The Blue Whale is biggest animal on earth and are about 100 feet in length. Everytime it opens its mouth to feed on 7,900 lbs of krill a day, it is the largest single feeding event that has ever happened. Blue whale calves take a year to be born, weigh 3 tons and gain 200 lbs a day for the first year of their lives. Everything about a blue whale is big. Before people used fossil fuels as a light source, the number one source of fuels came from the blue whale. The commercial whaling industry brought the 250,000 to 300,000 whales down to 1% of the blue whales that exist today. In 1931 the whaling industry caught 29,400 whales. In every industry, the term for the biggest clients are whales because they generate the biggest income for the company. The reality is every industry wants and cultivates the biggest clients or whales of the industry. In the investment industry, while most of the clients are legitimate, there are always one or more than are less than legitimate but they are whales.

In an book called Billion Dollar Whale by Tom Wright and Bradley Hope published by hachette books, NY, 2018, there was a relatively young man named Jho Low who was able to raise and spend money like a billionaire while using the money from the government of Malaysia as his piggy bank.

The story is an investment fund called 1MDB which could and can be a terrific method for any country to use. The intent of the fund is to place money generated from commodities mined in the country into a fund that can be used by the government to generate income to assist the general public. In simple terms, if you have a fund which generates income for you, you can choose to reinvest it, spend it on you or help the communities in which you live or a combination of the above. Governments receive royalties and some of the money is invested, it should generate a return for the country without having to raise extra taxes. it can be a win-win for everyone in the country.

The reality is often it is not, as in many countries bribing the elector is how some governments stay in power and then can use their geopolitical influence depending on how close or faraway, they are from the G7 countries.

In Malaysia, the country was semi democratic or at least held elections that were not decided 10 minutes after the election closed (that happened for a leader who is now no longer living). For elections that depend on hand counting of ballots, it is impossible to know who won 10 minutes after close of the elections. The leader of Malaysia was semi-democratic and the government of US saw him as an ally in the region. This encouraged US companies to do business in Malaysia.

The conditions were correct to step in Jho Low, the book outlines while he came from a wealthy family, it was not billionaire status. His family sent him to the schools in England and the US to meet wealthy people and to make connections. Mr. Low while not a party animal ensured he was party fixer or the organizer who takes credit for ensuring his new friends have a good time. Mr. Low also determined how he could meet those people who have access to purse strings particularly in the Middle East. With the rise of the price of oil, leaders of countries in the Middle East became wealthy and many of them plans or ambition to improve their countries. With enough money they could, but it also meant others would siphon some of the money to themselves.

Jho Low was everyone’s friend, but few truly knew him beyond his reputation as one of the greatest spenders of money the jet-setting class had seen in a generation. For a number of years who was interesting for the authors of the book was the ease with which he made everyone believed he belonged. Part of the reason he lived larger than life was he was the product of a society preoccupied with wealth and glamor.

Mr. Low convinced the President of Malaysia to put him in charge of the 1MBD and part of the funds went to the President and his wife’s lifestyle in particular his wife’s shopping habits. A famous example is the wife of the Philippines’ President and shoe collection. The wife of Malaysia liked designer handbags and diamonds on a meager Presidential salary. Mr. Low ensured bills were paid without the President asking where the money was coming from.

Mr. Low ensure 1MBD had the high profile addresses, even when he could barely afford it. He often suggested to people in high places he could introduce them to other people to do business with them or as a fixer. Why the money managers and bankers needed Mr. Low was a guestion rarely asked. After Mr. Low had access to 1MBD’s money he spent over $10 billion on lifestyle – gambling, yachts, payoffs, real estate, art, parties, and movie studios. In an ironic aspect the movie Mr. Low financed was Wolf of Wall Street or a crook of Wall Street with very good skills. If you have watched the movie, some of the lines are famous because they are said all the time but often refer to real industries not very early industries.

If you think about professional sports teams winning the league championship, there is often champagne being sprayed around. In the book, Mr. Low has a habit of spraying champagne at his many parties. If the parties are covered by the press because celebrities are invited and you see them in the gossip pages, should you be investing in those companies? Are the principals in it for the long term or short-term fun? Whose money is being spent? Money that was being worked hard for or someone else’s money or other people’s money (OPM)? The gossip pages can help make connections to what you invest in and what you do not invest in? If you see people that spent money like no tomorrow, giving to charity, ask how much and what percentage of their wealth for generally it is done to fix the image.

In the book, when the whale has money to spend, there were many Wall Street Bankers and everyday bankers in many countries willing to move the money around for a healthy fee. For a time, the Wall Street bank of Goldman Sachs was bringing 20% of its fees from Malaysia, is that a good thing?

The interesting aspect is what happens when the leaders decided the gig is up? For the most part $10 billion was written off by the Malaysia government, those that were caught working for the firms were let go, fines were paid, some assets seized and people stayed out of jail although the citizens of Malaysia would have to earn the money back though higher taxes.

Linking to dividend paying stocks, with these types of stocks, you want steady as she goes. If you see excessive displays of spending of money it is time to seek alternatives or get away fast because at some point there will be restructuring and addition time will be needed to break even.

There are more questions than answers, till the next time – to raising questions.