Advice from Hedge Fund Manager – Isaac Schwartz

Advice from Hedge Fund Manager – Isaac Schwartz

I had the opportunity to interview my friend Isaac Schwartz. Isaac has been managing money in emerging markets for more than a decade. He’s one of the youngest and smartest guys I know in the business, with energy & enthusiasm to match. He’s only 33 years old but has run the Global Fund at Robotti & Co. for the last nine years.

 

Isaac usually has a new way of looking at things that I haven’t thought of, and this conversation was definitely that.

 

How he began:
It was 2005, and Isaac was in his senior year of Wharton undergrad, looking for cheap stocks to buy. He came across Thailand. Wharton provided one Bloomberg terminal for students back then, and he just found Thailand was cheap when running a screen for global value.
He was looking for:
1. English language financials
2. Lots of established companies
3. High dividend yield
4. Low P/E
5. Long track records as public filers

 

 Thailand Stock Market

 

This is how he thinks Kazakhstan and Turkey are placed today.
 Kazak Stock Market

 

Advice to his younger self:
1. Actively seek advice from those more established – but then just as actively have the confidence to tune it out
2. Great investment ideas can strike at the beginning of the research process – or at any other time, even many years in following a company, industry, or country – so keep flexible

 

Advice to people starting out now:
1. The number one skill, is have passion
2. Get a mentor, someone who you connect with, who isn’t your boss
3. Attend conferences, meet new people, find people who are deeply involved in areas that interest you
4. Don’t be afraid to do something others aren’t doing – whether that’s a region, an asset class, or a style

 

What’s his edge?
1. Finding a fertile pond with less competition
2. The behavioural side of the business – everyone talks about an analytical or information edge, at Robotti they believe they can do that, but it’s not where they differentiate. Their focus is on the behavioural edge. History has shown they can buy what and when others won’t – and this has worked over time.
3. Being able to change his mind when required, he reminded me of a Soros quote about the contingent nature of human knowledge, whereby Soros conceptual framework emphasises the importance of misconceptions, making Soros very critical of his own decision-making process,

 

I know that I am bound to be wrong, and therefore am more likely to correct my own mistakes

 

Books Isaac recommends you should read:
Where are the customer’s yachts? by Fred Schwed
Indecent Exposure: A true story of Hollywood and Wall Street by David McClintick
The Wisdom of Andrew Carnegie as Told to Napoleon Hill by Napoleon Hill

 

Thank you Isaac
If you liked this interview you will enjoy listening to Karim Moussalem, Edward Misrahi or Michael Thompson.
 
If you want to learn how to be a better investor, you should check out our free investing course or our reading list.

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