Expert Investor: Bill Browder – Putin’s #1 Enemy

HOSTS Alec Renehan & Bryce Leske|6 May, 2021

Meet your hosts

  • Alec Renehan

    Alec developed an interest in investing after realising he was spending all that he was earning. Investing became his form of 'forced saving'. While his first investment, Slater and Gordon (SGH), was a resounding failure, he learnt a lot from that experience. He hopes to share those lessons amongst others through the podcast and help people realise that if he can make money investing, anyone can.
  • Bryce Leske

    Bryce has had an interest in the stock market since his parents encouraged him to save 50c a fortnight from the age of 5. Once he had saved $500 he bought his first stock - BKI - a Listed Investment Company (LIC), and since then hasn't stopped. He hopes that Equity Mates can help make investing understandable and accessible. He loves the Essendon Football Club, and lives in Sydney.

Bill is the CEO and co-founder of Hermitage Capital Management, which at one time was the largest foreign portfolio investor in Russia, and in 1997 was the best performing fund in the world – up 238%! Bill was the driving force behind the Magnitsky Act, a law to punish Russian human rights violators, which was signed into law by President Obama in 2012 and subsequently adopted by a number of governments around the world including Canada in 2017 and the UK in 2018. He is the author of the best-selling book Red Notice: How I became Putin’s Number 1 Enemy.

In this conversation, he reflects on the unique discovery of first investment, the way his investing perspectives have shifted over the decades, the global impacts of the Magnitsky Act (and the international perspective of Australia’s position on the policy), and why he thinks the legal disruptor app Do Not Pay is a fantastic company.

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BRYCE LESKE: [00:00:41] Welcome to another episode of Equity Mates, a podcast that follows our journey of investing, whether you're an absolute beginner or approaching Warren Buffett status, our aim is to help break down your barriers from beginning to dividend. My name is Bryce and as always, I'm joined by my equity buddy Ren. How are you going? [00:00:56][15.4]

ALEC RENEHAN: [00:00:56] I'm very good, Bryce. Very excited for this interview. We've got a guest who is an incredible investor, was actually Ren the best performing fund in the world in 1997. Yes. But his life outside of investing is more interesting. And I think we're going to have a really, really great interview today. [00:01:19][22.8]

BRYCE LESKE: [00:01:19] Yeah, very excited for this one. And it is an absolute pleasure to welcome Bill Brada to the show. Bill, welcome. [00:01:24][4.9]

BILL BROWDER: [00:01:25] Glad to be here. [00:01:25][0.4]

BRYCE LESKE: [00:01:25] So for those of you who haven't come across Bill before, it's quite the résumé but will list a couple here. He is the CEO and co-founder of Hermitage Capital Management, which at one time was the largest foreign portfolio investor in Russia, which will touch on a bit in a bit. And as Ren has said, in 1997, was the best performing fund in the world, up 238 percent. Pretty incredible. Bill was the driving force behind the Magnitsky Act, a law to punish Russian human rights violators, which was signed into law by President Obama in 2012 and subsequently adopted by a number of governments around the world, including Canada in 2017 and the UK in 2018. And on top of all of that, he's the author of the best selling book Red Notice How I Became Putin's number one enemy, which is certainly one of my favorite books that I have read quite recently, a phenomenal, phenomenal sort of look into bills, pass a bill. Welcome. We're very excited for this. [00:02:25][59.2]

BRYCE LESKE: [00:02:25] Great. [00:02:25][0.0]

ALEC RENEHAN: [00:02:26] So, Bill, there's a lot we want to cover in this interview, but we want to start with a little bit about you. And we do like to start all of our interviews by hearing about people's very first investments. We generally find there's a good lesson or good story that comes out of it. So to kick us off today, can you tell us the story of your first investment? [00:02:45][18.8]

