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Turkey Investments


dymanojbabu

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Recently I have watched multiple interviews on Turkish investments by Mohnish pabrai. I dug bit more on this.

 

I was able to find few more of his investments.

1. AgeSA Hayat ve Emeklilik A.S.

2.Anadolu Hayat Emeklilik AS

3.Reysaş Logistics

4. TAV HAVALİMANLARI HOLDİNG A.Ş.

and more

 

How I was able to find this on public disclosed platform link here. https://www.kap.org.tr/en/

 

I am not sure I can share here. this is my first post. Any corrections and inputs are really appreciated. 

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Recently I have watched multiple interviews on Turkish investments by Mohnish pabrai. I dug bit more on this.

 

I was able to find few more of his investments.

1. AgeSA Hayat ve Emeklilik A.S.

2.Anadolu Hayat Emeklilik AS

3.Reysaş Logistics

4. TAV HAVALİMANLARI HOLDİNG A.Ş.

and more

 

How I was able to find this on public disclosed platform link here. https://www.kap.org.tr/en/

 

I am not sure I can share here. this is my first post. Any corrections and inputs are really appreciated.

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Please do not start this thread again in the Investment Ideas section.  That section is for ticker specific ideas so we have a database of discussions about a specific stock, not broad-based country ideas like Turkey.  Cheers!

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I have dabbled a bit in Turkey (got slaughtered) and fail to see how you can make money here, given the interest rate and currency issues.  The key interest rate is 14% and it is probably too low given the current rate of inflation there. Might as well forget about Turkish stocks and just speculate on the Turkish Lira.

 

There are some good companies in Turkey but I fail to see how this is investible.

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8 hours ago, Spekulatius said:

I have dabbled a bit in Turkey (got slaughtered) and fail to see how you can make money here, given the interest rate and currency issues.  The key interest rate is 14% and it is probably too low given the current rate of inflation there. Might as well forget about Turkish stocks and just speculate on the Turkish Lira.

 

There are some good companies in Turkey but I fail to see how this is investible.

 

Not only is inflation, interest rates and currency issues huge problems but the guy in charge has the worst possible ideas for addressing it.

 

Maybe there is a macro "expectations" trade where you bet that after having his face smashed in by dumb macro policies Erdoğan does a 180 and fixes things. But predicting that is beyond my ken, especially when his low interest rate policies are dictated by his political strategy.

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4 hours ago, ValueArb said:

 

Not only is inflation, interest rates and currency issues huge problems but the guy in charge has the worst possible ideas for addressing it.

 

Maybe there is a macro "expectations" trade where you bet that after having his face smashed in by dumb macro policies Erdoğan does a 180 and fixes things. But predicting that is beyond my ken, especially when his low interest rate policies are dictated by his political strategy.

Yep, like backstopping Turkish lira  bank deposits & savings against losses relative to hard currencies. Since he did so, the Turkish lira has cratered again. I suspect it was just a play to calm markets and stem outflows but I think the market is slowly calling the bluff. I suspect that Turkey never could make good on this backstop if the currency really depreciates. Won’t be fun to be in Turkish equities if this house of cards collapses, I think.

 

Its s shame because there are some real hard charging entrepreneurs there. I went to Turkey on a business trip (shortly after the Istanbul airport

terror attackers) for a customer installation a few years ago and was quite impressed. So there is some real potential there, but there is also a deep chasm between the secular Turks and deep religious Muslims that are mostly living peacefully next to each other. You just wonder if this is going to last. I sure hope so, but I would not bet a lot of my money on it.

Edited by Spekulatius
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  • 2 weeks later...

My biggest risk is Turkish devaluation. With current lira situations I can see 1 USD going to 30 liras

 

If we invest 100 USD in Turkey.

2022  100US--> 1539.20 Lira (1USD =15.39 Lira)

if stock compounds 24 times in Lira terms in 3 years its a double

2025 3078.4 Liras --> 102.6 (1USD=30 Liras)

 

The gains are very minimum. Is that a correct assumption or I am missing some thing please advise. 

 

Edited by dymanojbabu
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  • 8 months later...

Does anyone know, how the earthquake affected Reysas?
I am just curious about those, who own it. Can you access anything about the company in English?
Is there some information available about whether their properties are insured against earthquake etc.?


(Disclaimer: I do not own it.)

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The biggest risk investing in Turkey isnt the inflation or instability or Lira............the biggest risk for the average Joe who got interested in Turkey because of Pabrai.........is if/when Mohnish stops talking about Turkey/Reyes.........you'll have these volatile tickers in your portfolio where if your being honest with yourself you have very little idea about whats going on with the underlying business.

