Last year I did a profile on advice from the world’s richest man (Get In When There’s A Crisis – Advice From the World’s Richest Man).
I wanted to continue the profile today by discussing one of Carlos Slim Helu’s most infamous strategies – Go Away From The Crowd.
“When there is a crisis, that’s when some are interested in getting out,” says Helu, “and that’s when we are interested in getting in.”
The entire success of Helu’s business career has rested on one simple premise: go against the current. Much like his father who prospered in real estate during the Mexican Revolution, a time when most others were fleeing the violence and insecurity as fast as they could, Helu has become known for sniffing out great bargain deals and making investments that seem to be directly at odds with what the market, and his competitors, are saying is right.
Helu has never been one to worry about what other people think of him. After all, he says, “When you live for others’ opinions, you are dead. I don’t want to live thinking about how I’ll be remembered.” Instead, Helu has built his career on standing out from the crowd. He was not trying to get noticed or to make the next day’s headlines, but by going for the investments that others were scrambling away from in fear, that is indeed what wound up happening.
The biggest investment of Helu’s life came at a time when his own country was in the midst of turmoil. Banks were faltering, businesses were collapsing, and people were living in daily fear of losing their lives. Throughout all of this, how many people would have taken the time to think to themselves, “Now’s the perfect time to invest!” As it turns out, Helu was one of the few, and the fortunate.
Helu looked for patterns in the market and singled out the unusual. If a company was underperforming, he did not turn away from it like the rest; he zeroed in his sights. Did this company have potential? Could he turn it around? Could he prove people wrong and make it a success?
The decision to purchase Telmex was a difficult one, especially in the operating environment in which it found itself. After all, it was not only Telmex that was suffering, but the entire country itself. And, Helu already had his hands full with many other small businesses he had acquired in the 1980s. But, in Telmex, Helu saw the potential and he developed a long-term plan to unlock that potential.
So, how does he do it? Does Helu simply look for deals that no one else is going for and throw his money behind them? Far from it. Helu engages in a strategic and meticulous plan of bottom fishing. Using his math background, Helu quickly determines whether an asset is being properly valued. He examines the entire sector, its outlook for the future, and the prospects for its competition. He goes beyond the regular number-crunching to take a long term perspective, evaluating from property holdings to human capital to determine the company’s intrinsic worth.
When he thinks a company is undervalued, he gets in on the action. And, that just so happens to be often what everyone else is getting out of.
Evan Carmichael