BILL BROWDER: [00:02:46] Just a little bit about me to get get to my first investment show. I was I'm the grandson of the head of the American Communist Party. And so when I was going through my teenage rebellion, I decided to put on a suit and tie and become a capitalist. And I went to Stanford Business School and graduated in nineteen eighty nine, which was the year that the Berlin Wall came down. And as I was trying to figure out what to do with my life, I said if my grandfather was the biggest communist in America and the Berlin Wall has come down, I'm going to try to become the biggest capitalist in Eastern Europe. And my very first job at a business school was working for the Boston Consulting Group, which was a management consulting firm, and in London. And I said to them, listen, I want to be your Eastern European guy. And for a while there was nothing going on in Eastern Europe. And then one day that the partner knocked on my office door and said, hey, you were the guy you wanted to go to Eastern Europe, well, now's your shot. And they sent me out to a little town in Poland on the six hours from Warsaw on the Ukrainian border where there was this bus factory and the bus factory was basically collapsing in every possible way, financially, physically, et cetera. And BCG had been hired by the World Bank to go in and advise them how to fix this failing bus factory. And they couldn't really afford the proper like team. So I'm sitting at this Polish bus factory not knowing anything about busses or anything else. And I have this translator who goes around with me everywhere. And so we were walking along the factory floor one day and I noticed that he's got this newspaper under his arm and what appears to be a bunch of financial statements on the front page of the newspaper. And so I, I say to him, his name is let's check and say, let's check. What's that? He said are these are the very first privatizations in Poland. I thought that's interesting. I'd like to know some more about that. So I said, let's go to a conference room and I want you to explain to me what's wh at's there. So he lays out the newspaper on the on the boardroom table. And I said, what's what's this number? And he says, number of shares outstanding. And I said, OK, what's this number? And the price per share. I multiply the two numbers that gets you to eighty million dollars, which is the market cap of the company. When they do the privatization and they say, what's this number? And he says, net profit. I said, no, no, no, go back and read it again. And he says, net profit. I said, OK, that number was one hundred and sixty million dollars. And so so I mean, you don't have to be a Stanford MBA or some kind of like investment specialist to know that that if you can buy a company at. Half of one year's earnings and effectively all they have to do is stay in business for half a year and you've already made your money back. And and and I didn't know anything about investing. I had never even it wasn't even a thing for me. And but I said to myself, isn't this what you go to business school for? Isn't this like what you're supposed to do if you're like an MBA and a guy in finance or whatever? And and at the time, I had a total life savings of two thousand dollars, and I had it all with me in full and in traveler's checks and American Express travelers checks that people don't use traveler's checks anymore. But this was back then. I like my traveler's checks to dollars and then I convert the dollars to Polish zloty. And then I go down to the post office with my translator and we subscribe to the very first privatizations and about a year later, my two thousand dollars and turned into twenty thousand dollars. And and what I can tell you is that having your first investment be a 10 bagger is the it's like the financial equivalent of crack cocaine and you just want to keep on experience. And and at that point, I knew exactly what I wanted to do, which was go around scouring Eastern Europe to pick up cheap privatizations, which is what I ended up doing. [00:06:58][252.5]

BRYCE LESKE: [00:06:59] It is it's quite the first investment, I must admit. I don't think we've had anyone who's had had quite that story. But, Bill, have you managed to build your own personal investing philosophy and how would you describe it? [00:07:12][13.1]

BILL BROWDER: [00:07:13] Well, I mean, in a certain way, what this experience did was totally ruined me as an investor because, I mean, it made me as an investor and it ruined me as an investor because when so I discovered that that that company and a few others were trading at some ridiculously low multiples of earnings. And then I ended up going to Russia, which I'm sure we'll talk about in a minute, where I discovered that the same type of things. And so what basically I became is is a a value investor, but like a value investor of proportions of undervaluation that you've never seen before. And so my investment philosophy and to this day is the metrics have to work. The stories don't matter as much as the metrics. If I can look at, you know, the valuation half of one year's earnings or or, you know, ninety nine percent discount for a barrel of oil reserves or whatever it is, it's got to be some metric where I can feel comfortable that that it's just, you know, undervalued and undervalued in a way that's measurable and clear. And it's interesting because that that seems so straightforward to me. And I'm fifty seven years old. I've been in this business now for more than 30 years, and I've had a lot of young, medium age people working with me and working for me and so on. And a lot of people don't don't start out thinking that way. I mean, people people approach investments from all sorts of different vantage points. But I always start out with the metrics. And even if I'm on a value, I mean, this day and age is pretty hard to do value investing. But even if you're doing growth investing, the metrics have to jump at you. The numbers have to jump at you. And they did in Eastern Europe at the time for me. And that's how I ended up sort of running my investment life. [00:08:57][103.4]

ALEC RENEHAN: [00:08:58] So you went from that Polish bus shelter to cofounding and leading Hermitage Capital Management. And I think I read that you told your initial investors at the time, where are you going to make a lot of money or we're going to lose everything. So can you tell us what that what that process was of, you know, starting that fund, focusing on Russia and some of these post-Soviet economies? You know, we hear that it was, I guess, a bit of a Wild West at the time. What was that like as a young investor starting your first fund? [00:09:29][31.4]

