Behind the Balance Sheet

Peter Cowley is a successful angel investor. But it was his tragic private life which prompted this interview.  Two of his three children lost to suicide; their mother died unexpectedly; his sister lost to alcoholism; his brother died aged 21 from cancer; two decades in recovery from alcoholism; and he has now been diagnosed with terminal Stage 4c cancer and statistically has 9 months to live.

In this interview, Peter calls himself fortunate. Since meeting Peter, not a day has passed that Steve has not thought about this remarkable man and day felt grateful for his lot. Hopefully the podcast will also make people aware of how common suicide is among young men.

Emmanuel Lagarrigue is the Co-Head of Climate at KKR and in this fascinating discussion, he explains why he joined the firm and what they are seeking to achieve in financing the energy transition. He explains how KKR sees a gap in the huge $7tn pa investment needed to fund the transition between the early stage investments and the mature infrastructure-like renewables area. This middle area is not really served today and he explains where they see the greatest investment opportunities, why decarbonisation is a good business, and why he is not concerned about political risk. This is a fascinating glimpse into the future and how climate change can be funded. Thanks to co-host climate finance expert Huw van Steenis.

Explaining what to expect from a new series of podcasts focusing on the investment opportunities (and risks) in the energy transition. With co-host, climate finance expert Huw van Steenis.

Bill Browder is a human rights activist who championed the Magnitsky Act, signed into law by President Obama. It not only sanctions Russians, but others around the world. Similar legislation is now in place in over 30 countries. He is also a bestselling author and former hedge fund manager.

In this episode, we talk about his career, about how he coped with a 90% fall in the value of his fund, about how he subsequently engineered a 37x recovery for the portfolio, about his deportation from Russia and how he subsequently secretly cashed in the gains and returned the cash to investors.

And of course we talk about the events that led up to the tragic death of his lawyer and friend Sergei Magnitsky.  

Warning: Listeners may find some of this discussion upsetting.

Disclaimer: Bill's views are his own and do not reflect the views of this podcast.

Grant Williams is a former hedge fund manager who now publishes the monthly newsletter Things that Make You Go Hmmm and a subscription-only investing podcast channel that incredibly is one of the top 0.5% of all podcasts globally.

In this fascinating discussion, Grant explains his fascination for Japan and why we should all pay attention. We discuss US Treasuries, and why there is a risk that the current glut of supply could meet a dearth of buyers. And of course we talk about gold as well as how Grant has built a financial media empire.

James Aitken is an expert in the plumbing of the financial system. We go on a world tour of the hotspots in global finance. You will learn why James is relaxed about the US; why the Japanese government will Make Japan Great Again and why this could have serious repercussions for global bond markets; and why China will likely muddle through, in spite of massive problems in its property sector.

Sebastian Lyon is a conservative investor who manages two highly successful multi asset funds. His motto is simple over complex and he is intent on protecting the downside. In this interview, we discuss his views on markets (spoiler: not super bullish); how he built Troy into a significant asset management business from scratch; how he has managed his fund to deliver only 3 down years in 20 and create outstanding performance as a consequence; what he looks for in stocks; why he invests only in quality companies; and why he owns gold.

Bill Smead has been in the investing business for over 40 years and has seen multiple cycles. He has an idiosyncratic investing philosophy which seeks to buy high quality stocks when they are out of favour.

He has a concentrated portfolio of 26 stocks with 45-50% in the top 10 positions. Yet his holding period averages over 6 years. He explains why he thinks the stock market is going down over the next decade and offers his views on the stocks that will deliver great returns, focusing on demographics and out of favour sectors.

And he explains how to handicap a greyhound!

Alec Cutler runs one of the best performing low risk global funds and has a pragmatic investing  approach. In this interview, we discuss inflation and markets and what this means for stock selection. Alec explains his views on what makes for a successful investment team. And he explains the principles of investing he learned as a child from his grandmother, which still guide his investing framework today.

Guy Spier is a successful value investor and has spent considerable time creating an environment which will protect him and his fund from making mistakes through his own temperamental idiosyncrasies. He talks much more about environment design than valuation which is refreshingly different.

We discuss why the best ideas are simple, yet analysts always want to impress with their understanding of complex situations. Guy talks about his university chums, David Cameron and Chris Hohn and why his father entrusted his life savings to a young man with no investing experience and how that has coloured Guy’s investing approach. And of course we discuss that lunch with Warren Buffett.

Beth Lilly is a highly successful value investor and an amazing woman. She has set up two asset management firms, worked with and learned from some of the most famous and some of the most successful value investors in the world, and now runs money for the multi-billion Pohlad family in Minnesota.

We discuss the power of compounding, Beth’s research process and how she conducts company meetings. We disagree on the attractiveness of the auto dealership industry, and Beth explains how she approaches the management of inter-generational wealth, how she decides much cash to hold and we debate private equity.

