The Chandler Brothers
“Let's do what we love, not just what we are good at.”
Most Famous for
The Chandlers are the greatest investors you have ever heard of. Two brothers from New Zealand turned USD 10 million of family wealth into USD 5 billion within 20 years.
Like Templeton, the Chandler brothers look for value in unusual places. In 1987, they invested in the Hong Kong real estate market. The market had fallen 70% from its peak in 1981, but the brothers looked at the fundamentals and found good undervalued assets. Within four years, the value of their investments had quadrupled.
Similarly, the Chandlers invested heavily in Russia and the Czech Republic when the iron curtain fell, and in Brazil in the early 1990s when most were scared off by hyperinflation.
Lessons for Investors
The Chandlers love to research and build up a knowledge base around an asset class. This not only helps to find undervalued stocks but can also lead you to other opportunities you would otherwise not have come across. You should see each of your investments in a new area as the beginning of a journey of discovery that will open up new investment opportunities.
Once the brothers find a profitable company with an undervalued stock, they bet big to maximize their returns. They call this approach “narrow and deep”. For example, when they bought into Hong Kong real estate in 1987, they did this by investing almost all their family fortune in just four properties.
The Chandler brothers have burnt themselves early on in their careers with leveraged positions, which forces you to seek out short-term returns. The brothers had invested in Hong Kong index futures, but when the market crashed, they were forced to liquidate their positions and missed out on the subsequent rise. From this moment on, they avoided leverage whenever possible so they could take the risk of their positions on longer time horizons. Sometimes the reversion to fair value takes longer than you think.