BILL BROWDER: [00:09:30] It was pretty unbelievable. It was truly, really Wild West sort of gold rush. So what happened was in in the when when Russia split from the Soviet Union and President Russia at the time was a guy named Boris Yeltsin and he wanted to go from communism to capitalism. And the way that he wanted to do that was to basically give all state property away for free. And so they created something called the voucher privatization program, where they gave every person in the country a physical voucher. And those vouchers were then exchangeable for shares and all the Russian companies. And again, I did the math, pretty simple math that the there's one hundred fifty million people in the country, which meant there's one hundred fifty million vouchers. The voucher is traded. They were freely tradable instruments that were about twenty dollars each. And so twenty dollars times one hundred and fifty million gets you the three billion, which is the market cap of the voucher program. And those three billion dollars worth of vouchers were exchangeable for 30 percent of the share capital. Every single company in Russia, which meant that the market capitalization of the whole country was ten billion dollars. This is a country with thirty five percent of the world's natural gas, 10 percent of the world's oil, 10 percent of the world's aluminum and. Some of the world's steel, electricity, car companies, insurance companies, telephone companies, everything, everything, 10 billion dollars you couldn't buy. I think at the time it was like one sixth of the entire country. Russia was one sixth the valuation of Wal-Mart. So so, I mean, it was just crazy the way that they were effectively giving everything away for free. And so the real question was not. Is it undervalued? The real question was, would they let you keep it? Would they would you buy it? And then a year later, the government changes and renationalize is that or whatever, because if they didn't nationalize it, then you could make. Just holding on to it, if it's trading in a night, if an oil company is trading in 99.7 Percent discount and you hold it, you make just you know, you can make 10 times, 20 times, 30 times your money without any problem. And so I looked at this and I said, OK, I don't really know what the probabilities are one way or the other, but let's just assign a 50 percent probability that that it doesn't work out and a 50 percent probability that that that they're not going to take it away from you, which means you make 10 times your money. That means that that the expected value of that investment minus 50 percent times, minus one hundred percent, plus 50 percent times five hundred percent, gets you two for four hundred and fifty percent expected value of that particular investment on a probability-weighted basis. And so I said to myself and I said to my clients, you know, you know, if you if you put it like a half a percent of your portfolio with me and it goes up 10 times, then then that's a five percent return for your whole portfolio. And if it goes down to zero, losing half a percent, it's not great, but it's not going to change your likes. And that was the that was the advice. And that is the sort of investment logic I shared with my clients and to be honest, very few people signed up. I was like 19 or 20, said, nice to meet you. Thank you very much. But but the people who did did pretty well. [00:12:40][190.1]

ALEC RENEHAN: [00:12:41] So, Bill, we read that while you were investing in Russia in the 90s, you were quite an activist investor. And for people who are unfamiliar with that term, it means you're actively speaking to companies and trying to get them to change what they're doing or, you know, different aspects of their business, which I imagine is difficult at the best of times, but particularly difficult when you're talking to, you know, post-Soviet oligarchs in Russia. What was that like being an activist investor in Russia in the 90s? [00:13:13][32.7]

BILL BROWDER: [00:13:15] So you have to understand that when when they privatized all these companies, when the state transferred all of them to private hands, it was kind of like they built a house, but they hadn't thought about putting in plumbing and electricity. And so in the case, the Russian stock market, the plumbing, electricity was the rule of law and property rights. And so what would happen is you would buy a share of a company, but you really wouldn't own a share of anything because the oligarchs who owned or controlled these companies were stealing all the money out the back door and I mean, really all the money out the back door. So you would have these enormous companies that the size of BP or Exxon that effectively had zero profit in it, in real in economic terms, they didn't have real profitability and have zero profit. But what happened was these guys would sell all the oil to their own trading company, you know, below market. And then and then the trading company would make all the profits between the price they paid and the real market price. And they would also strip assets and do all sorts of crazy stuff. And so I was watching all this going on and I said to myself, this is really ugly and awful and unprofitable. And and so I said then I said, well, how do I stop it? And and the answer is that in Russia, it wasn't like there was a a regulator who could stop it or the government agencies that would do something or the police or the prosecutor's office because they were all basically on the payroll of the oligarchs. So but there was one thing that I could do and I had the skills to do it, which is that I and my team are really good at research. We were good at researching stuff. And and and so we would research how they went about doing the stealing. We did something which I've coined a term for it we would do stealing analysis of Russian companies, and then we would take that stealing analysis and and share it with journalists and international media. The Financial Times, Wall Street Journal, etc.. And they loved us because we were doing a lot of the work for them and. And interestingly, by researching the stealing and then exposing it, it had had a dramatic effect on the share price for one really strange reason, which is that at the time that Vladimir Putin came to power. Fighting with the same guys I was fighting with, the oligarchs were stealing power from him at the same time as they were stealing money from me, and I've never met Putin or even had a conversation with him. But there's this expression, your enemies enemy is your friend. And so I would put out these big scandals about big Russian companies. And these were people who are enemies of Putin's. And Putin would then step in and use whatever the power he had to make life difficult for them. And as a result, whenever he would step in, I would publicize something, he would step in and the share price would go up. And and so I had the best performing fund in the world in nineteen ninety seven because of this. And in fact, if you had put your money in on day one, you make and took it out, you know, ten years later you made, you would have made something like 30 times your money. Wow. Because it was just such a great investment strategy for such a strange place. [00:16:31][196.8]