William Green is the author of Richer Wiser Happier, an outlier in investing books as a best-seller. He is a craftsman and a perfectionist and having interviewed 40 of the world’s top investors for the book, has some fascinating perspectives on investing and on life.

We split this interview into two parts. Last time we heard Green explain that the great investors are such thoughtful practical philosophers because they are students of life. Green quotes Munger who says that he watches what works and what doesn’t work and learns from it.

In this second half, you will learn what Charlie Munger said about Green’s book (Spoiler – he liked it, a lot); how to be a good interviewer, this is instruction from one of the best practitioners of the art; and why William thinks that no matter the endeavour, being just a little weird helps in life.

William Green is the author of Richer Wiser Happier, an outlier in investing books as a best-seller. He is a craftsman and a perfectionist and having interviewed 40 of the world’s top investors for the book, has some fascinating perspectives on investing and on life.

William spent five years painstakingly crafting the book and distilling his learnings from interviewing the world’s top investors. This was a labour of love for him – he didn’t take a vacation in that time – and he went to extraordinary lengths. The love and careful craftmanship shines through and is what made the book a best-seller.

Green always wanted to be a writer and studied English Literature at Oxford. He fell in love with markets, partly as he saw it as “a smart alec short cut way of making a living without doing too much work”. He had his first article published almost by accident and ended up as a journalist. Interviews with great investors followed.

Mario Gabelli is the billionaire founder of GAMCO and still managing money in his 80s. He believes in an in-depth research process, limiting his investments to the sectors he feels he understands. He believes in visiting companies – not just investees but their competitors and their whole value chain; in reading trade journals; and in monitoring the results of the sector. The day after we spoke he was due to visit a company he first visited in 1967!

Few investors active today were investing back in the 1970s and this long history is just one reason why Gabelli is a fascinating interviewee. He likes to recruit PhDs, not from Ivy League schools, but Bronx PHDs - Poor, Hungry and Driven. He is a value investor, rooted in fundamentals and is incredibly driven, part of the reason for his success.

Gavyn Davies is an economist and a former partner of Goldman, Sachs. He is the Chairman and co-founder of macro asset manager Fulcrum Asset Management and a co-founder of 3 other multi-billion asset managers. He is a former Government adviser and was Chairman of the BBC, the UK public service broadcaster. Of course we talk about economics, about investing, and about financial services; but we also cover public service broadcasting, streaming and politics.

Tian Yang was a fascinating guest and we covered a wide range of subjects. He explains why ChatGPT may be useful in solving accounting problems, but it produces gibberish when asked about investing. We talk about his work on the commodity super cycle, looking at rubber, whaling and fur. 

He explains how he applies quantitative techniques to the capital cycle framework championed by Marathon Asset Management and featured by Edward Chancellor.

His work encompasses 3 different timeframes – the long term fundamental, the 6-12 month business cycle and the shorter term tactical trades – Tian is unusual in that he understands fundamentals but also what he calls playing the game, the tactical business of quarterly earnings and similar.

We discuss the new environment which he terms the age of scarcity -investors need to understand the implications of the end of age of abundance which rested on the availability of cheap labour, cheap commodities and cheap money. All this now changes, which means different equity allocations are necessary.

Chris Bloomstran is best known for his incredibly detailed analysis of the valuation of Berkshire Hathaway. Not only is he an outstanding value investor, he is a highly accomplished analyst. His Semper Augustus annual letter runs at over 100 pages and in recent years, it has included an evaluation of Berkshire Hathaway – his analysis of the stock is the best I have read.

In this interview, we discuss his start in the business, his investment approach, why college investment funds make a great apprenticeship, why he writes such a detailed letter and Chris shares his analysis of the long term outlook for markets.

Dominique Mielle had an illustrious career as a distressed debt hedge fund manager, including building a $5bn CLO business from scratch at Canyon Advisors. She retired from hedge funds, wrote a book, amusingly titled Damsel in Distressed (it was too good not to borrow), about her story to inspire women to follow her lead. 

In this interview, she talks about why there are not more women in hedge funds and in investing more broadly; about the complexity of the distressed debt business; and about being a woman in a man’s world.

Vitaliy Katsenelson is an investor and writer. Born in Russia, he now runs an investment adviser in Denver which specialises in picking individual stocks and eschews the usual 60:40 portfolio with equities indexed. In this podcast we talk about investing, about his third book and about his life philosophy. Vitaliy has a wisdom beyond his years and his positive attitude can improve anyone’s life.

