Money talks. So does What Would Ben Graham Do Now? A New Value Investing Playbook for a Global Age, by Jeffrey Towson, published by FT Press. Scheduled to be released in early June (I received an advance copy), the book really differentiates itself from the pack of finance and investing books I've read of late. Full of fresh ideas, this insightful and informative publication is not what it seems on the surface.
From just looking at the title, I assumed as a retail investor I would be able to take out my spreadsheet and learn a few tricks. Well, I learned plenty of tricks, but they weren't meant for somebody in my modest income bracket. This book is best utilized by whales, sharks, movers and shakers, the big money dealers - whatever you want to call them - people in the position of financial power whether they are in a hedge fund, pension plan, Fortune 100 company, venture capital firm or private equity organization. That said, I thought What Would Ben Graham Do Now? was fascinating and that the writer made the most of his opportunity.
Towson is the former point man for Prince Waleed of Saudi Arabia, one of the richest men in the world. He developed over $15 billion of investments across multiple geographies which included the Middle East, North Africa and the Asia Pacific region for Waleed, nicknamed "The Arabian Warren Buffett" by Time Magazine. He is now the managing partner of the eponymous Towson Group based in New York, Dubai and Shanghai, and has culminated his experience into a part game plan, part textbook for those with deep pockets.
It is important to note that although this publication is meant to be a textbook, it reads more like a novel with Venn Diagrams and flow charts. Easily stated and understood, I would think that investors of all persuasions could benefit from this book if they are interested in where the global markets are heading in the next 20-30 years.
One of the many things I enjoyed about What Would Ben Graham Do Now? is that Towson doesn't go over old material. If you are a value investor, he assumes that you are already familiar with the teachings of Benjamin Graham and doesn't rehash old formulas, especially when breaking down financial statements. In fact, he spends very little time crunching numbers. His main piece of advice is to analyze a company's financials in the developing countries by turning back the clock and look at the balance sheet the way that accountants and analysts used to, not the income statement that is so popular in today's world. Reason being is that like America in the 1800s and early 20th Century, the developing countries are mostly industrial infrastructure and natural resource plays.
Although notable global tycoons like Prince Waleed, Warren Buffett and Carlos Slim have used their reputations to close sizable financial deals internationally (think Buffett negotiating a 10% stake in China's BYD), Towson believes that the best deals are done in smaller, privately owned companies. He likes to run into burning buildings and seeks opportunities everybody else avoids and utilizes what he calls "5 to 20" investments. This basically means you invest $5 million in a privately held family business that is selling below inartistic value, infuse good old American know-how in the form of better management or brand identity, then reap a $20 million profit - over the long term. There's no flipping involved here unless the company grows to IPO status.
Towson contends the main way to do business in these frontier markets is by going back to another era and network, press the flesh and be above board in your relationships. This is the way they do business over there. Don't be the Ugly American. As a member of the developed nations you are an outsider but have things to contribute like management skills, brand identity and technology. However, it's a hyper-competitive, fast and loose environment you are dealing with. That's why he looks for small, private companies that have a monopoly status in some exotic locale.
As far as the overall investing environment is concerned, the author thinks that since the end of World Wat II we have been primarily in a uni-polar ecosystem, and, that as we move further into the future, we will be experiencing a multi-polar financial world. East will clash with West and those from the developed nations that wish to make the most money will have to put up with emerging market norms like crony capitalism. Political power is often concentrated with the privileged few in the developing world, and you must make inroads with the local governments if you wish to succeed.
I really liked this book. I thought it made me more informed on what is going on in cross-border finance. I think it would be an excellent tool for not only those who have the capability of doing large financial deals, but business students in general. A job well done.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.