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Rob Citrone

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69
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2022-07-11
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2022-07-11
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  1. “I think that we were all hard workers, we were all dedicated to what we were doing, we all wanted to succeed. But I think Julian did a great job of putting people together who worked together as a team. We really supported each other. We helped each other. We had these Friday lunches where we had to come in with an idea that we wanted to present and also an idea we wanted to take out of the portfolio. So we had to be prepared and we had to go up against one of our colleagues in a different area. But it was done in a very cordial manner, but in a way that people did their homework. No doubt. I think the hiring process, because it was so meticulous, I think they hired the best people. And I think that's why it was so successful, and that's why I think a lot of people who've gone on from Tiger have become great investors. But we also learned a lot from Julian. I thought you could say two great institutions working with Tiger, but I also managed a lot of money for the Soros family for over 20 years. And I used to speak to George very frequently the first five years or so, almost every day. And I ran when he called part of the back book for Sora was whatever I could convince him to put in the portfolio. He'd put in. And he's huge compared to the size of the fund bank.”

    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

  2. “When you think back to the time from 1995 to roughly 2000 when Julian folded up, the talent inside of the old tiger became fairly legendary in the hedge fund business all these people spun out. What was that internal culture like?”

    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

  3. “I think we got a little smarter towards the end where he would lighten up in the first quarter on the short side and then put it back on towards the end of the month. But man, he stuck with that through thick and thin. It was the bedrock of Tiger's returns in the 90s, which were really this spectacular returns that Julian had”

    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

  4. “Intelligence tests to take personality tests. We had to talk to Dr. Stern, a psychologist, and it was fascinating. I love the investment part of it because Julie and I used to talk about different investment ideas and a lot of things that he was interested in. He was always interested in Brazil because we had a lot of investors from Brazil at Tiger. He was interested in what was happening around the world. Back then in the 90s, the big trade that Tiger had and where Julian made tons of money was a macro trade. He did it through individual stocks, but we were short Japan and long the U.S. And that was a massive macro trade. And it was one of the most brilliant macro trades. ever. And it was for a decade in the late 80s. Everybody thought Japan was taking over the world. The Nike was over 40,000. It went down to like 9,000. It was one way train down while the U.S. market in the 90s was just a fantastic upward movement. So that was the key. I give Julian credit because we used to always mark down every quarter we'd lose 10% in Japanese equities because they would always ramp the equities into the end of the quarter at their fiscal year end of March. But he stuck 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

  5. “That was just incredible. So, I've seen things that you never could imagine, and it gives me some pretty good perspective. So, I feel very fortunate to have done that over the 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

  6. “Times each, for instance, in China 12 times, and even Russia six times, Turkey 12 times. So I've traveled the world, and it's been an amazing experience, and it gives me a really interesting context when we're investing in these countries going forward, because I've been there. I've grown up with some of those countries as they've developed over the years, and the changes are immense. I can remember going to China the first time I went there in Shanghai. I was at the Hyatt, and I remember getting woken up at 3 o'clock in the morning. I look out. It is like a traffic jam of bicycles. I've never seen anything like it in my life. It was incredible. And then you go back three years later and there's tons of cars. In Shanghai, when they had Pudong, which just weeds, it was just fields. And then they said, well, this is going to be one of the biggest economic developments in the history of the world. And I kind of didn't believe it. And then when I saw the buildings they built, it was like a ghost town of high-rises. I was like, man, it was maybe the biggest development in the history of the world, but it's going to be the biggest disaster and philosophers are going to be enormous. And then a year later, it's completely populated. They were able to bring the people in, force them in. But it was an interesting place to be.”

    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

  7. “Well, when I adjoined he was just leaving, moving on from managing Magellan every day, a gentleman named Morris Smith was managing it, incredibly talented guy. I got a chance to work closely with him. He wanted part of the fund to be invested in EM debt, and it was a huge fund at the time. So I was a very small part of the assets. But I did that for a lot of funds at Fidelity. So it was a great experience. I mean, it was a very entrepreneurial place when I was there. Really came up with ideas. We were very early on in the EM debt and currency space. When I was there, and I was kind of head of research and also managed some of the funds, we had $7 billion of assets in the market. And at the time, I think the next biggest competitor had a billion. So we were very large. It was a great experience for me because I got a chance of what it was like to manage large sums of money and some difficulties with that. It makes a little bit more challenging. But I also got access to all the key people in all these countries we were investing in, whether it be sometimes the president or the head of the central bank or finance ministers, Congress, did a lot of trips over those years. I did 33 years of this now in EM and I've been to Argentina and Brazil over 52 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

  8. “One big difference for the US is that we're the reserve currency of the world, even during times of crisis. We have strengthening in our currency as a result our interest rates don't have to go as high as they otherwise would or inflation doesn't get as high. So I actually think inflation is rolling over. It's just going to take longer to come down to the acceptable levels, but it's rolling over. It's peaked in our view. The real risk on the headline is energy prices and maybe food prices. I mean, maybe the headline can go a little bit higher, but core has definitely peaked. It's already three months in a row, year over year, it's come down, and even month over month come down. So we think core inflation's peaked. We think it's going to come down, but unfortunately it's just not going to come down fast enough where the Fed can stop. The US, we have a huge advantage. In the EM, a lot of these currency crises then would lead to debt crisis because the currency would devalue so much they then couldn't pay their debt that was denominated another currency. We have all our debt in our own currency. So we can actually print the money, which we've done in the past. And we're actually inflating our debt away right now. So debt is not a big problem in the U.S. at the moment. Inflation is the big issue.”

