The Naked Rhino

To pre­pare for my Renais­sance pod­cast this week, I’ve been read­ing about the great Ger­man artist, Albrecht Dür­er, best known for the engrav­ings he did as illus­tra­tions for print­ed books. He also paint­ed on can­vas and worked in oth­er mate­ri­als, hav­ing trained orig­i­nal­ly under his father, a gold­smith.

Even if you’ve nev­er heard his name before, you might be famil­iar with this pret­ty famous wood­cut he did of a rhi­noc­er­os named Gen­da.

And there’s actu­al­ly an inter­est­ing sto­ry that goes along with this wood­cut.

Gen­da the rhi­noc­er­os was orig­i­nal­ly sent to King Manuel I of Por­tu­gal as a diplo­mat­ic gift from the Sul­tan Muzaf­far Shah II of Gujarat (West­ern India). It was the first live rhi­noc­er­os seen in Europe since the days of the Roman Empire and it made quite a stir.

Descrip­tions of it reached Ger­many soon after and Dür­er used those to etch his ver­sion of it, which, as you can tell, is high­ly styl­ized with a com­bi­na­tion of scales, lam­i­nae, shells, and even an extra horn on its spine, which makes it look more like some­thing out of Game of Thrones. King Man­ny arranged a fight with a young ele­phant from his col­lec­tion, to test the account by Pliny the Elder that the ele­phant and the rhi­noc­er­os are bit­ter ene­mies, but the ele­phant fled the field in pan­ic before a sin­gle blow was struck. I don’t blame it.

Poor Gen­da was then sent as a present to Pope Leo X, who also want­ed to see it fight with an ele­phant which had made him laugh by squirt­ing water and then kneel­ing down to be blessed like a good Chris­t­ian. Ah the good old days of rhi­no ver­sus ele­phant bat­tles in the are­na. That’s what Chris­tian­i­ty is all about. So Gen­da was thrown on anoth­er ship, only to be ship­wrecked near Por­to Venere on the Lig­uri­an coast of north­west­ern Italy, where he was last seen try­ing to swim to safe­ty, but unfor­tu­nate­ly still chained up (it had been shack­led to the deck to keep it under con­trol) and unable to make his way over the rocky shore.

Dür­er’s draw­ing sur­vived much longer than the actu­al rhi­noc­er­os and served as the inspi­ra­tion for innu­mer­able rhi­noc­er­os­es in les­son books. The wood­cut was copied many times in the fol­low­ing three cen­turies and was regard­ed as an hon­est rep­re­sen­ta­tion of a rhi­noc­er­os well into the 18th cen­tu­ry, when Clara the rhi­noc­er­os toured Europe for 17 years and more accu­rate rep­re­sen­ta­tions became pop­u­lar.

But the image con­tin­ued to have a cul­tur­al impact. Sal­vador Dalí, who had a repro­duc­tion of the Dür­er wood­cut hung in his child­hood home, loved it so much he made a mar­vel­lous sculp­ture of it in 1956, which stands in Puer­to Banús in Spain.

(Fun­ni­ly enough — it’s the sec­ond time I’ve read about suf­fer­ing rhi­noc­er­os­es this week. Soft­ware engi­neer Jesse Wait­es recent­ly pub­lished a post called “I Point­ed AI at 400 Years of His­tor­i­cal Archives. It Found a For­got­ten Mete­orite, Lost Rhi­nos, and Unrecord­ed Vol­canic Erup­tions” where he talks about oth­er rhi­noc­er­os­es dying in tran­sit.)

So what does Gen­da have to do with val­ue invest­ing?

The sto­ry got me think­ing about embell­ish­ment, and how the prospects for com­pa­nies are some­times embell­ished. CEOs, bro­kers, finan­cial advis­ers, and mem­bers of the finan­cial media, occa­sion­al­ly have been known to inflate the prospects of cer­tain com­pa­nies.

They’re usu­al­ly based on some lev­el of truth, but are enhanced and extrap­o­lat­ed in ways that might seem impres­sive to the casu­al observ­er, but real­ly would not hold up to much sober inves­ti­ga­tion.

When you strip away the fake armour, addi­tion­al horns and scaled legs, what you’re left with might still be a fear­some and impres­sive beast, but not quite the super-pow­ered ver­sion that you were promised.

And the prospects between the two ver­sions of the sto­ry could be mate­ri­al­ly dif­fer­ent.

One exam­ple that comes to mind is Lion­town Resources. The lithi­um deposit was real, the mine was real, and major com­mer­cial inter­est was real. The vul­ner­a­ble part of the pic­ture was the con­fi­dence attached to future prices, costs, fund­ing and expan­sion. A gen­uine asset can sup­port an invest­ment sto­ry that makes its even­tu­al prof­itabil­i­ty look much more assured than it is.

You might think, if you’ve already got a rhi­noc­er­os, why would you need to embell­ish it even fur­ther than nature has already enabled it? Isn’t a rhi­noc­er­os bad-ass enough? You’re mak­ing mon­ey, you’re grow­ing, what else do you need?

Per­haps that’s just the nature of the mar­kets, the short-ter­mism of CEO con­tracts and the incen­tive mech­a­nisms that bro­kers the finance media oper­ate under. There are moti­va­tions to fluff up the sto­ries as much as pos­si­ble, even when the hon­est sto­ry is prob­a­bly good enough. It’s one of the rea­sons we look for com­pa­nies with high founder stakes. They have less incen­tive to gild the lily.

QAV, of course, is designed to strip away the embell­ish­ments, the extra scales, fake armour and addi­tion­al horns, and give us the bare naked rhi­no which we can then score with our eyes wide open. We just want the cold, hard facts. Is the com­pa­ny mak­ing mon­ey? Is it grow­ing? It is well man­aged? It is avail­able at a rea­son­able price? Okay, we’ll accept a lit­tle bit of fore­cast­ing (hence our IV2), but it’s only one of twen­ty met­rics.

Give us a naked rhi­no any day.

Coin­ci­den­tal­ly, “NAKED RHINO” was the name of my post-safari nud­ist sludge-funk band in the ear­ly 1990s.

Now… where can I find a good old fash­ioned rhi­no ver­sus ele­phant fight? Any­one got the Vat­i­can’s phone num­ber?

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