A world of opportunity: Rob Citrone’s best ideas
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Welcome to another episode of Goldman Sachs exchanges. Great investors. I'm Tony Pasquarello, global head of hedge fund coverage in global banking and markets. And today I'm thrilled to be speaking with Rob Citrone. Rob is the founder of Discovery Capital Management, a hedge fund that manages about $3 billion.

Discovery focuses on macro investing with a particular focus on the emerging markets. And they're coming off two massive years in a row, returning to about 50% in 2023 and in 2024. I'm excited to hear about Rob's career, his investment framework, and of course, his view of the world as we sit here today. Rob, welcome to Grand Investors. Great to be here, Tony. It's a pleasure. Let's start with the big picture. How are you thinking about the markets right now?

Well, I think the markets are offering a lot of opportunities, both on the long and the short side. And we're seeing lots of big swings in people's views of things. I think we have a different view than a consensus, which I kind of like. We're relatively constructive.

And we actually think 2026 is going to be a big year for the U.S. We think the U.S. economy is going to boom on the back of significant tax cuts. In 26? In 26. Okay. I think it's slowing now, but we don't think it's – if it's a recession, it's kind of what I call a fake recession. It's a recession where you have two negative GDP numbers, but mainly because of massive imports, people getting ahead of the tariffs.

We don't think real final demand is really going to go negative. It does a very slight, and then we see the economy picking up in the third and the fourth quarter. We see a lot of reshoring of companies coming. You talk to office park managers, and they're full now. I mean, they got a lot of LOIs that they've signed. There's a lot of companies here coming to expand.

I think in the end, the tariffs will be a good process ultimately for the U.S. And if I look at the U.K. deal, I think it's a very good deal for the United States when you go through it. I hope a lot of the other ones will be solid deals. I think in the end, and most tariffs around 10 percent, I think China will be a little bit higher, but not egregious. And I think, you know, we need to have a bit fairer trade. And so I think it's not a bad thing.

Okay. And then so two questions on that. One is, is the constructive story on 26 a function of the policy? Is it a function of Trump 2.0 policy? And then the attendant question would be, what are some of the high conviction views you want to play today or maybe just set up for around the corner? Yeah.

I mean, I think it's part of the policies of what Trump is doing. I think also getting rid of some of the wasteful spending in Doge I think is also a great thing. But, you know, it's really about the U.S. private sector, and it's been about the U.S. private sector for the last 15 or 20 years. And I don't think that's changed. And the technology advancement and advantage we have is enormous.

I think the U.S. keeps that. So it's a combination of policies, but really it is the exceptionalism of the United States private sector and the corporate sector in the U.S. Okay. Today, I mean, I think part of the way to play this is we're constructive on the U.S., but, you know, evaluations kind of reflect that a lot. So we think some of the best opportunities, quite frankly, are in Latin America and some other places outside the United States.

We're incredibly bullish on Latin America. You have very cheap assets down there, and you can make very large returns, not just in equities in Latin America, but you can be in the local fixed income, you can be in credit, you can be in the currencies. There are very large returns to be had there. So we see a political revolution moving to the right, center right, to market economies, to more freer democracies. And we see four big elections in Latin America in the next 18 months in Chile, Peru, Colombia, and Brazil.

And it sounds like the bias coming out of those should be net positive for risky assets in those regions. 100%. And the other thing is that if we're a little bit wrong about how things play out in the U.S., Latin America is a little bit of a safe haven in all this. If you look, no country in Latin America got more than a 10% tariff. Mexico's got the USMCA where most of the goods still are tariff-free if you're compliant. So we see a lot of positive things happening there that can shield you if the U.S. doesn't do so well.

And do you feel like that's getting its due or do you feel like the Latin America trade has lost the months, the smoke of everything that's been happening? It's been lost for a long time because it's been a loss. It hasn't been a lost decade in Latin America. It's been a lost 25 years since the tequila crisis in Mexico.

And so not many people focus on it. I was just in a conference this morning, meeting Argentine companies in a couple of meetings. I had some other investors with me. Those investors had never been in Argentina, or if they had been there, they hadn't been invested in over a decade there. So there's a lot of opportunities still in Latin America where people just aren't invested. People really focus on emerging markets in Asia, and rightly so with China and over the years. But I think that's shifted now. I think China is a place where it's going to be a very difficult next 10 years.

