Eike Batista‘s story – flamboyant entrepreneur becomes the richest man in Brazil, only to see most of it wiped out when the market turned against him – has at least two good lessons for investors.
The first hearkens back to one of our “Walking Dead Investment Lessons“: don’t trust smooth talkers. Mr. Batista was an “outrageous, out-sized character, kind of like a Brazilian version of Donald Trump,” John Lyons said this morning on the MoneyBeat show. But now, said Lyons who interviewed the fallen billionaire, he was “bleary-eyed,” subdued and “recouping.”
We wrote about Ben Graham's activism at northern pipe line, but there are other interesting stories involving the father of value investing Value investing and activism go hand-in-hand. Benjamin Graham, the godfather of value investing, discovered how important it is to incorporate activism into a value strategy relatively early in his career, a strategy that Read More
“I don’t think he’s ever done an interview on the downside.”
The second lesson is also simple: beware booms. Brazil, and Mr. Batista, rode two booms, a commodities boom, and an emerging-markets boom. Now that those booms are abating, Mr. Batista’s empire has gotten hammered, and he’s trying to salvage what’s left of it.
“He never delivered on his enormous promises. He was kind of a product of this euphoria for Brazil and for oil.”
If you’re interested in cautionary tales, read John’s fascinating piece in today’s paper.