BRYCE LESKE: [00:16:32] Before we move on, we're just going to take a quick break and hear from our sponsors. Let's move forward then, so in the 2000s, you went from, you know, a large foreign investor in Russia and just off the back of achieving a two hundred and thirty eight percent return in 1997 to then the number one enemy of the Russian state. So can you tell us the backstory to this bill and how that actually happened? [00:17:01][28.7]

BILL BROWDER: [00:17:02] Well, so you can imagine exposing multibillion-dollar corruption is going to mess up and annoy a lot of people. And what happened was that I was doing this for a while and Putin was it was helping Putin. But Putin wasn't interested in in you know, he wasn't interested in truth and honesty. He was interested in fighting with the oligarchs and winning his fight with the oligarchs. And so one day he decided he was going to go for broke. And finally, once and for all, when his fight with the oligarchs by arresting the richest oligarch in the country, a man named Mikhail Khodorkovsky was the owner of oil company called Yukos, and he arrested him on his private jet in Siberia. He brought him back to Moscow. He put him on trial. And in Russia, when you go on trial, you sit in a cage. And he allowed the television cameras to come in and film the richest man in Russia on trial sitting in a cage. Now, imagine you're the 17th richest guy in Russia. You're on your yacht. It's part of the hotel duckpin in France. You finished up with your mistress in the bedroom. You wander out to the living room, you flick on CNN. And there before you is a guy far richer, far smarter and far more powerful than you sitting in a cage. What's your natural reaction going to be? You want to go back to Putin and say, what do I have to do to not sit in the cage? And that's what they did. And they all went to Putin. What do I have to do, not sit in a cage? And he said 50 percent, not 50 percent for the Russian government or 50 percent for the presidential administration of Russia, but 50 percent for Vladimir Putin personally. And at that moment in time, he became the richest man in the world. And at that moment in time, the oligarchs went from being his enemies to being his business partners. And I was still going after the oligarchs. But now I wasn't going after, you know, I was now hurting his own personal financial interests. And and so what happened was in November of twenty five, I was flying back to Russia from a weekend trip to London and I was stopped at the border. I was arrested. I was put in the airport detention center and that I was deported back the next day to London and declared a threat to national security not to be allowed in Russia after that. And then then the real trouble began. My offices were raided in Moscow. They seized all of my documents. They raided my law firm, the Lofstrom office that I use. They seized all my documents there. And then the documents were used in a complex scam where they ended up stealing a bunch of police officers, working together with corrupt officials, stole two hundred and thirty million dollars of taxes. My firm paid to the Russian government from the Russian government. And this was the point where I hired a really bright young lawyer named Sergei Magnitsky to help me investigate and stop what was going on. And Sergei, he figured out the whole tax scam. He wrote criminal complaints for me to every different law enforcement agency in Russia. He went and testified against the officials involved. And in retaliation, he was subsequently arrested by the same officials who testified against Putin pretrial detention, where they then tortured him for three hundred and fifty eight days and ultimately killed him on November 16th, 2009, at the age of thirty seven. [00:20:18][196.4]

ALEC RENEHAN: [00:20:20] It's an incredibly sad story, and Sergei's name lives on partly through the lobbying work that you've led. Some people who are listening may be familiar with the Magnitsky Act, but for those that aren't, can you tell us what the Magnitsky Act does and what was the process that you sort of followed behind the scenes to lobby governments to get firstly the US and then other governments around the world to adopt their own versions of the Magnitsky Act? [00:20:51][31.1]

