Frontier investor finds deal over tea in Lahore to beat peers

Ami Kemppainen, who manages $88 million at Terra Nova Capital Advisors’ Evli Emerging Frontier, often take long-haul flights followed by further rides to make investment decisions. This time the fund manager has found a deal with a Pakistani cement maker over tea in Lahore, the Bloomberg reported.

“We like to map out the macroeconomic scenario the companies are inserted in, go there and check what the management is like,” the 38-year-old Harvard University-educated money manager says. “That takes time, but it is worth it.”

Many of the stocks he buys are from companies ignored by research teams because of their minute size.

Pakistan is another market where Kemppainen saw the benefit of in-person discussions, meeting in Lahore with the chief executive and finance head of a family-run Pakistani cement maker.

A PowerPoint presentation coupled with tea revealed Maple Leaf Cement Factory Ltd.’s plans to reduce reliance on intermediaries, a rare approach in the industry.

“It was basically impossible to know all that if we didn’t get close to them,” Kemppainen says.

To date, Kemppainen has mostly avoided the pitfalls. His fund’s 19 percent return in 2016 was more than eight times that of the MSCI Frontier Emerging Market Index.

Taken from inception in 2013, its performance is better than 99 percent of a peer group comprising 533 open-end funds focused on emerging-market stocks, Bloomberg data shows.

His favorite markets for this year include Vietnam and Pakistan, as both have large, young, populations combined with fast growth.