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GG team - How significant of a role does local politics factor into your analysis?

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Depends.

If it's a known, unknown, you account for it in your models and DCF. In other words, if I know that the Koreans are going to lean on a company for aggressive marketing, but I don't know how much, I can account for that, to an extent.

Unkown unknowns are the things that keep me up at night, or, more likely, keep me out of a stock altogether.

For instance, is there enough rule of law to allow for any investment at all in Russia? I don't know. And worse yet, I don't even know what I don't know.

That said, I could make a good argument for the "no moolah to Russia," at least as an outside shareholder.

Maybe someone who knows more about Russia would have fewer unknown unknowns, and could make a better judgment.

Sj

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How significant of a role does local politics factor into your analysis?

This flows from the gretat question earlier about what we look for in markets.

I consider it a great deal. For example, our Watchlist company from this last month. Cresud, I think is dirt cheap. (Funny allegory for a land company). I just don't trust the Argentine government's ability to manage its fiscal affairs, debasing company operations in the process.

I do not shy away from political turmoil, even corruption. But in each situation, the company has to be trading cheaply enough to compensate us for the extra risk. I don't think that markets like Venezuela, though, offer attractive investing possibilities, because of the potential for nationalization of industries.

Bill Mann
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