2025
January
In January, we had meetings with the management of companies from Argentina, Brazil, Egypt, and Mexico, which ranged from $300m to $5b in market capitalization and represented a diverse spectrum of industries such as power generation, logistics, commercial printing, hospitality, fintech, real estate, brokerage, and pharmaceuticals.
This month, we increased our position in a $2b electricity producer and distributor in Argentina. Benefiting from the country's president's highly ambitious – and so far noticeably successful – economic turnaround and free market agenda, this company is well-positioned to substantially grow earnings this year. Listed in the US, its stock – trading at 12x LTM P/E – is attractively priced, given the ongoing and the planned future deregulation initiatives in Argentina’s power sector which give electricity producers much greater freedom to set their own prices.
We sold a Thai food manufacturer after a series of red flags. For example, we could not find its products in the global stores where they were supposed to be sold, and the management also refused to show us the food production factory – usually public companies are proud and eager to showcase their assets and facilities to investors, unless they are hiding something. In the end, the firm failed to deliver satisfactory quarterly results, which only confirmed our suspicion that it was not doing well.
February
In February, we made research trips to the UAE and Egypt. In Abu Dhabi, we met with the CFO of a $20b prime real estate developer which dominates the market in its wealthy emirate – boasting a tremendous project backlog – while also expanding into Dubai’s booming property market. This stalwart of top-quality development has recently issued an impressive multi-year earnings growth guidance of 35% p.a., indicating a 2027 P/E of 4x – a bargain.
In Egypt – where we sensed an upbeat market outlook – we met with the CEOs of two growing undervalued companies trading under 9x LTM P/E. One is an investment holding which operates hospitality assets; it also owns and is developing Egypt’s most valuable land in El Gouna by the Red Sea: this land alone is worth over $1b, implying a steep sum-of-the-parts discount for the company whose market cap is only $450m. The second firm is best known for manufacturing cars for a Korean brand at an impressive factory which we toured meticulously; however, it also owns a fast-growing fintech business serving customers in Egypt and Turkey whose value alone exceeds the entire parent company’s market cap of $350m.
We also visited the Egyptian stock exchange where we learned about improving market liquidity from a senior manager, and we gladly toured the EGX museum in old town Cairo, appreciating the charm of this storied institution established back in 1883.