And I think that Latin America is going to boom. And if we circle back for one second, it sounds like in the end, you're still a believer in U.S. exceptionalism. Yes. Makes two of us. Do you worry about the flow of global capital at all in that context?

I do worry about it. You know, we're seeing a lot of flows from official, like central banks and others right now that have obviously seen the dollar come under some pressure. So, you know, how long is that going to continue? And, you know, the dollar, I think, is the hardest thing to call. I think we're pretty constructive on the equity market in the U.S. after the kind of sell-off that we've had. And we think that the rates, we're in the camp that rates are going to

rise in the U.S. in the 10 years is going to be over 5% by sometime towards the end of this year, mainly because the economy is picking back up, but also inflation is going to stay sticky with the policies in the short term. So we don't see a rally in interest rates. We don't see the Fed cutting interest rates. But the hardest call, I think, is the dollar. Okay. I want to take a quick step back. I'm just curious how you would characterize your style of investing. And then as an adjunct to that, how much has it evolved over time? Yeah.

Well, I really believe in this top-down and bottom-up approach where you can use the macro at the same time, pick individual stocks. I think it's been a huge advantage for us. I don't think many people do it. Certainly not many people do it very well. We've been doing it for 26 years at Discovery.

But I really learned a lot from Julian Robertson and George Soros and having worked closely with each one of those gentlemen, you know, some of the best legendary investors we've ever seen. And, you know, I kind of combine what I think are the best of the two. You know, Julian with a little bit of long-term strategic view, cross-checking all the ideas with his Rolodex that he had. And then George was a master trader, putting on big positions, taking risk, and then taking it off quickly if things change and managing the risks. So I kind of try to combine the two of those in discovery. Got it.

I'd be curious, and you referenced this earlier, how important has the short side been, particularly as it relates to the equity asset class, how important has the short side been to your money management and your risk management? I remember when we first met, this must be at least a dozen years ago, we were at a roundtable dinner, and you talked about the significance of some of your single stock shorts, which was a brave thing to say at a table of hedge fund folks. A lot has happened in that context,

think GameStop and all that in 2020, 2021. Yeah. Flash forward today, how important is it to what you do? I think it's really important and I think it's a lost art. Not many funds are doing it anymore. I learned it from some of the best, from Julian and from George, particularly Julian and what we did in initial stocks when I was at Tiger for over five years.

It has really led to the fact the last two years, you quoted we were 50% roughly each year. The last two years, a compound of 120%. Well, we had a net 10% equity exposure over that period on average. Plus 10. Plus 10. That's it. And two rippers. Two rippers, only plus 10. So we did it the way you're supposed to, the old-fashioned way. We did it with longs and good shorts. And those individual shorts were hugely valuable. Example, we caught three of the four regional banks that went bankrupt.

We were short, and we wrote in our outlook in the beginning of 23 that regional banks were some of the best areas to be short in the United States. And had you battled that for a while, or did you nail the timing? We nailed the timing on the regional banks. You don't always nail the timing on the shorts. And shorting is a dangerous game, and you have to be very careful, and you have to make sure you're managing the risk. And I think we've done a really good job through that because even through all the GameStop and all the other stuff, I think we managed through that very, very well.

Here's a question I've always wanted to ask you, which is you do so much. You trade so many different asset classes. At times, I presume you have a lot of line items in the book. How do you keep track of it all? How much is kind of in your head? How much is on a spreadsheet or a risk management system? How do you do that? You know, I'm very familiar with the companies we invest in to a large degree. So I've been doing this for almost 35 years.

I have a lot of it in my head. Of course, I have great reporting and real-time reporting as well. So I have a real-time P&L system. I can see what's happening in the portfolio. I break the portfolio down into kind of themes. So instead of having to think about each individual line, I think about the big themes that we have. Like Argentina long has been a big theme for us. India on the long side has been a big theme. Short regional banks has been a big theme for us.

China over the last few years has generally been a short theme for us. So I think of things in terms of themes that helps me think about the risk and help manage the risk. Got it.

