have the thesis, especially a broken stock or a broken situation like Thailand, those corrections are enormous. I can remember we were shorting the red chips in China in 97. These were companies that were in China but listed in Hong Kong and they had these big parents in China. They had something called Asin Jackson. They kept shifting assets into the listed entity. And the Chinese were going crazy about it. I was like, this doesn't make any sense, Julian. These things are overvalued by a mile. I think we were down 40% on the position at one time overall. And he said, Rob, make sure you're on top of this. I said, Julian, these things are just crazy. This is going to have to stop. And by the way, nobody talks about the debt that they had taken on to take on these assets because they buy them from the parent company. He said, Rob, they're not going to go down 40%, Rob. They're going to go down 90%. They went down 90%. And I can remember the first short I ever put on at Tiger, it was during the Mexican tequila crisis in 95 in January, and we shorted two construction companies in Mexico.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“One is you got to be incredibly careful because there's an unlimited loss in shorts. You don't want to ever have any of the shorts too large, but you also want to have shorts that the skew is so much in your favor. Like if you're long, you lose 10 or 15 if you're right. You make 75 or 80. And those were the best shorts. I mean, the best short I ever had a tiger was the Tai Bot. We shorted a huge amount of Thai bot before the 97 crisis in Thailand. I can remember they moved the band stronger against us. So at one point we were losing 225 million dollars on the position. Julian said, you still have conviction this and I said, Julian, I have tremendous conviction. This is just completely unsustainable. Interest rates where they are, the whole banking system will just collapse. They can't keep it there. They have no reserves left. It's going to go and devalue about a month later, about 40%. There is where askew is really in our favor, and even though we took some losses, we had huge skew in that direction. The other thing is shorts are working. It's tough, but you need to keep the position on. Let's say you start with a 3% short it has. It's only 1.5% now. So Julian would always say, well, the best shorts go down 90%.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“When I was leaving Fidelity, I almost went and did my own thing. And then I thought, you know, I need some more experience, an opportunity to work with Tiger and Julian would be a great opportunity. And so let me do that. I think what I'd really learned at Tiger, the biggest thing was how to short. I hadn't done much shorting at Fidelity. That's a skill that is really a lost art these days, and there aren't many people who can short securities and do them effectively. And I think I learned a lot from Julian in that. I had always wanted to go out and start my own thing. And at Tiger, I missed managing the actual money. At Fidelia, I had portfolios that actually managed the portfolio, pulling the trigger and making the decision. That's a key thing. It's something I really enjoy and something that motivates me. At Tigery, I didn't have that. I mean, you're really an analyst to Julian. In the end, Julian ultimately makes the final decision. You just have to convince him to have a portfolio of your longs and shorts, but you don't determine exactly when to buy and sell them. You have to convince Julian to do that. So I missed that. So I knew that at some point I would go out and launch my own fund. I left a year before Tiger shut down. I didn't know Tiger was going to shut down, but it was just a perfect time for me.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“Cross refere During the crisis in 2007, it was in the fall when Tarp had just fallen and the market was a mess. Lehman had gone down. George said, what do you think is the big next problem? And I said, George is a big problem in Eastern Europe. And if Eastern Europe comes down, then Western European banks are going to go down. And then it's just going to cascade this crisis everywhere. And he said, well, what can we do about that? I said, Western Europe has a lot of money that they can actually lend to the Eastern European countries. Western European banks could say they would have a standstill where they won't take the money out. And the IMF can do a big program for them. And he said, that's a great idea. Let's get Gordon Brown on the line. 10 seconds later, Gordon Brown's on the line. Next day, I see in the paper, Gordon Brown has a big plan to save Eastern Europe. And that's what transpired. So his Rolodex was incredible, but he would always cross-reference his ideas as many people he thought that knew something about it. I learned that I try to do the same thing. And it's not easy when you lose conviction to get out. It's not an easy thing. You think it sounds easy, but I think learning those two things from those two gentlemen and having that experience for those years is incredible, isn't it? The Fidelity experience was fantastic as well. So I'm very blessed with all that.”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source
“Then, but man, what a master trader George was. He just had a feel for the market. He knew when things were going to change. He was always so good at picking up what are the key issues, one or two things you have to really focus on. He didn't focus on everything. He's got the key thing where it didn't matter about the other things. So I really feel like I worked with one of the best stock pickers and fundamental bottoms-up guy in Julian Robertson of all time, who also had a good macro feel, and then a master trader in George Soros. They were totally different in how they approach things, but there are two things I learned from them that they did the same. The first thing is when they lost conviction and idea, they got out. They didn't wait around. They didn't get half the position out. They just got out of the position. And they took whatever the market price was. I'm going to wait for a better put, no, because what happens to go against you and you never get out of the position to get out of a much worse level. And then second thing they did is they always cross-referenced their ideas. So if I'd go to Julian with an idea, he'd say, okay, if it's on Brazil, let's say I wanted to own the Brazilian Royale. He would say, well, what do our other investors or partners think about that? Or who else can I talk to about that?”
2022-07-11 · Capital Allocators · Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (Capital Allocators, EP.261) · IDENTIFIED FROM THE TRANSCRIPT · source