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Season 2, Episode 21: Prepare for the ‘L-Shaped’ Recovery

With David Neuhauser, Livermore Partners

David Neuhauser of Livermore Partners joins the podcast to discuss his expectation of a “L-shaped” economic recovery and corresponding sideways market activity in the years to come. 

There are still opportunities for investors. Here Neuhauser is bullish on certain companies tied to hard assets like oil and copper.

Content:

  • The “best days” of the market rally have likely passed (3:00), expect more rangebound markets in the short run (4:24);
  • What this period of low growth means for markets in the medium term (8:16);
  • What it means to be a contrarian today (9:39);
  • Background on the guest (12:11);
  • How he spends his time in terms of activist situations (17:40);
  • More specifics on opportunities in energy markets. Hint: it’s not in shale (20:31);
  • Concerns about the demand picture? (24:09);
  • There will be a “massive reset” in markets and fundamentals will take hold, causing “further grinding” to the downside, especially amid high-priced securities (26:45);
  • Neuhauser’s process for finding opportunities (27:46).

For more information on the guest:

Not intended as investment advice.

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Season 2, Episode 11, Transcribed: Bargain Hunting in Frontier Markets, With Hedi Ben Mlouka of FIM Partners

Moderator 0:02
Welcome to the Contrarian Investor Podcast. We give voice to those who challenge the prevailing sentiment in global financial markets. This podcast is for informational purposes only. Nothing on this podcast should be taken as investment advice. Guests were not compensated for the appearance, nor do they supply payment in order to appear. Individuals on this podcast may hold positions in the securities that are discussed. Listeners are urged to educate themselves and make their own decisions. Now, here’s your host, Mr. Nathaniel E. Baker.

Nathaniel E. Baker 0:36
My guest on today’s podcast is Hedi Ben Mlouka of FIM Partners. Now Hedi has been investing in frontier markets for quite a long time. And in fact, he has one of the oldest funds focused on this sector. It is of course a very interesting time in Investing. And in economics, as we all know, the Coronavirus has wreaked havoc on the economy. frontier markets, as we may know are a little bit less tied in to the major economies of the world. There are some typical emerging markets, like China and India. So, one could think that maybe this asset class is a bit better protected from events like the Coronavirus, but that is not the case according to Hedi. He tells us why this asset class is actually particularly vulnerable. And in fact, he goes into further details and tells us specifically which countries are at greater risk. But that doesn’t mean that there aren’t still compelling opportunities for investors to put capital to work. Before I roll the tape on this conversation, I want to remind you of an event that I am hosting on April 20, the first ever contrarian investor virtual conference. This will be held on a via web conference. I’m hosting this in partnership with value walk. And we actually just moved the time to 8am. So it’ll we’ll be recording this and hosting this at 8am on Monday, April 20. And I’m very excited because there are several hedge fund managers that have signed on and a couple of them have promised to present ideas that they haven’t previously shared. And I fully expect these ideas to move markets when they are discussed. And that’s why we moved this to the start of the day before The market open. To find out more about this event, you can go to contrarian pod.com slash event, contrarian pod.com slash event. And it’s all over my social media feed as well at pod contrarian on Twitter. So all that out of the way, let’s roll the tape on this conversation. Here you go.

Hedi Ben Mlouka 3:25
I’m the CEO and founder of FIM Partners. In a nutshell, FIM Partners is one of the leading frontier investors. We’ve been in existence since 2000, the end of 2008. And we’ve been investing in what we call high growth markets or frontier market by our own definition, which is basically the small emerging markets in Asia. I’m talking about Pakistan, Philippines, Bangladesh, and all of the MENA region. So that goes from the GCC countries Saudi Kuwait, Qatar, UAE, Oman, North Africa and also parts of sub Saharan Africa and I’m thinking in Nigeria and and a few other larger countries in the large countries in Africa. We are mostly in equity firm. So we basically we focus on public equities, in these markets that I just mentioned to you and we are also managing money on behalf of very large institutions globally. So from university endowments, pensions, sovereigns, because I sovereign, these are long term investors in the frontier markets. So they like obviously the opportunity said they like the growth profile, but also the fact that these economies are less integrated within the global economies and therefore offer an opportunity set which are to some extent different from what they would find in larger emerging markets, such as China in India etc. Our my approach to investing has always been to, to, to think as a business owner. And not to think like a minority, passive shareholder in any of the companies we invest in. So always want to create a very strong relationship with the management, sometimes even board members, but also understand the ecosystem of all of the companies we invest in. So, always privilege going into visiting the companies we invest in meeting, speaking to their suppliers, to their clients, to the competitors, even in the private space, etc. And that’s how I build the business. And that’s why I think we’ve been very successful investing in these in these markets. So I’ve been doing this myself for the last 20 years almost before FMI. I worked for Merrill Lynch in London, responsible for central Eastern Europe, Middle East and Africa.

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Season 2, Episode 11: Bargain Hunting in Frontier Markets, With Hedi Ben Mlouka of FIM Partners

Frontier markets are at greater risk of coronavirus fallout, but there are opportunities

Hedi Ben Mlouka joins the podcast to discuss his views of frontier markets in light of the coronavirus crisis.

Ben Mlouka has been investing in frontier markets for more than a decade as CIO and CEO of Dubai-based FIM Partners. He sees the asset class in general as being at greater risk of being impacted by fallout from the COVID-19 epidemic. The political risks are particularly vexxing.

Content segments timestamp:

  • Is this a good time to be investing in frontier markets? (6:03)
  • The first part of the equation: Frontier markets are less prepared for the coronavirus than developed markets (7:05)
  • The impact will be larger from a healthcare perspective while the policy response can be expected to be weaker, especially in fragile economies (9:56)
  • The crisis will expose the “downside of globalization,” precluding a “V-shaped” recovery (11:30)
  • Where are the opportunities? Oil importers like Pakistan and Egypt can benefit (15:26)
  • Speaking oil, forget about the demand shock for now. Oil prices should recover to $50 or $60 per barrel (18:57)
  • Beyond the macro picture, industries with access to capital are preferred. Avoid travel, hospitality, banks. (21:07)
  • Healthcare, education, retail, and consumer discretionary companies should recover over the long term (23:56)
  • Political risk is a major concern for many countries in frontier markets. Who’s most vulnerable? (31:09)

Quick Highlights From Our YouTube Channel

More information on the guest:

Not intended as investment advice.

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