Too Easy

Bill Browder’s best investment made his fund more than 10,000% in only 5 years. Over $100,000 for every $1,000 invested initially invested.

Interested? Bill’s book (which I strongly encourage you to read in full) explains in detail exactly how he did it.

“Gazprom was eight times the size of ExxonMobil and twelve times bigger than BP, the largest oil companies in the world— yet it traded at a 99.7 percent discount to those companies per barrel of reserves.” – Bill Browder from Red Notice: A True Story of High Finance, Murder, and One Man’s Fight for Justice

How was this even possible in modern times? Aren’t the markets now so perfectly efficient that even Warren Buffet can no longer beat them.

“Why was it so cheap? The simple answer was that most investors thought that 99.7 percent of the company’s assets had been stolen.”

An oil and gas company in a country run by Vladimir Putin and the Russian Oligarchs.  A company where management was not only working against shareholders, but brazenly transferring out entire assets.

“Based on an extremely conservative estimate, we determined this subsidiary was worth about $ 530 million, yet a group of buyers was allowed to buy 53 percent of Sibneftegaz for a total of $ 1.3 million— a 99.5 percent discount to our calculation of its fair value! Who were these fortunate buyers? One was Gennady Vyakhirev, the brother of Gazprom’s CEO, Rem Vyakhirev.”

Against a macro backdrop of extreme inflation, a recent debt default and fleeing foreign capital.

Still interested?  It gets better.

After spending months investigating the extent of the Gazprom asset thefts by interviewing competitors, customers and ex-employees, he took all he had learned about the corruption in Gazprom and turned it over to the press.   Bill went public about the extreme corruption at Gazprom all the while living in Moscow and endangering the safety of himself, his firm and everyone he worked with in Russia.  Going public eventually led to the investment paying off but also to horrific costs which are detailed in the book.

I apologize if you were hoping that 100x returns could be achieved with no more effort and risk than entering a few EBITDA screens into a Bloomberg terminal and clicking a “buy” button.  But did you really think you were going to find tremendous opportunities in the same securities that any 10 year old with an iPhone can pull up the last 10 years of financials for in the time it takes for a red light to change?  That would just be too easy.

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