Invest Like the Best with Patrick O'Shaughnessy

Manny Stotz - Frontier Markets Investing - [Invest Like the Best, EP.169]

4 snips

Apr 21, 2020

Manny Stotz, founder of Kingsway Capital and an expert in frontier markets, shares his insights on investing in emerging economies like Egypt, Bangladesh, and Pakistan. He discusses the unique demographics and market dynamics that create opportunities for growth. Manny dives into the importance of strong brand building and the critical role of distribution networks in these regions. He emphasizes the potential of high-quality businesses and the value of understanding local conditions for successful investing, even amid market challenges.

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ADVICE

Long-Term Ownership

Be a long-term owner of the very best businesses.
Let high-quality businesses compound and simplify your approach.

INSIGHT

Defining Quality Businesses

The best businesses sustain high returns on invested capital without debt for understandable reasons.
Their moat comes from intangible assets like brand or distribution, which are harder to replicate.

INSIGHT

Building Great Brands

Great brands benefit from high frequency of use and strong brand recall.
Consumers buy these products out of loyalty, habit, or even addiction.

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My guest today is Manny Stotz, the founder of Kingsway Capital. Manny is one of the leading investors in Frontier Markets, investing in equities in countries like Egypt, Bangladesh, and Pakistan. We discuss the opportunity in these markets from all angles: demographics, valuations, sectors and beyond. It is important to note that we recorded this conversation before COVID, and these markets have fallen 30% without a similar rebound in prices that we’ve seen in the U.S. As you listen you’ll hear why this may be relevant for the companies Manny focuses on and may accentuate the opportunity in Frontier Markets even relative to the numbers quoted in this conversation. Listeners will know my interest in Frontier Markets runs deep, so I was excited to have one of the categories leading investors join me.

Please enjoy my conversation with Manny Stotz.

This episode is brought to by Koyfin.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Show Notes

2:07 – (First question) – How Kingsway was conceived, their focus on frontier emerging markets, and his career path

11:57 – What are the best company builders good at when it comes to fostering a brand

18:30 – How country-specific factors impact the tailwind

25:43 – How markets are faring in these special circumstances

32:09 – Building a book in many of the markets they trade-in

37:10 – Understanding your edge in frontier markets, showing up

39:59 – Importance of solid distribution for the companies he invests in

42:12 – Concentration in various markets

44:10 – Moving beyond consumer brands in these markets

47:14 – Some of the most interesting countries they are looking into and the country business model

47:42 – Guns, Germs, and Steel: The Fates of Human Societies

47:44 – Civilization: The West and the Rest

47:46 – Why Nations Fail: The Origins of Power, Prosperity, and Poverty

53:21 – New topics he’s excited to learn about that will impact his business over the next 10-20 years

55:37 – Best way for people to get involved and invest in these markets

58:17 – Kindest thing anyone has done for him

Learn More

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on Twitter at @patrick_oshag