Last semester, I had the honor to attend a course about Jeffrey Towson, who worked in Prince Alwaleed Investment Company for 9 years, and introduced value investment. He introduced some investment strategies of Prince Alwaleed in class, and I only answered them from memory and handouts at that time (in fact, they are all big truths and should not be considered as company secrets. In addition, in some interviews, Prince and Professor Towson will also introduce their investment strategies. Professor Towson's course notes have also been published on his personal website, so I think it should be okay to write them here.
(The following structure and main framework refer to the viewpoint described by Professor Towson, and the author made a clumsy translation to supplement some of his own understanding. )
1. Prince Alwaleed is one of the first value investors to start global investment.
First of all, we need to know why few value investors participate in transnational investment, especially in developing countries.
Everyone knows Buffett, who can be regarded as one of the most famous value investors. Buffett has always maintained a sound investment strategy, hoping to buy enough assets that can be held for a lifetime. So he always pays attention to the complex industries and companies beyond his understanding (Author: I seem to have bought IBM recently, but now IBM's business does not belong to rocket science. Buffett's heavy IBM is bearish by legendary fund manager Zhu Ken Miller, not to mention the overseas markets he is not familiar with, especially those in developing countries. Coupled with Buffett's active era, the world is not so flat, and there are various difficulties in transnational investment and investment in developing countries, so many value investors in developed countries will not set foot in these.
By the way, introduce some main obstacles to value investment in developing countries:
The current intrinsic value is uncertain, and so is the long-term intrinsic value (which is especially important for Buffett). Investment channels hinder the control of multiple corresponding assets and may not be guaranteed (such as sudden nationalization).
Naturally, some value investors have bypassed these obstacles by some means, but they have not made large-scale attempts. Prince Alwaleed, on the other hand, used his own advantages to focus on investing in an area that traditional value investors stayed away from, and gained a lot. What are the specific advantages? There are mainly the following two points:
1. Sufficient and reliable capital
Speaking of Saudi Arabia, um, oil! 1948 The price of a barrel of oil was $0.22,1970 $0.89, and then 1974 jumped to 10 (I didn't come to verify it one by one). During this period, the Arab government's income from oil has increased hundreds of times, bringing about a sharp increase in per capita wealth and large-scale infrastructure. As a prince, with the support of the Saudi Arabian government, Alwaleed's investment company is as rich as oil. However, there are many rich people in the world, and Prince Alwaleed has more than one advantage.
2. Political strength
Well, after all, it is a prince, and some problems can be solved through diplomatic means. This is difficult for many rich people to do. The reason why value investors avoid developing countries is also because the state-owned enterprises in many developing countries are too heavy and the government has considerable ability to intervene in the market (no, not just that country).
Second, Prince Alwaleed's investment strategy
1. Bird Strategy on Rhinoceros (1980- 1990)
The bird on the rhinoceros is Professor Towson's original words, that is, the bird standing on the rhinoceros's back to help the rhinoceros take care of parasites. I wonder what its scientific name is. )
The explanation is to invest in large state-owned enterprises and companies that provide services or other values to the government ("rhinoceros"). There is a simple reason. Such enterprises usually have a very strong relationship with their partners in the country (which may be brand, unique technology or government relations, etc.). ), and it is difficult for overseas capital without background to get involved. For example, Alwaleed has invested in some Macao advertising, human resources and gambling companies.
2. The strategy of western hunters (the author admits that this is a bad translation, originally translated as "bonus hunter's") (1990- 1998).
Background: The oil price plummeted at 1986, which brought a series of shocks. Many financial institutions are in trouble because of bad debts and other problems.
One way of value investment is to look for assets with low prices (such as Net-net proposed by Ben Graham, the originator of value investment, after the financial crisis in the late 1920s), buy them, try to realize them, and then sell them. What Prince Alwaleed did was to look for companies that were in trouble for some reason, but their own strength was not a big problem. For example, companies with liquidity problems, asset restructuring, management changes, and reduced brand value. ...
A famous investment case is its investment in Citibank, which was struggling at that time in the early 1990s (before the subprime mortgage crisis, Prince Alwaleed even held half of its total assets). In this passage, the role played by the prince can be called "the prince of fallen angels", and he bought many such companies that were temporarily in trouble.
It is worth noting that in this short period of time, a large amount of investment is made through PIPE (Private Equity Investment). Interested friends can learn more about this tool.
3. International Vision (1998- Now)
Market globalization accelerated sharply during this period, and the global economy gradually changed from Europe and America to a more polarized situation. Prince Alwaleed's previous global strategy also began to erupt during this period.
On the investment project page of Kingdom Holding Company official website, you can find some investments made by KHC in some famous companies. Because many projects are not investments in listed companies or mature markets, they are not publicly displayed on their official home pages. I don't have the ability to find some vivid and interesting examples myself, so just list them casually so that readers can feel for themselves (usually only a part of the shares are not wholly owned):
Finance: Citigroup (Citigroup)
Property: Jeddah Economic Company, Land of Kingdom of Riyadh (16.5 million square meters), Kingdom Center (Trade Center Co., Ltd., 99-story skyscraper), Kingdom City (a land with all functions of the city), etc.
Hotels: Four Seasons Hotel and Resort, new york Square, etc.
Entertainment: Paris Disney Resort.
Media: News Corporation, time warner Inc. Company, etc.
Technology: Twitter, AOL, Apple, Motorola.
Retail: JD.COM and Yi Bei, etc.
And various other industries. ...
Yes, KHC is one of the major shareholders of JD.COM. This time, JD The listing of COM can make another profit. ...