BILL BROWDER: [00:20:52] After I got the news of Sergei's murder the next morning after he was killed, for me, it was like the most horrifying, traumatic, soul-destroying news I could have ever gotten. He was effectively killed because he was my lawyer. If he hadn't been working for me, he'd still be alive today. And I made a vow on that day, his memory to his family, to myself, that I was going to put aside everything else I was doing, stop doing business, and devote all of my time, all of my resources and all of my energies to go after the people who killed him and make sure they face justice. And that's what I've been doing for the last 11 years, and at first I thought that we would be able to get justice inside of Russia. Sergei had done something very unusual, which is he wrote down everything that happened in his three hundred fifty eight days in detention. He wrote four hundred and fifty complaints documenting all of the abuse and mistreatment. And he was tortured and all sorts of terrible ways. And once a month or so, he would take a hand, a stack of these complaints to his lawyer. His lawyer would file them. The Russian authorities ignored them. But we got copies. And from these copies, we were able to construct the most granular, well-documented, detailed account of human rights abuses that come out of Russia in the last thirty-five years. And because of that, we expected some measure of justice inside of Russia. But it didn't happen that the Russian authorities circled the wagons. Vladimir Putin personally got involved in the cover-up and they gave promotions of state honors to some of the people most complicit. And it became obvious to me that that we were never going to get justice in Russia. And so I then said, well, then we need to get justice outside of Russia. And that's what I came up with this idea. And it's interesting because I'm not a human I'm not a lawyer or a human rights activist. I'm a hedge fund manager. But being a hedge fund manager allowed me to have an idea that was different than any other than an idea that that a lawyer or a human rights activist would have, which is that I know who these people were and I knew how they operated as a business person. And they did all this stuff for money. And I know how these people operate with their money. They don't keep their money in Russia because it is too dangerous to keep their money in Russia. They keep their money in Swiss banks and British banks. They buy properties in the south of France. They send their kids to boarding schools in England and Switzerland. They they send their girlfriends on shopping trips to Milan. And so it became obvious to me that that maybe we couldn't prosecute them in the West for these terrible crimes, but we can certainly not let them travel to the West or spend their money or or invest in the West. And and so I went to Washington after Serguei was killed and I met two senators, a Democrat from Maryland named Benjamin Cardin and Republican from Arizona, that everyone's everyone's sort of the late Senator John McCain. And I said I told them the story that I've just shared with you. And I said, can we freeze their assets and ban their visas? And these two senators said, yes. And that became known as the Magnitsky Act. And the Magnitsky Act really took off. And it passed ninety-two to four in the Senate. It passed with eighty nine percent of the House of Representatives. And it was signed into law by President Obama on the 14th of December 2012. And the moment it was signed into law, Putin went out of his mind. He was so angry. He was so angry because this potentially put his vast fortune at risk and he made it his single largest foreign policy priority to repeal the Magnitsky Act. And he even lashed out at Americans by banning American adoptions of Russian orphans, which is just the most hideous thing one could do since most of these orphans were sick in their lives are being saved by American families. And he thought that that lashing out like this would make that make the senators think twice and maybe think about repealing the act or something. But in fact, his is is apoplectic reaction had just the opposite effect. And these two senators said, well, wait a second, if Putin is so upset by this, there's a lot of other bad guys, dictators around the world who would be who who would be equally upset and should be targeted as well. And that became known as the Global Magnitsky Act. The Global Magnitsky Act went after people doing similar things everywhere in the world, and it was passed in December of twenty sixteen. Following from that, I traveled to Canada and the Canadian parliament unanimously passed a Canadian Magnitsky Act in October of twenty seventeen, followed by the Lithuanian Parliament, followed by the Estonian and Latvian parliament. And then the British Parliament passed the Magnitsky Act in twenty eighteen after the Solsbury Novacek poisoning of the scribbles. And then at the end of last year, the European Union passed European Union Magnitsky Act. And so we now have thirty one countries with Magnitsky Acts. And one of the big outliers that I think is on deck is Australia. Australia. The Australian Parliament had a full one year public inquiry into an Australian Magnitsky Act, and it was a unanimous recommendation from this committee in parliament to the government to do it. And now we're just sitting and waiting to see when, if and when the government is going to act. [00:26:16][323.4]

