EP.69 EMERGING MARKETS, DISORDER and INVESTING with PHILIP READE

It's important to speak to people who are having success exploiting other asymmetries. Many opportunities come when the world devolves into chaos. (Bill Ackman recently made gigantic money by buying insurance against corporate defaults related to COVID.) Sometimes there are opportunities when economies start to recover. Enter PHILIP READE. He is the Co-Manager of HELM INVESTMENT PARTNERS, an investment firm that focuses on emerging markets that collapsed and have developed a narrative for recovery. What made Philip's story interesting to me was not only his half Brazilian / half British geopolitical bent, but his application of recovery narratives into usable investment themes. Philip's Background Co-Manager the Partnership (Helm Investment Partners). Investor and board member of Cultura Inglesa Rio de Janeiro, one of Brazil’s leading English as a second language school networks, backed by 3G founder Jorge Paulo Lemann. For 7 years, until February 2016, Philip was a Partner, Co-Portfolio Manager and Co-Head of the Investment Team at Tarpon Investimentos, Brazil´s largest independent equities fund with over USD 3 billion (21.7% US$ net annual return, May/2002-April/2017). At Tarpon Philip served as: Chairman of the Board of Omega, Tarpon´s renewable energy platform / Chairman of the Board of Cremer, a publicly traded company and Brazil´s leader in the disposable health care sector / Chairman of the Board of Somos Educação, a publicly traded company and Brazil´s leader in the K12 educational market / Board Member of Tarpon Investimentos, the publicly traded GP / Board Member of Metalúrgica Gerdau, a publicly traded company and the largest long steel producer in the Americas and the second largest globally / Board member of Tempo Participações, a publicly traded company and Brazil´s leader in the Roadside and Home assistance businesses Prior to Tarpon, Philip was the Head of the Brazilian operations of a NY-based hedge fund, Marathon Asset Management, focused on private and public equities as well as structured credit. Prior to Marathon, Philip worked for Goldman Sachs in Sao Paulo, as part of the Investment Banking division, participating in over 20 M&A and capital market transactions in Financial Services, Real Estate, Telecom, Power Generation and Consumer. Before that, Philip founded and ran Brasilis Seafood, a company that financed seafood processing plants in Brazil and raised US$ 2 million in venture capital from one of Brazil’s larger institutional investors. Philip started his career at Brazilian Banco Garantia, founded by Brazilian entrepreneur and 3G founder Jorge Paulo Lemann and then at McKinsey & Co. He went to Sevenoaks School in England, holds an Economics Degree from the University of Sao Paulo (top ranked student in the history of the University, as of 1996 graduation, award for the best graduation thesis and class representative) and an MBA from Stanford. Helm Investment Partners Tell us about the firm and where did you see the opportunity? What does a typical EM manager do?  How do you differ? You look for Crisis conditions . . . what does a crisis look like to you?  How do you quantify "trouble"? When screening for good or bad governments, what do you look for?  What are the countries you are focused on? Ex. Argentina, Greece, et al . . . The Concept of Going from "horrible" to "bad" Process Down 50% "Country-wide"  What does this actually mean?  How do you account for currency?  If a currency devalues, how do you stay away from the trap that it will rarely recover? Looking for Narratives that Change Perception- what do those look like? Finding ways to invest in that narrative- what is the "bottoms-up approach" to finding companies?  Why do you focus on Utilities, Telco, Retail, Consumers, and Banks? Trying to avoid being too early - how do you prevent tactical "short term downward swings" from battering your...