Why John Burbank’s Betting Big on Saudi Arabia

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Aug. 19 (Bloomberg) -- Passport Capital Founder and Chief Investing Officer John Burbank discusses his strategy for investing in Saudi Arabia on “Market Makers.” (Source: Bloomberg) This report originally aired on Aug. 15, 2014.

About saudi arabia because it is one of john's big bets.

20% of your flagship funds, not an easy place to invest.

You shared some of this with us a couple of years ago.

One you feel so good about the -- for saudi arabia when they just announced it has already been priced into the market.

We were invested before the market opened and it did quite well the next couple of years we think there is about $40 billion of passive index money that will come in by 2017. the reasons to not pay attention to saudi are vanishing.

You have a number of things to pay attention to.

They are a big market.

The economy is growing almost 5%. earnings growth is going to average 20% next couple of years, dividends over the next 12 months is 3.5%. i would much rather own a 3.5% growing dividend than spain.

I think saudi was not -- you are not allowed to invest until late 2008 and no one cared.

They had a double crash.

They had a massive top in 2005. it crashed.

The financial crisis crashed it again.

Unlike feds around the world, saudi got difficult.

You did not see the big move up in equities that have been -- that happened.

The market stopped having any correlation to the s&p. it allowed the kingdom to reinvest a tremendous amount of capital.

If you go to saudi, you will say where is all the wealth.

It is not that easy to see.

In 2009, there were hardly any large buildings.

I started to want to understand the middle east, having invested all over the world.

The marginal supplier of oil really has relevance.

I want to understand more about what is going to happen.

It led to the market being open and realized there were technical reasons to keep people out.

It felt like a story from the 1990's. it was 20 years later.

This was not addicted that the market would open now.

It was predicted that it would happen a next couple of years.

They are indicating it will be the first half of next year.

The risk is much better than riley.

The currency is tied to the dollar.

If we have a tightening scenario where the dollar rallies, saudi is not hurt by that.

We have been negative broadly at em.

We have been negative em for the last couple of years.

We are positive on saudi.

I think a middle east is the fastest changing place in the world.

It is a low base, but it is changing.

You have to have gone to qatar or abu dhabi, or saudi.

The politics of kale and

This text has been automatically generated. It may not be 100% accurate.


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