The Great Financial Hustle: Flying to Bahrain without tickets
Ivan Nechunaev
December 2024
We have always gone to great lengths in terms of effort involved in our search of hidden gems across emerging markets. Making our Bahrain adventure happen was no exception – in fact, it exemplified our hustler nature to the max.
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We had been trying to get a meeting with a leading regional financial services group headquartered in Bahrain for nearly a year. Our emails to their official investor relations email address were going unanswered – same as most of our phone calls, with those rare calls being picked up not resulting in any response other than "Please send us an email" (read: bye-bye) – a communication pattern very typical for listed companies in the Middle East.
Nonetheless, our persistence finally paid off: after many months of diligent attempts, we managed to get through several layers of the company's gatekeepers by calling and emailing – and ultimately, we were given a meeting! The caveat? The date of the meeting was "today", the meeting time was "in 4 hours", and the meeting location was “in Bahrain”.
We didn't think long – the quick, decisive and mobile travelers we are. We were calm, organized, and determined to make the only flight that would take us to the meeting on time. It only took us 5 minutes to prepare for travel and another 20 minutes to get to the airport in Dubai.
Our flight to Bahrain was scheduled to depart in 1 hour and 8 minutes when we arrived at our terminal – a bit tight with only 8 minutes left to make it through but we were still on track. The only issue – we didn't have flight tickets: online ticket sales had already closed a couple of hours before departure.
We rushed to the ticket sales desk at the airport. Relieved, we learned that it was still possible to purchase flight tickets in person. Thanks to the proficiency of the Dubai-based low-cost airline’s employees, we managed to quickly get our flights booked with 3 minutes left before the check-in close!
Tickets in hand, we realized that we still needed to check in! Escorted by the airline representative, we ran as fast as we could across the airport to the check-in desks, still sore from a sub-4-hour marathon we ran in Kuwait with a portfolio company CEO a week earlier.
As the twist of fate had it, with only 10 seconds left before the hard close of check-in, we made it! – we were checked in and ready to fly to Bahrain, a market we haven't explored much until now. Ugh!
We went to Bahrain for a research trip on an extremely short notice for a meeting we had been trying to secure for nearly a year
Our unique walk-in strategy
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After such a whirlwind of hassle in Dubai, arriving in Bahrain was a necessary bliss: the airport was quiet, modern and beautiful, and the visa-on-arrival process combined with passport control was absolutely streamlined. In total, it took us less than 10 minutes to get from our plane into a taxi, and then a mere 15 minutes extra to arrive in Bahrain's financial district where our company meeting was to take place.
Thanks to the welcome efficiency of Bahrain's infrastructure, we ended up having an hour to spare before our meeting. The best use of that precious hour, we thought, was to simply walk into the Bahrain stock exchange building next door and meet with the exchange's senior management. In the past several years, we have successfully used this sophisticated walk-in strategy to get meetings all around the globe (with the Pakistan finance minister meeting being a rare exception in 2019). We believe, walking in is often a much more efficient way to secure meetings than sending a magnitude of emails into nowhere.
Our trademark walk-in strategy worked out, yet again. As we were entering the head office of Bahrain stock exchange, we bumped into the bourse's senior director of trading. Despite that the gentleman was already leaving the office for the day, he was extremely kind to stay with us and help us learn insightful information about the Bahrain Bourse.
The local stock exchange is working on improving liquidity in the market and is focused on integrating trading capabilities of several regional exchanges, having already integrated trading with the Abu Dhabi financial market – we see this as a very important initiative to increase market liquidity in a sustainable way. We were also delighted to hear that there are regional differences between investors in the Middle East: for example, in Kuwait there is more active daily trading in the market, while in Bahrain investors value a more fundamental, long-term approach to investing; we have limited experience with the market in Bahrain, but the Kuwait narrative seems about right, from our observations. A fascinating development that we also learned in our meeting was that it is possible to open a trading account at the Bahrain stock exchange in just a few minutes, even for a foreigner – for now only in person but there is work ongoing to make it easy also via digital means.
We sincerely appreciated the hospitality and the time of Bahrain Bourse's senior director, and we appreciated that he appreciated investors from a Finnish fund taking interest in his exchange and market.
Thus, before we even met the company that we came to Bahrain for, we had already learned a great deal about the Bahrain market and established a respectful relationship with the senior management of the local stock exchange. Had we not decided to simply walk in, this would have simply not happened. The simple beauty of active management – by all means.
