Is Libya the World’s Biggest Sucker or a Sovereign Warren Buffett?

There is a limitless supply of suckers in the world of investing. Will Libya soon become a victim of Greece’s slick salesmanship? Or, is Libya the sovereign Warren Buffett snapping up shares at the most opportune time?

During my investment banking days, one of my roles was to meet with sell-side salesman to evaluate the prospects of a deal. The first prong of my framework was what I call the Bullshit Test.

Promoters (i.e., Wall Street speak for “salesman”) came into our office dressed in expensive clothes. They came into our office wielding a shiny prospectus with sexy graphs and financial models. They came into our office high on their own hype and believed their story with an overwhelming conviction.

However, as my boss taught me, only a very small percentage of those salesman were pitching something that would actually result in a winning investment. Therefore, when I smelled bullshit, we kindly took a pass on the “opportunity”.

The pool of rejected beggars played the law of numbers and swiftly moved on to the next large purse holder. To the promoters’ dismay, their reputation would usually precede them because the world of professional high finance is a very small group who tend to discuss deals on tour within the circuit.

Consequently, as top-tier investors say “No”, many of these promoters continue to move down the ladder of quality capital partners. The riskiest and most tenuous projects seem to quickly gravitate to the biggest suckers.

This morning, Greece made headlines after the Libyan Investment Authority took a look at investment opportunities in Europe’s Achilles’ heel. Clearly, Greece is running out of top-tier investing partners. In my humble opinion, Libya could be a fool who has fallen in love with the idea of investing in a sexy vehicle such as a Euro zone country.

Unless I am missing something, I am not convinced the entire Greek culture will suddenly break long-standing habits. But that’s hard to see when someone is smitten with becoming a part owner in one of civilization’s greatest brands. It reminds me of all the people who fell prey to the allure of Bernie Madoff and Lenny Dykstra.

Only time will tell whether Libya makes an investment or whether such an investment goes sour. But if I was the gatekeeper being wined and dined at Greece’s most spectacular destinations,  I would ask myself whether the strong smell at the deal table is more than just fresh feta.

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