Great Review of My Book by Chris Mayer at Agora Financial


Chris Mayer, managing editor at Agora Financial and author of Mayer’s Special Situations, reviewed my book. Really dead-on accurate I thought. I am reading his book Invest Like a Deal Maker.

The review is reproduced below with his permission:


The Prince of Deals

Prince Alwaleed is one of the world’s greatest investors. Born in 1955, he started out as an investor in the late 1970s by opening a small office on a side street in Riyadh, Saudi Arabia. He had $30,000. By 1988, Alwaleed was the subject of a Forbes profile. He was 33.

Today, he is one of the richest men in the world, with an estimated net worth of around $20 billion. He controls a vast fortune through Kingdom Holding Co., of which he is the founder, CEO and 95% owner. He has created his fortune through a mix of private and public investments across dozens of industries in over 130 countries.

You can make a good case that he’s the No. 2 greatest investor ever behind Warren Buffett. And though I’m getting tired of these kinds of labels, he’s been called “the Arabian Warren Buffett.” (Buffett, in a metaphorical tipping of the hat, called himself “the Alwaleed of America.”) A better nickname comes from Forbes, which called him “the Prince of Deals.”

I hadn’t given Alwaleed much thought until I read Jeffrey Towson’s book over the holidays — What Would Ben Graham Do Now?: A New Value Investing Playbook for a Global Age. Towson and I share a common affinity for the principles and values espoused by Benjamin Graham, often called the father of security analysis.

We are also both taken with the investment menu offered up in the 21st century:

I think my entire generation has gotten lucky. We are the first wave of investors to see the entire world as our opportunity — being equally excited and comfortable in Shanghai, New York, Dubai and Mumbai. It’s a thrilling time if you are ambitious. And like many value-focused people, I have fascination (compulsion?) with understanding things as they are. And now there is much more of the world to learn about. Beijing banks. India-U.S. cross-border mergers and acquisitions (M&A). African natural resources. It’s all fascinating — and profitable.

I am in full agreement with this worldview. It is a great time to be an investor — at least a certain kind of investor. Which brings us back to Alwaleed.

Towson served as one of Alwaleed’s five investment chiefs in Riyadh for almost a decade (2000–09). His tenure with one of the world’s greatest dealmakers influenced his thinking at least as much as Graham. “I have found that Graham’s concepts are the theoretical anchor for global investing, but Alwaleed’s deal history is the Rosetta Stone.”

There isn’t much out there on Alwaleed. “Alwaleed remains one of the greatest business stories never told,” Towson writes. “He created one of the world’s largest fortunes but never has undergone much external, independent analysis.” Part of this is because he keeps a small circle in Riyadh. According to Towson, there have been only 10 investment staffers in 30 years. Another factor is his home base in Saudi Arabia. Investigative journalism doesn’t really exist there, and he’s free to operate in relative privacy.

And Towson is not the man who is going to spill the beans on his old boss. “Because I’m a loyal guy,” he writes, “you won’t read the ‘Waleed story’ here.” That’s too bad, because there are enough enticing tidbits about Alwaleed in the book that made me wish he did write the story of Alwaleed. I wanted to know more about him.

Towson himself poses the great question: “How had a pure investor with only two or three staff members built $30,000 into a $22-billion fortune?” That is a question I would be most interested in seeing answered.

Still, as I say, there is enough in the book to make it the best we have on Alwaleed so far. Towson makes the case that Alwaleed is “the world’s first private global investor,” as he moves easily between nations, a true global tycoon. Towson’s book is as much a reflection on the lessons learned while part of Alwaleed’s team as it is a reflection on Ben Graham’s teachings.

Alwaleed is unique among the great investors because he was the first to come out of an emerging market. When he started in Riyadh, there were no public companies. There was little rule of law and lots of regulatory uncertainty. There was no public market information. Management teams were notoriously unreliable.

Though it sounds awful, this was probably a great place to start for a global investor. It probably has something to do with Alwaleed’s comfort investing in virtually any market. I believe the best investors of the 21st century will be those who are equally comfortable in Mumbai as they are in São Paulo. They will be comfortable looking at mines in Ghana one day and hotels in Mongolia the next.

Alwaleed earned much of his early fortune in emerging markets. It was only in the 1980s that Alwaleed seriously invested in developed economies. His most-famous bet was his 1991 investment in troubled Citi. (Is Citi ever not in trouble?) Since then, he’s picked up big stakes in Four Seasons, News Corp., Euro Disney, Apple (in 1994!), Saks Fifth Avenue and more. He’s the largest foreign investor in the U.S.

Towson also includes an interesting speculation on the situation of the Saudis, which may contribute to Alwaleed’s skills. We know the Saudis were lucky that their deserts were full of oil. It gave them immense wealth. But they had little in the way of a domestic market. So they had to become cross-border investors a good 30 years before it was popular. The Saudis also faced many obstacles investing abroad: language differences, cultural gaps and a lack of technical abilities possessed by more-experienced investors in the West.

But they evolved to be successful abroad. Towson includes a section called “Lessons From the Saudis,” which is based on his experiences with the Saudis. The first lesson is: “A foreigner and his money are soon parted.” When looking at a deal, the Saudis like to ask if all the local investors already passed. In other words, are they the dumb money? If it’s such a great thing, how come the locals aren’t in on it? Another lesson I like is, “Don’t get caught up in geographic strategies.” To the Saudis, the world is industry-specific, and their experience teaches that it is more important to be in a good industry than it is to be in a specific place.

Towson includes other tidbits on Alwaleed, such as his work habits. If you visit the Kingdom office, you won’t find analysts or traders with Bloomberg terminals. No cubicles. No workrooms. You find the prince behind a desk with several sofas around him and three or four staff members down the hall. He reads — a lot. He meets with people, but only in a very disciplined way. There are no meetings in the hallway or casual drop-ins. He manages his schedule to the minute. Meetings last 10–15 minutes, and you generally get three minutes before the prince interrupts you. And when you leave, there is usually someone else ready to enter.

“There is a machine-like quality to the days,” Towson writes. “The process never slows or stops. At nights, the activity shifts to Alwaleed’s palace. On weekends, it continues at his desert camp. During vacations and business trips, it continues aboard his Boeing 767, on his yacht or in boardrooms around the world.”

It’s a never-ending search for ideas. It is an extreme version of a template followed by great investors everywhere. You must love the hunt. And if you continue to apply the same proven techniques, over and over again, time is on your side. “You must become wealthy — if you keep doing it consistently,” Towson writes.

The most interesting parts of the book, to me, are the “war stories” about different investments Alwaleed made. They will give you a good feel for what successful deals in emerging markets look like.

Towson advises staying in the trenches and getting out of the clouds. “It really does look different from the ground, as compared with flying over at 30,000 feet,” Towson writes. The decisions are also easier, the data more concrete and real, going beyond macro-generalities.

Towson himself is a global investor of this new 21st-century breed.

He writes about how, when putting the book together, he had about $175 million in deals he was looking at: a Swiss water company with concessions in Madagascar, a Libyan construction project, a Saudi small business, Chinese health care projects, a Middle Eastern insurance company and a South Carolina physician home-monitoring company. “And I’m doing this while commuting between New York and Shanghai, where I live; Beijing and Cambridge, where I teach; and Hong Kong and Paris, where I normally stop over for a few days to rest and write.”

This is the world of investing in the 21st century. You better get used to it, or you will miss out on some fantastic opportunities.


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