BRYCE LESKE: [00:26:16] So just on that bill, it is pretty fascinating that we have had that recommendation from the Australian parliamentary committee, yet the government is yet to act on that recommendation. What would you tell Scott Morrison and the Australian government in terms of adopting this Magnitsky Act? [00:26:34][18.1]

BILL BROWDER: [00:26:35] Well, I think that the most obvious thing that happened was that the Magnitsky Act was used very recently to go after the Chinese officials who were most complicit in the concentration camps against the wigger minority in Xinjiang. And as you know, there's a massive genocide taking place. The Chinese basically want to wipe an entire ethnic group off the map, kind of similar to what the Nazis were doing in Germany. And everybody is shocked by it all over the world. And what happened was that the EU, the US, UK and Canada and so there was 30, 30 countries in total in this group sanctioned the Chinese officials involved. And and and the best Australia could do is, was make an announcement saying we support what everyone else is doing. And it really, I have to say, when I saw that announcement, I thought that is just the weakest. I mean, just it was just humiliating for Australia to be in that position where Australia couldn't join the rest of the civilized world in taking action. And I wouldn't be proud to have seen that as an Australian. And I think Australia should join up with the rest of the world and do what's right. Moreover, by not having a Magnitsky Act, the Australian government is basically creating a massive incentive program for for for human rights abusers and kleptocrats to keep their money in Australia. This is the one place that saves if everyone else is basically creating a hostile environment for these bad guys. [00:28:12][96.3]

ALEC RENEHAN: [00:28:12] Yeah, I think that's definitely going to make price. And I reflect on being Australian, get your act together psychomotor and get that pass, I guess, while we're in the frame of asking you what you would say to different governments around the world if you had a chance to speak to Vladimir Putin, you know, after being his number one enemy, after he's tried to arrest you so many times, after everything that's happened, what would you say to Putin? [00:28:44][32.0]

BILL BROWDER: [00:28:45] I got nothing to say to Vladimir Putin. I've got nothing to say to him at all. It's pure. I only want one thing, which is for him to give up power and go to jail and face justice for the crimes that he's committed. [00:29:00][14.6]

BRYCE LESKE: [00:29:01] So recently, the US Russian relationship has been characterized by low level cyber intrusions, allegations of election interference, and we had bromance between Mr Trump and Putin. But with Biden back in power now, what do you think the future holds for this US Russian relationship? [00:29:20][18.7]

BILL BROWDER: [00:29:21] I don't think anything good for Putin. Biden has made it clear right from the get-go. He said he said very clearly that Putin is a killer. He's imposed sanctions recently. And he's not he's not going to be pushed around in the way that Trump will. Trump wasn't pushed around. Trump was voluntarily pushing himself around on behalf of Putin. But even before Trump, Obama really didn't he was trying to sort of reset relations with Russia. He thought he could somehow appease Putin. And so I think that this is probably going to be one of the darkest times for Putin because the United States is really kind of drawing a line. And a lot of the stuff that Putin could get away with in the past, he won't be able to get away with Biden. There is one sort of very frustrating intermediate part of this whole situation, though, which is that in Europe, there's a number of countries that really don't understand that it's not in their interest to Putin. And just, for example, the German foreign minister a couple of days ago said, you know, maybe we should try dialog instead of sanctions. And that sounds all very reasonable, except in a situation for 20 years, everyone tried that. And Putin has just been blowing up planes out of the sky, invading foreign countries, poisoning dissidents and so on, so forth. And dialog doesn't work with a criminal like him, Bill. [00:30:51][89.7]

ALEC RENEHAN: [00:30:51] It's pretty incredible the work that you've done. So I think you should be proud and we're pretty proud to speak to you about it. We're going to we're going to try and do a hard pivot now back to investing, which which I don't think we have the skills to pull off. We'll give it a try. But I think if people want to hear more about your story and also this story about Sergei Magnitsky and, you know, I guess Putin, we can't recommend more picking up your book, Red Notice. It's a fascinating read. And it's a really important story that you're telling and that you're continuing to fight on. Thank you. All right Now I'm going to try and do the hard pivot back to the investee. So obviously now most of your time is taken up with this fight and lobbying governments around the world, including Australia. Come on, Australia, get your act together. Are you investing today and are you paying much attention to financial markets in twenty, twenty-one? [00:31:53][62.0]

