Nigeria, Iraq, Baghdad discussed on Invest Like the Best
So it was an example of private capital in Iraq taking this ailing franchise and transforming it into the strong very profitable business that we find today. What's this guy's name? I probably shouldn't say his name just because he tries to stay away. He still has a stake in the business, but he's not running it anymore, and he just likes to stay out of the spotlight. But the guy running it now is actually better than he was he sleeps at the factory. Although I guess Elon Musk sleeps at tesla. So I'm not sure that's necessarily a good thing. But I guess that doesn't necessarily mean that you're going to have an efficient operation, but. We found that there were examples like this at these guys were profit-driven, they're really looking to capitalize on the economic turnaround that was taking place in the country, and they were looking for these sort of distressed, but very promising companies, and they're putting private capital at work to transform it. And doing it in a way that very much resembled what you would find in the west. It's one of the great success stories and the Iraqi stock market emission Bank grammar earlier, and I've seen interviews with you elsewhere, this idea that maybe the voting weighing machine thing holds true in the west. But may not always hold trillion on the same time scale in markets like this. So even with a company like the soft drink company or there's an epoch turnaround does price accurately and over some period reflected. Snow not in our experience, not yet at least our existence as a fund has been characterized by completely inefficient pricing of these assets. You have very severe mis pricings of these stocks stock could be misprint. Just by being overvalued or undervalued. And fortunately for us. It's been strictly undervalued you wanna stick around long enough to get to the point where Mr. market gets manic, and as very optimistic view and starts assigning, very high multiples to companies earnings, but to just explain the concept of voting machine is this idea that in the short term stocks are driven by popularity and sentiment which is not a very good or officiant way of pricing and asset but over the long run, Ben Graham guest believed that fair value Vanessa would be reflected in the stock market because market participants are going to accurately way its value. We've just been sort of stuck in the voting machine phase where we have just local investors who are more interested in rights offerings and stock dividends than they are about company fundamentals and very few foreigners have come in. The follows. I don't mean to say this insulting way. But the fact of the matter is you have an unsophisticated group of locals. Who are more or less determining the price level on any given day, and they're not relying on fundamentals to do that. So it's been a bit frustrating in that regard because Baghdad soft drinks its revenues of I believe tripled in the last ten years and cash flow from operations per share as compounded at about twenty percents for the last decade. But the stock is maybe doubled in if Baghdad soft drinks was called. I don't know like Pakistan, soft drinks, it would be trading twenty five or thirty times earnings. It would have had a significant rerating. There was even a point in time in Nigeria when you would find companies like this trading at twenty or thirty times trailing earnings and what's frustrating from our point of view is Nigeria and weighs more screwed up than Iraq. Is they have a problem with Al Qaeda or Kaieda filial Boko haram that controls the northeast part of the country. Their oil production has been declining for decade. They're g. GDP per capita is well below in rocks. And the rockets got a measure of macro stability that Nigeria. Really never has. And people get really excited about Nigerian because we're product companies because there's huge Margaret. Yes, he's market, exactly. And it's new relatively new. So they get excited about the potential growth, but the risks in Nigeria are in a way greater than the risks you face in Iraq. But because Iraq has this sort of enduring negative perception people just stay away from it. It's really become the leper of the frontier emerging market investment universe. How do you? Compare sentiment about Iraqi equities today relative to when you started. And then the second part of this question is kind of a John Malone question..