Investment Opportunities in Maligned Markets

“One question,” the gentleman asked me, “why Colombia? What are you doing here?”

It was innocent enough, if direct. We were seated at Casa Vieja in an upscale neighborhood in Bogota last night. Chris Mayer, Bruce Robertson, Dave Gonigam and I are being hosted this week by el presidente of Interbolsa, the largest brokerage house in Colombia.

“We believe the market is unnecessarily maligned by lingering fears over the drug war,” we answered, “and therefore less expensive than the market will bear when the real Colombian story gets out. We expect to find opportunity here.”

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With price-to-earnings in the 18 range…we wouldn’t exactly call Colombia cheap. Seated at the table with us was a gentleman who makes his living running a fund in Cambodia and who’d just returned from investment tours of Haiti and Cuba. Those places are most assuredly cheaper and possess deeper “value” plays than anything we’ll find here.

Still we think, as with our project in Nicaragua, we believe there is a unique opportunity here. And it’s right in our wheelhouse.

“The security issues are a thing of the past,” our host assured us. “Colombia’s future is food and energy – two things the world needs and will be buying forever.” We aim to find out.

This morning, we begin with a meeting at the Treasury Department. Then off to the HQs of the three largest domestic oil producers in Colombia. We’ll have much more to report tomorrow.

Addison Wiggin
for The Daily Reckoning