Forbes_USA_June_13_2017

HOW TO PLAY IT
FINAL THOUGHT
a construction entrepreneur and attended Universidad
de las Américas in Puebla, majoring in economics
and playing shooting guard for the college’s championship
team, the Aztecas. Rodriguez went straight
from there to an entry-level position at Mexico’s Ministry
of Finance and then on to Stanford, earning a
master’s degree in engineering, economic systems and
operations research.
After graduating in 1999, Rodriguez headed back
to the finance ministry under presidents Vicente Fox
and Felipe Calderón, ultimately rising to undersecretary
of finance. During his 14-year tenure there, Rodriguez
got to know the Mexican capital markets intimately,
because he helped create them. From 2005 to
2011, as head of Mexico’s public-debt management,
he was the nation’s yield-curve czar. He also created
an online Treasury Direct platform similar to the
one in the U.S. and launched a National Infrastructure
Fund.
“I was in the finance ministry during the Asian
Tiger crisis, at a time when we were just getting over
the Tequila Crisis … and then, bam, it’s 2008,” Rodriguez
recalls. The Tequila Crisis refers to Mexico’s
devaluation of its peso in December 1994, which
sparked hyperinflation and capital flight. At the time,
Mexico faced default on its dollar debts, and the IMF,
with the help of the U.S. Treasury, spent $40 billion
bailing out the country.
“We became the poster child of the IMF,” he says.
“None of that compared to 2008.” That’s when the
world began falling apart. In Mexico City, while Wall
Street was imploding, Rodriguez and others in the finance
ministry were looking at their balance sheets
for ticking time bombs, “and we found nothing,” he
says. Until Rodriguez realized that Mexican corporations
had gorged on dollar loans. Companies needed
more pesos to pay dollar debts. It was the Great Recession
with a painful reminder of the peso crisis.
“We spent $25 billion in different forms to stabilize
the situation, because we thought, No way is anyone
going to fund us. It was intense,” he says shaking
his head, with a “never again” look on his face.
Thanks to Mexico’s good record paying back its
1990s peso-crisis debts, it got thrown another IMF
lifeline during the 2009 G20 meeting in London. “We
got a $47 billion credit line. Until then, we thought we
were entering another major financial crisis,” he says.
On the news, the peso rebounded from 15 to the dollar
to about 13.
According to Rodriguez, the peso strengthens fast
on good news. He predicts it will happen again.
In 2013, Rodriguez was recruited by BlackRock,
barely a year after he spearheaded the hosting of
the G20 Summit in Mexico City. During the meeting,
Rodriguez led the effort to increase IMF funding
by over $450 billion. Despite his decision to move El
Norte, Rodriguez continues to be named as a potential
successor to Agustín Carstens, the current governor
of Mexico’s central bank.
In his new role managing BlackRock’s $370 million
fund, Rodriguez has spread its investments
around the globe, employing something of a contrarian
value strategy. The fund currently has its largest
exposure to equities in China and Taiwan and is
overweight tech and telecom stocks. From a currency
standpoint, he is long the Brazilian real as well as the
Thai baht and Turkish lira. For bonds, his top three
holdings are Mexico, South Africa and Indonesia, all
yielding around 7%. Total is leveraged 140% on the
fixed-income side to help limit
volatility in equities. In 2016, the
fund returned 13.2%, beating
the benchmarks and its category
average of 8.47%.
In December, Fitch downgraded
Mexico’s credit outlook
from stable to negative amid
an interest rate hike by its central
bank. The peso has recently
strengthened to 18.80, and
Rodriguez has lightened up his
positions there.
“The big mystery for Mexico
has been Trump, but soon local politics will take center
stage,” he says. “But there is a strong fundamental
backdrop in the country.” What if its populist frontrunner
comes to power and the peso falls back to 22?
Says Rodriguez, “Buy. Absolutely buy.”
“Two men look out through the same bars; one sees the mud, and one the stars.”
—FREDERICK LANGBRIDGE
BY MARC CHAIKIN
Our model is bullish on iShares MSCI Mexico Capped
ETF, but when you analyze its components you get
seven stocks accounting for 50% of the index, so I
think you really have to focus on those stocks. Carlos
Slim’s America Movil, Fomento Economico and airport
operators Grupo Aeroportuario del Pacifico and Asur
are all beating the iShares ETF. We are bullish on all of these stocks
(all ADRs) for the next six months. We also like cement-maker Cemex,
which is in the exchange-traded fund but underperforming.
Marc Chaikin is the founder and CEO of Chaikin Analytics, a Philadelphia
technical research firm.
FOLLOW-
THROUGH
INTO THE
SUNSET
One of the most
skilled investors
in Silicon Valley’s
Wild West is
hanging up his
spurs. Chris Sacca,
he of the signature
embroidered shirts
and other cowpoke
attire, made a
$1.2 billion fortune
at his venture fund,
Lowercase Capital;
his prescient bets
on tech titans Uber,
Twitter, Instagram
and Kickstarter
earned him a Forbes
cover in April 2015.
But after a taste
of showbiz glitz—
he was a Shark
Tank shark in the
program’s most
recent season—
Sacca is trading
series funding for
series TV. He’s
playing himself
in a comedy pilot
for ABC about the
startup lifestyle.
He’s also appearing
on Celebrity Family
Feud and launching
an anything-goes
podcast. And
although he’s a
self-proclaimed
“loudmouth in
the #resistance”
who gave more
than $1 million to
Democrats in 2016,
Sacca says he’s
not throwing his
cowboy hat into
the political ring
anytime soon.
—Madeline Berg
THOMAS KUHLENBECK (LEFT): JAMEL TOPPIN
JUNE 13, 2017 FORBES | 67