BILL BROWDER: [00:31:54] I no longer manage other people's money, but I do invest my own money. And I've gone from being a investor in public equities, in emerging markets now to being a an investor-only in developed markets and with the rule of law and generally in private companies as opposed to public companies. And so my whole sort of modus operandi has shifted. And I'm no longer a value investor because I think there's not much value left out of there, out there, and so on. Now you look like almost everybody else understanding the world is being disrupted. Different technologies and trying to find ways of picking the beneficiaries of the disruption and avoiding the victims of it. [00:32:40][45.4]

ALEC RENEHAN: [00:32:41] What are some of the key, I guess, areas or thematics that you're investing in at the moment in the private sector that are capturing your interest if it's in that sort of growth sector or stage of the business? What's what are you excited about? [00:32:53][12.4]

BILL BROWDER: [00:32:54] I'm excited about anything where you know, where one can bring technology to improve efficiency in any industry. And that's and generally, it's interesting because I'm not looking for people in my generation. I'm looking for young people to invest with because people my generation just you know, we're not hard-wired to see the opportunities. I have a son who's twenty-five who went to Stanford and then started a company to replace lawyers with artificial intelligence. His name is Josh Browder. His company is called Do Not Pay. And all of a sudden he went from a standing start to having this enormous business with a huge number of users where he's now trying to put lawyers out of business and and I mean, his friends. And they're all doing amazing things and all sorts of different areas. And so, you know, really I'm focused on, you know, young disruptors who can who are going to change the world. And it's a totally different mindset and a different investment style than anything I did before. And it's not it almost feels unnatural to do what I'm doing, but it feels like the right thing at the same time. [00:34:03][69.3]

ALEC RENEHAN: [00:34:04] I've heard of Do Not Pay. I didn't realize it was founded by your son, but that was started to like automatically contest parking tickets. Is that is that right? [00:34:15][10.3]

BILL BROWDER: [00:34:15] That's exactly right. But now it does two hundred different things. But it's a remarkable story. And, you know, he's he really is. He's just ripping the cover off the ball. [00:34:26][10.7]

ALEC RENEHAN: [00:34:26] Wow. Wow. That's that's incredible. I mean, Bryce should be a little bit nervous. His partner is a lawyer, so. [00:34:31][4.7]

BRYCE LESKE: [00:34:32] Yeah, Hang on a second. [00:34:33][0.6]

ALEC RENEHAN: [00:34:35] So, Bill, you you know, emerging markets for the equity markets community is a is a really big, I guess, area of interest. But, you know, it's incredibly hard to invest in those spaces for a lot of the reasons that you just touched on, you know, less regulation, less adherence to rule of law and stuff like that. But as your experience in post-Soviet Russia exemplifies that there are some incredible opportunities if you can navigate those markets effectively. When you look around the world today, do you see any emerging markets that you think display similar characteristics to that post-Soviet Russia in the 1990s? [00:35:17][42.3]

BILL BROWDER: [00:35:18] I do not I don't think that anything will ever compare to the crazy, you know, sort of mismanaged privatization program that created those opportunities. Having said that, I think that we're going through such a world of cataclysm with covid and global warming and alternative energy and so on, that there's going to be so many dramatic winners and losers in the future in other areas. But it's not going to be so obvious as a ninety-nine points nine percent discount that we saw in Russia. You're going to have to be doing a lot of homework and you're going to have to have a view and take that. You can live with that view. And it's definitely not going to be so obvious in your face as things are. Things were when I was doing Russia. [00:36:02][44.0]

ALEC RENEHAN: [00:36:03] Yeah. Yeah. Well, if you ever do find any companies with ninety-nine percent discount, make sure you let us know about it. [00:36:10][7.2]

BILL BROWDER: [00:36:13] Well, you know, it's interesting because I was telling everybody in Russia about Russia back at the time, like as I said, in out of 20 people didn't want to hear it. Yeah. [00:36:20][7.1]

ALEC RENEHAN: [00:36:21] Yeah. I bet they're kicking themselves now. So, Bill, we have almost written about time. We do like to end these interviews with the same final three questions. But before we do, we want to firstly say a massive thank you for joining us. And then secondly, aside from buying your book, Red Notice, is there anywhere if people want to find out more about you or follow you online, is there anywhere, in particular, that should be going? [00:36:49][27.1]

BILL BROWDER: [00:36:49] Probably the best thing to do is to follow me on Twitter at Bill Browder. I'm active. I'm commenting on lots of things. I'm announcing lots of things and got lots of things to say there. And I'm just finishing my second book, which will be out until probably early next year, is almost fully written called Freezing Order, which will bring everybody up to date from when the red notice was red Notice stopped in around 2012. The story and this one will bring us right back to where we are today. [00:37:19][30.3]