You also tend to have what I would characterize as pretty high conviction views. And despite, again, like I said, many line items, you also can concentrate quite a bit. How does that kind of translate into the way you take the risk and the way you manage the risk? Are there times when you're particularly concentrated and other times when you're not? Or is that always kind of a hallmark of what you're doing?

Well, I think there's special times every five or ten years where there's a really spectacular trade and investment that we then will concentrate in a meaningful way. 2013 in the dollar-yen, where we made over a billion dollars, long dollar-yen. And, in fact, you know, we discussed it quite recently.

and I kind of convinced George and Scott Besson at the time to go big in that. And, you know, Scott says I'm responsible for 75% of his bones at Soros, kind of jokingly, over that time. But-- And then the latest one is Argentina, where, you know, I saw the movie happen in 1991. I was in Argentina in '91, and I was like,

And this was a very similar movie where Argentina in '91 had a reform program that generated a good fiscal balance. They were able to bring inflation down, coming from a very depressed level in the market. In all asset classes, it was the best performing market for four years in a row.

This is the same movie in Argentina today, starting back about 18 months ago, and we got very large in all the asset classes. And we do it in a way where we use all the asset classes. So you're having many tools in your toolbox, not just doing equities, but being able to do local rates or currencies or bonds.

Credit is a very big advantage for us. But we took a concentrated bet, but we also took it in a way that we minimized the risk as much as possible. For instance, in the dollar credit bonds that I took, I only did bonds that basically amortized out during Malay's term. And yet those bonds were yielding 35%, which was crazy because the probability default was very, very low over that period. So, you know, I think they come around every... And I said to our investors, you know, two years ago that Argentina, actually after Malay was in...

elected that Argentina is the best thing I've seen since Dorian in 2013. This is the best trade. And you have to do that, but you have to manage the risk. If we're wrong and things were to change, we'd have to be liquid enough to get out. And both Lien and Argentina are good examples of things that we structured in ways that we could get out pretty quickly.

And then when you have a setup like that, when you have, say, a country view, and as you've referenced, you can prosecute that bet a bunch of different ways. Yes. Equities, credit, currency, on and on. First of all, how do you decide...

And then within that, do you sometimes mix kind of a pro-risk trade with a risk-off trade? Or is it kind of all shooting in the same direction across a bunch of different implementations? I would say generally when it's a big idea like that, they're generally in the same direction. So you're not counter-trading anything or hedging anything that way. But what I do is I look at the expected return and what the downside of each of the positions is, and then try to meld it together in the best position as I can. One of the things that was very helpful in Argentina, especially early on,

is the equities actually were performing in 23 and the bonds were not. So we were losing money in the dollar bonds and the equities were actually going up. And that helped to counteract some of the decline. So you do get some benefit of having some diversification, but the key is to have liquidity to exit

and also get into the trade effectively. And so using all the asset classes really helped. But sometimes like the equities rallied quite a bit in Argentina early on. So we reduced equities, added fixed income and then dollar fixed income. And then when we were able to go into the local peso market, a 35 percent discount with 75 percent interest rates. And we knew that discount was going to come down and ultimately they were going to, you know, get rid of the capital controls and it would merge the two rates.

That was a home run trade. So we put capital there, which we had not had any there. We had to be careful on how much we put there. But, you know, we got a good 10% position and it was just a home run trade. So there's a hypothesis that markets just continue to get more and more efficient with time.

And yet here you are coming off one of your best five periods of money management in a long, long career. And so how do you, I guess the first part of the question is, do you agree with this kind of arc of efficiency? And then how do you square it with how good the hunting has been for you personally in recent years? Yeah.

Well, I actually think markets in the last five or 10 years are getting less efficient. Less. A lot less efficient. And they just don't discount things ahead of time as much as they used to in the past. And that actually makes timing difficult. But what we're seeing is with more retail money involved and more just what I would call machine money, they don't anticipate much. They react to headlines. They react to news. And so we see much bigger reactions to news. And the discounting isn't as early. So it actually, if you have an ability to stay with your position, it's

It actually has made it easier, but it's made the timing a bit more difficult. So I would say markets are less efficient. I think it is easier for how we manage money. It's easier for us now, but for most people, it's much harder. And I would say that we've been investing the last few years with confidence and not scared. And I see a lot of investors who are investing scared because they don't know what's going to happen. Sure.