An illustration of this philosophy is his belief that scarcity is an essential concept that enables him to lead a more fulfilled life. US society is an aspirational society, it’s about abundance. But where there is abundance, we don’t value things. We all have varying levels of wealth, different health but on average a similar amount of time. And he views time as a scarce resource, which makes him value his time with his kids, so that the school run is no longer a chore but a privilege – he will only take his elder daughter to school another 400 times, so he wants to appreciate each time. I thought this was a wonderful demonstration of his mindful approach to life.

Barry Ritholtz hosts Bloomberg’s Masters in Business, one of the most popular business podcasts in the world. He rather modestly says he was one of the first. Ritholtz not only has managed to interview investing heroes like Ed Thorpe, Ray Dalio (twice) and Michael Lewis (four times) but also has built a $3bn wealth manager in just ten years. 

In this interview, Barry explains why financial TV is irrelevant, why the F.I.R.E. contingent (Financial Independence, Retire Early) have it wrong, why 70:30 should be the new 60:40, why investors should think in decades, how he can call Mike Bloomberg “dude” and not get fired, and what it’s like to have broadcast over 450 shows with some of the greats and some misses. 

Carson Block is one of the world’s top short sellers, and one of few still managing a specialist fund.

In this interview, Carson explains the business of short selling; the difference between fundamental shorting and his business of shorting and exposing frauds; how he spots these fraudulent companies; where to find frauds; and why it takes Muddy Waters 3 months to launch a short campaign. We discuss the economics of a short fund, why short selling is so much more difficult than long only investing and why Europe is a more difficult area to operate in.

Sir Clive Woodward is a winner. He is best known for managing the England rugby team, taking them from world #6 to a world cup win. In this revealing interview, he explains that there is no difference between managing a sports team, a business or an investment team.  It’s all about managing people. Winning teams are made up of winning individuals - you can persuade the individuals in a team to strive to improve performance and the team will benefit. He is a proponent of continuous learning, and his team members must be teachable. I was fascinated by his management philosophy and investors and business people can learn so much from sport. No detail goes unchecked in his quest for 1% gains - he explains why the team’s second-half performance improved when they changed strips at half-time. You don’t need to be a rugby fan to enjoy and learn from this exposition of what makes a winning team.

Richard Oldfield is a true value investor. Author of the delightful commonsense investing book, Simple but not easy, in this interview he recites several wonderful anecdotes from his long experience as a value investor. We even get a song (while Steve recites one of Richard's investment poems). Richard has an innate belief in the cyclical nature of markets and the madness of crowds. He is a classic contrarian investor and he came out with numerous gems about how to think in this way. Richard is a truly independent thinker. He doesn’t believe in index funds, likening them to hanging on to the coat-tails of a lunatic. He believes that anyone with some common sense, experience and ability to manage their emotions can outperform the market. Learn why that's achievable for almost anyone, as long as you can master your emotions and why there are few true value investors left.

Chris Pavese, President and CIO of Broyhill Asset Management, is a seriously thoughtful investor. We talk about how investing straddles left and right brain thinking, about whether the advantage of being located outside the bustling environment of a New York or London will continue to confer the same benefit in the days of Zoom, and about the benefits and joy of reading widely. Chris explains his investment philosophy, why he has fewer than 20 stocks in the portfolio, why the only research he buys is from a short seller (even though he doesn't short), and we discuss the north-south divide in Europe and the US.

We speak to Dan McCrum, the award winning FT journalist who exposed Wirecard as a fraud. Once a stockmarket darling valued at over €25bn, Wirecard crashed to worthless in June 2020, when its auditors could not confirm €1.9bn of cash. Dan pursued the story for six years and has now written a book about the saga. “Money Men” is an amazing account of how the company used every tactic possible to disguise its activities. This is an extraordinary tale and Dan, a brilliant raconteur, explains the highs and lows of his struggle to reveal the truth. We also speak to market participants on the buy and sell side to get their perspective.

Former Goldman, Sachs partner, Jim O’Neill (more properly, Baron O’Neill of Gatley), is best known as the man who coined the term BRICs. He correctly identified that this group of emerging markets would drive global growth and published a paper on it over 20 years ago. In this wide discussion, we talk about the BRICs, about why for the first time in 30 years of close study of the country, he is puzzled on Chinese policy, and what inevitably lower Chinese growth means for the global economy.

Of course, we discuss his beloved Manchester United, kids’ education, a cause close to both our hearts, and how his involvement in the anti microbial review, leading to the publication of the book Superbugs, was the most interesting work he has ever undertaken.

Jim is quite critical of central banks who he thinks are behind the curve and he gives his assessment of the long term outlook for inflation. Listen to the end to learn why he calls himself a spoilt brat.

Russell Napier and Jeremy Hosking discuss how the capital cycle will become an even more important driver of equity returns as we move into an age of financial repression. This series of macro episodes focuses on the changes we should expect in the new era, as we exit a 40-odd year period of falling rates, globalisation, cheap energy and disinflation.

