The movie version of a key value principle – with film-maker Santiago Zapata
The latest episode of The Value Perspective podcast, with Colombian film-maker Santiago Zapata, offers an unexpectedly vivid illustration of a key tenet of value investing
If we had not suspected there were parallels to be drawn between the worlds of film-making and investment, here on The Value Perspective, then clearly we would not have invited producer Santiago Zapata to be a guest on our current series of podcasts on the subject of decision-making at times of uncertainty. What we had not realised, however, was that he would offer such a vivid illustration of key principle of value investing.
Zapata’s most recent film project is the thriller Monos (‘Monkeys’), which premiered at the Sundance Film Festival at the start of last year and went on to win the Best Film Award at the 2019 BFI London Film Festival and be selected as a candidate to represent Colombia at the Oscars. Just released on DVD and Blu-Ray, it follows the fortunes of a group of teenage soldiers trying to survive a military conflict on a remote mountaintop.
Among the questions we pose about how a film makes the journey from initial idea to silver screen are how Zapata defines success and what he looks for in a script. “For any film-maker, success is based on two things,” he replies. “Your story has to reach as many people as possible and the film-making exercise has to be sustainable – meaning you can actually make a living out of it and do it again and then again.
“As for what we look for in a script, it varies. Stories are, I think, what drive us as a species. The stories we tell each other are the stories that define our present and our future. So having a story you are passionate about and you think will connect universally, that is very important – even though it can be told in a million different ways, through genres like horror or action, drama or comedy.
“What you want in a script is something that really connects deeply to the human self – to the heart – although who you attach to that script is very important too. You need to analyse carefully who would be the best fit for a specific script and how well can they work with the ensemble of other characters you are attaching to the project. So it is a very interesting mix of technique and processes, gut feeling and passion.”
Here on The Value Perspective, we need no persuading about the importance of teamwork or achieving an appropriate blend of available assets. The same goes for technique and processes – though, as our entire investment strategy aims to take emotion out of the equation, we are a lot less keen on gut feeling and passion. In a similar vein, well aware of human beings’ love of a good story, we try not to fall for them as investors.
One line of Zapata’s that really struck a chord with us, though, comes in answer to our question about how, as a producer, he sets out to control for uncertain factors that could knock a hole in his film’s budget. Acknowledging that any film producer worth the name would plan as well as they could, he goes on to observe the need “to leave some room for those unexpected things to happen”.
Zapata illustrates his point by recounting the extremes the cast and crew went to while filming Monos. “The locations were very important because we wanted to shoot in places that did not resemble any specific region or country,” he explains. “We wanted whoever sees the film to feel it was happening somewhere they themselves could relate to and so we travelled all over our country, Colombia.
“We found these very beautiful and exotic places that were very extreme in terms of climate and weather – like Chingaza National Park, which has a very specific ecosystem called the ‘Paramo’. It is kind of a highland but a wetland as well, so it is very strange combination. It is also 4,000 metres above sea level and so, as there is very little oxygen, just moving around and staying there is a logistical challenge.
“And then, from that Paramo scene, we went to film in the middle of the Colombian jungle – just getting there involved a four-hour journey and pretty much every means of transportation. We had to take trucks, then we walked, then we took donkeys and then we took rafts until we got to our set. Doing that journey every day was impossible and so we had to camp on the set.
“We didn’t have any electricity or refrigeration or phone signals – only a satellite phone – and we had to build a dining room and latrines. We slept in tents for five weeks until we got the piece of film we needed but every day in the jungle was complete uncertainty. Wild animals, extreme weather – it is not the way you are supposed to make films but, at the same time, it was the film-making experience we were looking for.”
In the past, we have actually described value investing as a long, hard and bumpy road to travel but that is not a metaphor we would dare reach for immediately after hearing the trials and tribulations of the Monos crew. Instead, we would argue Zapata’s aim “to leave some room for those unexpected things to happen” has a direct parallel with value investors’ search to identify a ‘margin of safety’ – that is, where the price paid for any investment is cheap enough to allow for a range of unexpected adverse outcomes.
Juan Torres Rodriguez
Research Analyst, Equity Value
I joined Schroders in January 2017 as a member of the Global Value Investment team. Prior to joining Schroders I worked for the Global Emerging Markets value and income funds at Pictet Asset Management with responsibility over different sectors, among those Consumer, Telecoms and Utilities. Before joining Pictet I was a member of the Customs Solution Group at HOLT Credit Suisse.
She previously was with Baillie Gifford in Edinburgh for 6 years. She holds a BA In European Social and Political Studies from UCL.
The views and opinions displayed are those of Nick Kirrage, Andrew Lyddon, Kevin Murphy, Andrew Williams, Andrew Evans, Simon Adler, Juan Torres Rodriguez, Liam Nunn, Vera German and Roberta Barr, members of the Schroder Global Value Equity Team (the Value Perspective Team), and other independent commentators where stated.
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