It feels like a bit of an out of consensus view on the efficiency point. Now, maybe it's one of those things that people just have said at any point in market history. Oh, it was easier in the old days, but you're on the other side of that. Yes. Okay. So given kind of everything discussed at this point, it feels to me like you'd say the opportunity set is going to continue to be really pretty fertile, whether it's in the macro space or the EM space. Is that fair? Absolutely. Yeah, that's a great, great opportunity for us. I don't know if there's been a time, certainly in my 35 years of investing, where

that it's been a better environment for what we do at Discovery and for the skill base that we have, for the contacts and insight we have. For instance, in Latin America, the expertise we have, I don't know if anybody has any better than we do. And for some of the places that, you know, and being able to change mind quickly and, you know, having not only a macro but the micro view. I mean, I've always had a number of technology individual analysts because if you don't understand what's happening in technology, I don't know how you can invest. So it's been so helpful to our macro view to have understanding what's happening in technology.

It's obviously been a great place to invest as well. And I guess in a different spirit, because everything we've discussed feels quite, again, quite exciting, high quality.

What do you worry about? What keeps you up at night? Where can you be wrong? Yeah. Well, keeping up at night is not a problem because I get up for the last 25 years at night at 3:00 in the morning every night for the close of Asia and the opening of Europe. So I've been doing that for 25 years. So, up at night on a problem. And then you're back to bed after you get a glimpse? Back to bed after about 20 minutes, yeah. Okay. But we do trades and I'm involved in making decisions in that period of time. And I'm planning ahead of that, but I do make decisions at that time. It's really a tremendous advantage because it gives you the feel for the market on a 24-hour basis.

And also, I don't know why is the case, but if I ever want to buy the U.S. market or buy futures, it's usually the weakest time of the day is for some reason the close of Asia and the open of Europe. The markets tend to be the weakest point they're going to be.

I should actually go back and do a study on that, but that's my feel from doing that. So it's a big advantage. I mean, the world is a very complex place, so there's a lot of dangers out there. So I think that's kind of the biggest risk, the unknown, that you don't know what's going to happen that could be a big surprise. I'd be curious, for your 3 a.m. wake-up, what time do you go to bed? Then you have your 20-minute break.

and then you go back to bed? And then what time do you wake back up? What's a night's sleep look like? I try to get to bed by 11.30 because I want to have three and a half hours of uninterrupted REM sleep. And apparently the Israeli army have studied this very closely. And if you have three and a half hours of uninterrupted sleep,

The other stuff is just superfluous to some degree. You can get a rest. But if you only get like two hours, get woken up two hours, that's actually not very good. So I try to get three and a half hours. Then I'm up from – it's actually 3.15. I get up 3.15 to about 3.30, 3.45, somewhere around, depending on what's happening. On Sunday night, with all the stuff happening in China and all that, I was up for a little bit longer this last Sunday night. And then I go back to sleep and I get up around 6, 6.30. Okay. Okay.

And then that segues to my next question, which is there's not a lot of people who have a track record like yours. There's not a lot of people who have run hedge fund money for as long as you have, where every day is something of a knife fight. And so what's been the key to your longevity?

You know, I think number one is you've got to love it. I love it. And I feel like I have a front row seat to the world. I got to work with some great organization to Fidelity and Tiger and I worked on a discovery. And so I'm really involved in the investments that we do. Let me give you an example. So I went down to Argentina for one day, the day of their liberation, where they got rid of the capital controls and announced the IMF program. And I got a chance to meet with the president before he met with Scott Besant. And I went with the economic team for a couple hours before they met with Scott Besant. It

It just, you know, to be part of that event, which is a big deal for that country, and to help influence it and be part of it is a really powerful thing. I got help to get the president of Mexico to call President Trump. She first wrote a letter to him and to some of her advisors I know. I said, look, you've really got to develop a personal relationship with him. He likes to talk. Letters aren't going to work.