 In this fascinating interview, these two giants of the investment world discuss the way forward, covering everything from banks to ESG,  from Tobin’s Q to excessive liquidity, and from the tragic events in Ukraine to the sinking of the Titanic. One theme is constant, however - the capital cycle, and we discuss in detail its mechanics and the reasons why it’s such an effective investment tool.

Please make sure to listen to the very end. Russell and I have a postscript discussion, as we wanted to tie some of the loose ends together. We both met with David Einhorn shortly after the podcast and I share some of his interesting perspectives on how to invest to protect capital from inflation.

In this wide-ranging interview, recorded before Russia’s invasion of Ukraine, Chris Wood, Global Head of Equity Strategy at investment bank Jefferies, talks about his route to success, why he is bullish on energy stocks, some of his fun trades (long Ryanair, short Zoom), why he doesn’t use Zoom, how the pandemic has altered his approach and why his multi-million air miles account won’t get built up quite so much going forward. We cover the long-term outlook for the global economy, why the Fed has a straight jacket, and how the world will look in years to come as we move from a regime of falling rates. Spoiler - he doesn’t see a repeat of ‘20/21 in ‘22. Wood’s weekly GREED & Fear publication was a must-not-miss for me – so is this episode.

In this interview, Dylan Grice and Rob Crenian discuss how markets work, how “stupid” investors have been winning of late but will not do so for much longer, how quants think, how real alpha will be more difficult to come by, and how this will likely be found not by being smarter but by doing something different; and they explain how they are seeking to preserve wealth with an unconventional investment strategy at Calderwood Capital.

Former hedge fund manager Hugh Hendry is best known as the man who made 30% in 2008, when others crashed, including many so-called hedge funds. He described his cockroach mandate as being a survivor no matter what. He closed the fund in 2017 after a period of lackustre but far from shocking performance and has become a property developer and landlord of upmarket rentals on the billionaire favourite Caribbean hideaway of St Barths. But few owners of vacation lets could tell you what the 10 year bill has done in the last month, let alone give a coherent view of how it might move in 2022. Hugh may have retired but he has certainly not let go. He views the world through a different prism – he is like a photographer who only uses a fish-eye lens. We recorded on a cold London day and on St Bart's it was just as windy, as you may hear.

Lucy Macdonald is the former CIO of Global Equities at Allianz Global Investors where she worked for almost 20 years and managed £5bn or $8bn of assets. She is currently a NED on JP Morgan GEM Income Trust and taking care of a new puppy. Lucy has 30 years of experience in financial markets and is exactly the sort of guest we are hoping to have on the podcast – a wealth of experience, semi-retired, and not afraid to speak out. In this podcast she explains her really unusual route to finance, her approach to running successful portfolios, how to run a team of fund managers and analysts and how a woman copes in a man’s world.

Until 2015, Quintin Price was Global Head of BlackRock’s Alpha Strategies business where he was responsible for nearly $1 trillion of assets under management and was a member of the Global Executive Committee, working closely with Larry Fink. Quintin has 30 years of experience in financial markets and is exactly the sort of guest we seek to have on the podcast – a wealth of experience, retired from day to day fund management, and not afraid to speak out, as you will hear.

Pete Davies has long been widely considered one of the greatest long term thinkers in the hedge fund world. He was early to recognise the opportunities to provide venture capital to UK academia and his firm, Lansdowne Partners, was instrumental in setting up Oxford Science Innovation.

Spencer Crawley is the co-founder of FirstMinute Capital, a UK seed investor which boasts an astonishing 111 unicorn founders as investors.

In this interview we discuss the UK venture scene, why early stage investing is truly a long term activity, and how this cycle compares to the late 1990s tech boom.

In this fascinating interview, Stuart Roden, former Chairman of Lansdowne Partners, explains the 5 keys to a successful fund, how his 25 year partnership with Pete Davies produced one of the most successful hedge funds in the UK and how now managing venture capital is a different, yet similar, game.

I have known Stuart for over 25 years but I learned more in this hour about his philosophy than I had previously. He has a winning combination of a razor sharp intellect, a love of markets, a wealth of experience and a nose for a winning idea.

In this interview, we hear how he was tempted to fire a client, the 5 key factors to run a successful fund, why you are either an analyst or a portfolio manager, how handwriting can reveal whether you will be a good employee, and how he and Pete Davies ran an incredibly successful $10bn hedge fund. I know you will enjoy listening to this as much as I enjoyed recording it.

Two investors who went to the same school, then to Oxbridge, and have been awarded the CBE (*). They are both titans in their fields but through very different routes. One has run his hedge fund firm for 27 years, has been incredibly successful as evidenced by $28bn AUM, yet is so under the radar that few have heard of him. The other has started multiple companies, is a business celebrity and is recognised as one of the most successful people in UK tech.