ALEC RENEHAN: [00:37:20] Right. So first of the final three questions, do you have any books that you consider must reads? [00:37:27][6.8]

BILL BROWDER: [00:37:29] So I've got so many books that are considered must-reads, there's a book that I had an opportunity to read ahead of time before it is being published. It's called Read Roulette. And it's written by a guy that I met who basically lifts the hood on Chinese corruption. And it's he was busy doing wheeling and dealing in China and with the lid on the whole thing. And it tells you an insider what it's like to be a businessman, investor in China, and who's doing what to whom. And I thought that was really it's coming out soon. Read Roulette. Another one, which I thought was just shocking and hilarious, was a book called The Billion Dollar Whale about that the one IMDB scandal. Really well written, really funny. And just amazing what it just shows how all the institutions got completely hoodwinked by this guy, Joe Lo. Those are the two sorts of ones that would be most relevant to you guys and your audience. [00:38:30][61.4]

ALEC RENEHAN: [00:38:31] Fascinating story. [00:38:32][0.6]

ALEC RENEHAN: [00:38:32] Billion dollars while that blew my mind. That's just how you can still have to do still out there. So the next question is in 60 seconds or less, what's the best company you've ever come across? [00:38:46][13.5]

BILL BROWDER: [00:38:48] Well, I have to say, my son's company does not pay. [00:38:50][2.2]

ALEC RENEHAN: [00:38:54] good and so I'm sure a lot of our listeners at this point have Google do not pay, saying if they can get him to contest, then I take it all. [00:39:02][8.1]

BRYCE LESKE: [00:39:03] Graduate lawyers are also Googling new jobs. [00:39:06][2.9]

ALEC RENEHAN: [00:39:09] And then final question, Bill, if you think back to the early days in your career when you're at Stanford or when you were in that Polish factory, what advice would you give to your younger self? [00:39:21][12.2]

BILL BROWDER: [00:39:22] worth knowing then? What I know now, I would have stopped in Poland and never gone to Russia because the most terrible things happened. You know, we've lost the life of a young man. You know the Russian government has been pursuing his family, pursuing me, and pursuing everyone around me. I could have had just as good a life if I had stayed in California and focused on technology instead of Russia. And so for me, staying away from Russia would have been the best thing. And I advise you and all your listeners, no matter what anyone says, don't invest in Russia now. [00:39:56][33.8]

BRYCE LESKE: [00:39:56] Good, good advice to finish on. No intentions to invest in Russia on my side. So, Bill, we will have to leave it there. But it's been a truly fascinating conversation. As we said at the start, you know, you've done some pretty amazing work. And the efforts that you're you're doing to still lobby for the Magnitsky Act around the world is impressive. We would love to invite you all looking forward to inviting you to Australia. When the Australian government passed the Magnitsky Act here and doing a follow up interview in person, that would be an absolute pleasure. But again, thank you for your time. We know that our audience would have got a lot out of that. So thank you very much. Thank you. [00:40:35][38.3]

Disclaimer: [00:40:36] Equity Markets Investing podcast is a product of equity markets, media. 

ALEC RENEHAN: [00:41:36] Bryce, with three policies here at equity markets, what's number one we face we hate phase and we love brands that are finding ways to reduce fees for everyday customers. And that's why we're here today to talk about after pay, who in twenty 20 saved Australian customers. One hundred and ten million dollars in consumer fees and interests by using after pay rather than traditional credit cards. [00:42:02][25.3]

BRYCE LESKE: [00:42:02] That is right, Ren. It's been a great investment for me. And after pay is changing the way we pay for the better by helping us all manage our money and to take back control, you just [00:42:12][9.6]

ALEC RENEHAN: [00:42:12] You just had to slip the investment thing in. [00:42:14][1.5]

BRYCE LESKE: [00:42:15] Everyone knows I love afterpay. [00:42:16][0.8]

ALEC RENEHAN: [00:42:17] Yeah, well, look, you may not be able to live off to pay as much as Bryce, but you may love afterpay because you can use it online or in-store. And it's really easy to get started. Just head to to sign up or download the afterpay app from your app store or pay better choose afterpay. [00:42:35][18.4]

BRYCE LESKE: [00:42:36] late fees, transaction limits, and eligibility criteria apply. Visit for more details. [00:42:36][0.0]


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