She called me immediately. They've developed over a number of six phone calls now. They've developed a pretty good relationship. She's doing an amazing job of managing that relationship. So we're actively involved in our investments as well. And, you know, really, I feel like I have a front row seat to the world. You think you'll trade to your last breath? I think so. I think so, too. Okay. As our viewers probably figured out right now, you're a Steelers fan. You're one of the owners of the Pittsburgh Steelers. What's that experience been like? How involved are you?

Yeah, it's been an incredible experience. I'm a lifelong fan, so I grew up as a kid as a big Steeler fan. But to see it from the inside and be involved in it is really special. But it's also been very special to get my family involved in it, my kids involved in it, and Cindy involved in it. Cindy and I have been on the board really for the last 17 years, and it's been a wonderful experience.

learning experience for us. But you feel even closer to the team. You have more conviction in what's happening. And you feel like you at least have some input into it. So it's been very powerful. But I really focus on managing the hedge fund. And I let Art Rooney and Omar Khan and Coach Tomlin, they really run the operation. They know what they're doing. All right. So we'll finish as we do with the lightning round. First question, what's your greatest strength as an investor? I think the greatest strength is I'm able to

connect so many dots around the world and put them together into what actually will happen out of that and have done this and can do it quickly. And I'm decisive and got to be decisive in this business. I'm decisive. And to link back to earlier in the conversation, that is pattern recognition that's between the ears. Is that right? Absolutely. And it's also insight that I get from all the different contacts that I have that are just invaluable. I'd better pick up the phone and to talk to some of the leading people in the key countries we're investing in is just a massive advantage.

What's the best piece of advice you've ever received? This could be markets advice or otherwise. You know, I think it came from my dad when I was really young, from the day I can remember. He always basically said, whatever you do, do 100%. And if you can't do it 100%, you don't do it. So I always thought you had to do 100%, so I never, you know...

I never thought otherwise. And I think that really helped me from an early age on. And when you have success early on and you compound it over time, it makes things easier. So if I think about the people that I speak with in our industry who are running hedge fund money in particular, who've been successful for decade after decade...

The the the kind of the to sustain that excellence requires an enormous amount of work and focus and effort. And there's almost no other path. Yeah, almost no other path. I agree. You referenced George Soros earlier. You referenced Julian Robertson earlier. Who are some of the other investors that you admire most?

Well, I certainly admire the two of them, and I learned from them, and I think they're two of the greatest. I admire what Dave Tepper's done for many years. You know, he's a Pittsburgh guy as well, so I think there's a special affinity there. You know, he went off to the dark side with the Carolina Panthers, but we had him for the Steelers for a little while. I still think he secretly roots for the Steelers.

But I really admire what he's done. Stan Druckenmiller, again, another Pittsburgh guy. That track record is phenomenal. So there must be something in the water in Pittsburgh that's special. But, yeah, those are the two other guys that I really have a lot of respect for. I've done it for a long time with tremendous records. Away from the markets and, I guess, away from National Football League records,

Where else do you spend your time? What else is of your interest? Well, I do a lot in the philanthropic area, a lot for mental well-being for the youth. We have a big program in Pittsburgh we've had for a number of years even before COVID. We have five people on the ground there, and that's something that we do a lot. Also in education and serve on the board of my college, and we get involved in education and stuff like that. But then I like to – I'm not very good at it, but I like to play golf on the weekends, and that's kind of fun. Last question. What advice would you give to a young person entering our business today?

Yeah, I think the best advice I can give is you have to love it. You have to love it. I mean, really love it. And the second thing is, as you're developing your career, the relationships you build are the most important things. And you need to focus on building relationships. And to build relationships that are truly lasting, you have to give something in that relationship as well. And you have to keep your integrity and your honesty. And I think that's really key. Okay, beautiful. We're going to leave it there. Rob, thanks for doing this. Tony, this is fabulous. Thank you very much.

Thank you all for listening to this episode of Goldman Sachs exchanges. Great investors, which was recorded on May 14th, 2025. I'm Tony Pasquarello. If you enjoy the show, we hope you'll follow us on Apple Podcasts, Spotify or YouTube or wherever you listen to your podcasts and leave us a rating and a comment.