I recently sat down with Andrew Brown for an episode of The Australian Investors Podcast.
Andrew is the Director of East72, a Sydney-based investment company that resembles a true-to-label Australian hedge fund (except it’s not a fund). Andrew has a long and rich history in the Australian investment management industry, having overseen the management of billions of dollars invested on the ASX.
I could have talked to Andrew for hours. This episode is much longer than previous episodes because we cover:
- Andrew’s career as a stockbroker and fund manager
- The Dotcom boom and bust
- The Global Financial Crisis (GFC)
- Starting private investment companies
- Shorting shares of Tesla Inc
- Researching Uber’s impact on the Aussie cab industry
- Valuation in banking & insurance
- Macquarie Group
- Shorting cryptocurrencies like Bitcoin
- Using debt and derivatives to gear a portfolio 400%, and
- Loads more
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Show Notes
- 0:45 – Intro to Andrew Brown
- 1:30 – Andrew has his “comes to Jesus moment”
- 3:30 – Studying economics at Manchester University
- 4:15 – First job at Prudential
- 7:45 – The best sector to learn about being an analyst, how to value insurance and banks
- 12:30 – Westpac is about to go bust! (with 20x the bad debts it has today)
- 14:45 – Why Banks go broke
- 15:15: – Andrew joins AMP and manages $1 billion — which becomes $2 billion. Plus some concerns about AMP today.
- 17:45 – The go-go funds of the 90’s, Andrew moves to Rothschild
- 19:30 – The difference between price and value — how Andrew finds value
- 23:30 – The Dotcom boom (and bust) and similarities to today
- 27:15 – Stiletto investments: A ladies investment company with 14 investors
- 30:30 – Using a trading journal — why you need one
- 36:10 – Starting private investment companies, why it makes sense to have a small company
- 38:50 – The GFC & a behavioural rule Andrew used to invest in dirt cheap shares
- 41:30 – Buying Magellan for half the value of its assets, plus Wesfarmers at $13.50
- 44:30 – How to prepare for the next market crash
- 46:15 – Why did Andrew buy into a listed company — with just $300,000? How Andrew gets 400% exposure to the market
- 49:00 – How a long-short strategy fits in a portfolio
- 56:50 – Does Andrew know Australia’s best investor?
- 59:45 – Why Andrew is shorting Tesla
- 1:06:10 – How social media is changing investment research + Andrew’s favourite hedge fund blogs
- 1:08:30 – Andrew’s research process, Uber Vs. Cabcharge, an investment with a few hairs on it
- 1:15:00 – using the value chain, how Andrew’s research leads to other investment ideas
- 1:20:00 – Cryptocurrencies, why Andrew short sold Bitcoin
- 1:24:30 – Is Bitcoin a fraud?
- 1:25:30 – Current risks facing Aussie investors, as Andrew sees it
- 1:28:30 – Positioning for risks in Australia’s rapidly-changing market, Afterpay, EL Financial, European banks and shipping
- 1:31:00 – learn more about Andrew
- 1:34:10 – what Andrew would tell a younger him
Further Reading:
- AFR Article: Andrew Brown’s hedge fund East 72 and the global hunt for value
- Andrew’s favourite blogs/hedge fund letters:
- Rask Finance Intrinsic Value Video
- Compound Interest video
Learn more about Andrew:
Disclaimer: The Australian Investors Podcast is produced by The Rask Group and Owen Raszkiewicz. It contains general information only and is no substitute for qualified financial advice. The information does not take into your needs, goals or objectives. Always consult a licensed financial adviser before acting on any information you read here or anywhere else online. Please refer to The Rask Group’s Financial Services Guide on the Rask Finance website.