    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

  9. “Think the second phase is significant withdrawal liquidity. I mean, if QE had a major impact on asset prices rising, we've done $6 trillion of it and $3 trillion of it in a very quick period of time during the pandemic. As we take $3 trillion out, it has to have a significant impact on asset prices, in my view. And we haven't even started. This is so different than in 87. The other thing is, back in 87, the number of investors in the market, the breadth of the market in the U.S. in terms of people in 41ks was tiny. Today, so many people have huge amounts of their wealth in the market, especially the United States. And so I think this is going to have a much bigger impact on the economy with the correction we're seeing than most think. I think we're in a real substantial slowdown. At the same time, we have to tighten policy and got to keep tightening because we have an inflation problem.”

    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

  10. “Talk to him about the markets, what I thought. And then I joined in Jan 95 after almost five years at Fidelity. So starting in 87, getting going after the Latin debt crisis, both of those times markets crashed to some extent came right back. And I'm curious what you took away from those experiences. Well, I can remember the crash in 87, and I can remember it was one of the longest days that I ever experienced. I mean, I think we just stared at the screens and we just were in shock that the equity mark was down 20-some percent in a day. You were like frozen. But then the Fed came in and just eased liquidity massively. It was an interesting time to buy, obviously, and we could see that and feel that. That's why things recovered very quickly. The amount of liquidity they pumped into the system had a huge impact. I think that's very different than today because today the problem is we can't do that. We've already done that. Now we have to go the other way. You have to actually take liquidity out of the market.”

    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

  11. “Was a very interesting year because with a crash of 87 happened, we had the Latin American debt crisis. I was doing a lot of stuff on Latin American debt issues for First Boston. So that's how I got into emerging markets. From there, I went to GutMI MBA at the University of Virginia. I was the second youngest kid in the class. I had just a year of experience. And then went to work for Fidelity Investments up in Boston to head up their emerging market fixed incoming currency group to start that. What an entree into the field. At the time, they were restructuring a lot of the Latin American debt and the Brady bonds. And we got involved in buying some of this debt and the yields were 25% in dollars. These things performed incredibly well. The countries were in kind of a boom time in Latin America in the early 90s. So I moved up to start managing some funds there. I managed part of Magellan Fund for a while, launched some of our own emerging market, fixed income funds. And then there was a fellow that worked with Fidelity named James Lyle, who worked at Tiger. Julian was looking for somebody to do emerging markets. So James, I got the perfect guy for you. So it was about a six-month interview process with Tiger. It was a pretty thorough process for sure. I had to talk to Julian a number of times.”

    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

  12. “Thanks so much for joining me. Really a pleasure, Ted. Thank you for having me. Why don't we go back prior to your launching discovery? I know that was a while ago, but would love to hear your investing background, how you first got in the business. As a little kid growing up, I wasn't really familiar with investing, very modest roots, but I had a lot of odd jobs and started mowing grass when I was 12 years old for like a buck and a quarter an hour. Save my money, just put it in the bank. And then, of course, that was in the late 70s then. And all of a sudden, interest rates got double digits. So I put my money in the money market funds. And then after a few years, those went to 15, 16% yields. And then yields started to fall. And so I started to take my money and put it into mutual funds. And then I started picking mutual stocks. And I'm just doing this on my own. And I really loved it. So I knew I want to get in the investment field. I didn't really know anything about it. I did very well in school. I was valued during my high school and my college class. By the time I was senior in high school, I knew this was what I wanted to do. So I went and got a math and economics degree at Hamden City College and knew I'd get my MBA at some point after that, but went to work for Wall Street for a year at what was then first Boston.”

    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

  13. “Our conversation dives into Rob's background, lessons he learned from Fidelity, Julian Robertson, and George Soros and the launch of Discovery. We discuss his investment strategy, research process, perspective on markets around the world, ups and downs in the business, and managing an organization through change. Rob doesn't often share his insights in the public forum, so it was a real treat to get inside the mind of one of the best in the business. Please enjoy my conversation with Rob Citrone.”

    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

  14. “My guest on today's show is Rob Citrone, the founder of Discovery Capital Management, a two billion dollar global hedge fund investing across equities, fixed income, currencies, and rates with a focus on emerging markets. Rob is one of the longest standing managers in the space and the largest investor in his fund. He trained under Julian Robertson in the heyday of tiger management in the mid nineties before launching discovery in nineteen ninety nine. Since then, the firm grew to a peak of $15 billion in assets, and despite the subsequent reduction in AUM, he and his team of 42 are still growing strong.”

    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

  15. “Hello, I'm Ted Sides, and this is Capital Allocators. This show is an open exploration of the people and process behind capital allocation through conversations with leaders in the money game, we learn how these holders of the keys to the kingdom allocate their time and their capital. You can join our mailing list and access premium content at capital allocators.com.”

    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

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    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

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    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

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    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

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    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