Meeting with a senior director of Bahrain stock exchange
Buying assets in the US, Europe, and Middle East
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After quickly navigating our way from the stock exchange through Bahrain's “Wall Street”, we arrived for the one and only company meeting we had endured so much stoic suffering for.
We met with the senior management of a $1b diversified investment group with over $20b in assets under management which is headquartered in Bahrain and operating across the Middle East. The business is listed on four different regional exchanges (Bahrain, Abu Dhabi, Dubai, Kuwait) with the largest volumes of trading in its shares happening in Kuwait – not surprising, given what our earlier stock exchange meeting revealed about the Kuwaitis and their affinity for active trading.
We learned from the company's head of proprietary investments that in the past several years the company has been actively implementing a diversification strategy: while a decade ago 80-90% of its revenue was generated from real estate investments, today real estate represents closer to 20%, while investment banking and proprietary investment activities have picked up steam. In the last few months alone, the company has disclosed that it bought a private education platform in the Middle East, launched a world-class hotel in Bahrain, allocated cash from its abundant liquidity to a fund run by the world’s largest private equity manager from the US, invested in a logistics business in Saudi Arabia, acquired student housing assets and industrial storage and distribution facilities in the US, invested in a European maritime ship leasing platform, increased its stake in a commercial bank in Bahrain, and launched a sleek client app powered by artificial intelligence. Clearly, a lot is happening in this business!
According to management, investors are missing the company’s ongoing transformation, and this might be the only plausible explanation why the company still trades at 10x LTM P/E, which is 50-75% cheaper than most of its listed peers. We were impressed by how institutionalized and mature – yet progressive and forward-looking – the company was, and were glad to have finally met the management. Our hustle was worth it.
Meeting with senior management of a $1b investment group in Bahrain
Lose Yourself
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Bahrain is widely known in the Middle East as an entertainment hub – especially for the many expats working for the world's largest oil company across the bridge from Bahrain in Saudi Arabia, as well as for the Saudis themselves. Until recently, there were no cinemas allowed in Saudi Arabia and alcohol consumption is still strictly prohibited there, so Bahrain with its relaxed social norms where alcohol is legal and large-scale events such as Formula 1 Grand Prix regularly take place has always been an understandable location of choice for a quick pit stop for Saudi expats and citizens alike.
As a testament to how much is happening in Bahrain on a daily basis, even during our short trip we were able to observe and experience the variety of entertainment options in Bahrain ourselves. For example, there was a weightlifting world championship taking place in Manama; there was an annual cultural festival we visited after work (which was coincidentally sponsored by the company we had just met) where we learned a lot about Bahrain’s history and customs and consumed a lot of local food; and there was a concert of a 52-year old iconic American rapper which we also enjoyed attending.
Somewhat tired but happy to have pulled off such a magnificent trip which at some point was just 10 seconds removed from not happening at all, we went to the airport. Same as when we arrived, our departure experience at Bahrain international airport was truly outstanding: the ambience was pleasant, the design was calming and aesthetically appealing, there were no queues, food and shopping options were abundant, and the entire security and boarding process was ultra-smooth. We concluded that this is now our favorite airport in emerging markets. If only the rich Middle Eastern brother Kuwait could replicate Bahrain's seamless airport experience!
We enjoyed attending a local cultural festival where we learned a lot about Bahrain history and customs
Emerging Markets Hustlers
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We hope this blog gave our intellectually curious readers insightful and entertaining information about our trip to Bahrain. But we also wanted to share with our investors another example of the sheer hustle we undertake when searching for hidden gems in emerging markets. When needed, we fly, run, bike, sail, and swim to get management meetings done: whatever it takes!
We had only four hours before a company meeting in another country which had just been confirmed after a year of trying to secure it. We managed to get ourselves ready for the trip; make it to the airport on time; buy airplane tickets at the airport because online sales were already closed; register for our flight 10 seconds before the check-in close; and take an international flight. Once on the ground, we managed to meet with the senior management of the stock exchange; meet with the senior management of a cheap, growing, high-quality local company; and explore the culture of the country.
If you know of any other investors who can be as quick, decisive and mobile when searching for alpha, and who are ready to hustle and hassle for performance in the best interest of their clients far away from mainstream investor conferences held at luxurious hotels, please let us know – we would be thrilled to meet our brothers in arms and treat them for an emerging-markets-themed lunch.
