By Vijitha Yapa
Sri Lanka is presently making a major effort to draw foreign direct investments from around the world but an epidemic of bungling by our bureaucrats – who seem more interested in themselves than their country – has led to a multitude of problems.
Accommodating the entry of burning container ships (carrying inflammatory materials and dangerous goods, as we now know) into our waters seems to be but the latest episode in a series of debacles.
While inaugurating schemes may bring kudos to some officials in some places, no one in authority owns up to actions that have cost the country dearly over the years.
In this context, how does a foreign hedge fund decide to invest in Sri Lanka?
The Colombo Stock Exchange (CSE) has experienced a plethora of scenarios where there’s heavy buying of certain shares sometimes, and equally heavy panic selling at the whims and fancies of hedge funds among others.
But who makes these decisions – decisions that cause such consternation? And what criteria encourage them to implement their plans?
This is an area that is foreign to many – and Ted Seides attempts to answer these questions through the eyes of the very people who make such decisions.
A Chartered Financial Analyst (CFA) by profession, Seides, is the founder of Capital Allocators, which he established in 2016 to explore best practices in the asset management sector from the perspective of asset owners and managers, as well as a host of other relevant players.
And being the son of a teacher and psychiatrist, he is passionate – perhaps by genetic disposition – about investing in people and sharing his insights with the world at large.
The author has worked in the field as an institutional investor for over 25 years, inter alia allocating money to managers.
He writes with authority – quite unlike some ministers of state in governments of today whose educational qualifications betray their limited understanding of market forces and related knowledge, let it be said!
Therefore, it is becoming increasingly evident at home that dishing out plum positions to close acquaintances and pliant friends is not the answer to a panoply of issues facing our nation state today.
Seides’ early experiences began when he was at the Yale Investments Office of the eponymous university and Harvard Business School in 1992, and these years served as the basis for his subsequent operations.
He cofounded and served as President and Co-Chief Investment Officer at Protégé Partners, which was once a leading multi-billion dollar alternative investment firm that invested in and seeded small hedge funds.
In 2007, Seides shot to fame when he challenged Warren Buffett’s statement about the superiority of index funds over hedge funds. His podcast, Capital Allocations, was launched in 2017, and Seides has interviewed a number of leading investment players since then.
Barron’s (a weekly American newspaper/magazine published by Dow Jones & Company, which is a division of News Corp.), and the business news and financial investments barometer Forbes, placed it among the top investing podcasts Stateside.
Seides also writes opinion pieces for Institutional Investor magazine – a monthly periodical published by Euromoney Institutional Investor – and focusses on people who sit at the top with capital in hand to invest.
The author of this book asserts that businesses are conceived by entrepreneurs who raise capital to pursue their ideas.
They then sell a part of their business; or borrow money and make decisions about what products or services to create, and which markets to enter. And they explore various forms of financing to fund new projects.
Above them are money managers who have a range of choices such as those of business executives.
Sitting at the top of the hierarchy are the Chief Investment Officers (CIOs) who lead their investments. These CIOs identify the best among a host of money managers arrayed in different strategic arenas around the world and by virtue of the same are students of the entire universe.
They have a unique vantage point from which to view assets, strategies and geographies; and therefore, they’re more than proficient at building a portfolio of investments that meet their objectives. Their decisions are the ones that influence the flow of capital throughout the world.
How much remuneration has to be afforded to performing executives is an eternal question that begs an answer! In this context, I am appreciative of a wise statement adopted by the Partner at Parvus Asset Management Rahul Moodgal: “If you pay peanuts, you get monkeys.”