 

Cloning "super investors" has merit.........outsourcing idea shortlisting is OK.......but you cant outsource research........and the problem with Turkey is what is being described/felt above...buggy IR, lack of material in English, no knowledge about the culture and/or inability to gather news about whats happening on the ground post an event like an earthquake.

 

Investing is hard enough and rewarding enough (if done correctly) in country's your familiar with - when the material is written in English & governed by Western securities law.

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Turkey is a terrible country for the average investing tourist to get involved in - terrible currency and economic policy, huge runup in the market, political (and now geological) instability galore, an autocratic government, terrible liquidity, lousy rule of law, lousy governance. The list goes on.

 

To sell Micron (close to the lows) and buy the overbought Turkish equities most be one of the lousiest market calls ever.

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"fish where the fish are" - I think Munger said that 

 

"“People are always asking me where is the outlook good, but that’s the wrong question,” he responds. “The right question is: Where is the outlook the most miserable?”" - John Tempelton.

 

These above listed Turkish companies are wonderful with great business model, if one just focusses on the unit economics and competitive advantages, then I think one can forget about the macro environment, as in most cases, it will get fixed. Turkey will have its election in spring 2023, so I think that the democracy of Turkey is rational enough to throw Erdogan out or demand a more rational president who knows how to calm inflation. 

Edited by Charlie03
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I can be biased, as im tempted to construct a basket bet of Turkish companies with USD and EUR revenue.

 

I have a question, if Anadolu Hayat is a Turkish insurance company, isn't its revenue only be from domestic customers, so no western currency hedge?

 

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On 2/8/2023 at 6:26 AM, Spekulatius said:

Turkey is a terrible country for the average investing tourist to get involved in - terrible currency and economic policy, huge runup in the market, political (and now geological) instability galore, an autocratic government, terrible liquidity, lousy rule of law, lousy governance. The list goes on.

 

To sell Micron (close to the lows) and buy the overbought Turkish equities most be one of the lousiest market calls ever.

@Spekulatius have seen you mention several times MP selling Micron shares. Can I ask you when did he sell MU and what % of his MU position did he exit?

 

Everything I've seen, indicates MU is a core position of >15% in MP holdings for 5+ yrs and one of his few US positions along with Brookfield. As of Fall 2022, he remained bullish on MU. 

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I have shared this in the Pabrai blog before but since this thread is new i want to say it again. In general i agree with @Spekulatius description of turkey. Its not a market id like to be invested in. But now we had Pabrai sharing and essentially pumping two turkish stocks to the value investor community AFTER he made an investment in them, both with very small marketcaps where just inflows of a few thousand investors with little capital will 10x these businesses (which did happen and he praises himself for how smart he has been and how great he is with his research). 

 

Fair enough: He flew to turkey and visited some businesses his friend owns and found a buisness that was really undervalued for reasons @Spekulatius already described. 

 

Not fair enough: 100% against what buffett would do he shares these businesses on almost EVERY public speech to wealthy people and essentially pumping reysas more and more. He did it once again on the SumZero Competition end of Jan where he marketed reysas as still being investable but that the train might drive off soon (so you better call fidelity and execute that 80$ trading cost buy order!). 

 

With all my respect, i despise behaviour like that and it just smells like a pump. I would not be surprised if he sells this in a year or so after he made a 10x bagger and all the cloners are left with this buisness and very little information on its developments. 

 

I liked mohnish a lot before but since reysas and all the advertisement i get a bad feeling. 

 

Let me know what you guys think, i personally have no business i like and understand in turkey, no interest to dig through those markets aswell. 

Edited by Luca
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On 2/18/2023 at 9:09 AM, investmd said:

@Spekulatius have seen you mention several times MP selling Micron shares. Can I ask you when did he sell MU and what % of his MU position did he exit?

 

Everything I've seen, indicates MU is a core position of >15% in MP holdings for 5+ yrs and one of his few US positions along with Brookfield. As of Fall 2022, he remained bullish on MU. 

I don’t think he sold it in his personal or fund  portfolio. He recommends to sell out of BRK and MU in his Ueber Cannibal portfolio which he talks about in his Chai with Pabrai blog.

 

13C456FC-A8FC-47AB-AEEF-5DF271C9B656.jpeg

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  • 1 month later...
On 2/11/2023 at 4:10 PM, Charlie03 said:

It's significant that TAV Airport's revenue is denominated in euros and dollars and costs in lira, but their loans are in euros, so that could be a deal breaker for Mohnish's thesis.

 

Source: TAV Airport's 2021 annual report. 

Skærmbillede 2023-02-11 kl. 22.03.57.png

So do you think net revenues at the end of the year negative?

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