Jeffrey Towson – on becoming a Global Value Investor

Tuesday, Oct 11 2011 by
2
Jeffrey Towson  on becoming a Global Value Investor

Until 2009, Jeffrey Towson was Head of Direct Investments Middle East/North Africa and Asia Pacific for Prince Waleed arguably the world's no.2 investor and nicknamed by Time magazine as the "Arabian Warren Buffett". While many investors are advised to have some emerging markets coverage in their stocks and share portfolios via various investment funds and ETF’s, global value investor Jeffrey Towson instead suggest that successfully going global as a value investor requires successfully going direct.

He believes “going global” as a value investor means exponentially increasing your potential opportunities. However, experienced investors are finding themselves on rapidly changing and increasingly unfamiliar terrain.Issues like: when sitting in New York or London, can you really go long in China? Isn’t getting accurate information a problem?  Isn’t the absence of rule-of-law in many places a problem? What about the fact that there is often no real separation between commercial and government activities?

Most private investors with global ambitions look at China, India, Brazil, Russia and other places and are rightly cautious. Some investors decide to avoid the perceived risks by avoiding these markets altogether. Or they limit themselves to short-term and liquid strategies. Or they try to invest in an indirect way, such as buying an international retailer such as Tesco’s with significant exposure to the emerging markets.

Going direct - five common “going global problems”

Jeffrey Towson formulates five problems aspiring global value investors need to overcome when considering going global, including:

Problem 1: Limited access to investments.

Towson suggest following Buffett’s most important lesson: that you accumulate wealth by targeting the most mispriced assets and going long. Market inefficiencies are your best targets while time is your best ally.

Most of the really mis-priced assets in developing economies are private however. And these tend to be fairly tightly held – often by conglomerates, state-owned-enterprises and owner-managers.  Even Warren Buffett was denied in his request to buy 25% of Shenzhen-based BYD (he ultimately got 10%). Getting access  is a primary problem when going global.

Problem 2: Increased uncertainty in the current intrinsic value

Most developing economies are characterised by increased uncertainties and instabilities. The markets and companies are developing quickly. Government actors are changing the rules or disappear overnight altogether. Information is limited and inaccurate. This all plays out in a greater uncertainty  when calculating intrinsic value.

Problem 3: Increased long-term uncertainty, including worries about instability

The previous problem becomes even larger…

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Disclaimer:  

Steven Dotsch - Managing editor - http://www.dividend-income-investor.com - Guide to Dividend Investing, at: http://www.dividend-income-investor.com/guide-to-dividend-investing/ - Dividend Value Profiles, at:   http://www.dividend-income-investor.com/british-american-tobacco/


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Tesco PLC (Tesco) is a retail company. The Company is engaged in the business of Retailing and associated activities (Retail) and Retail banking and insurance services. The Company's segments include UK & ROI, which includes the United Kingdom and Republic of Ireland, International, which includes Czech Republic, Hungary, Poland, Slovakia, Malaysia, Thailand and Turkey, and Tesco Bank, which includes retail banking and insurance services through Tesco Bank in the United Kingdom. The Company's businesses include Tesco UK, Tesco in India, Tesco Malaysia, Tesco Lotus, Tesco Czech Republic, Tesco Hungary, Tesco Ireland, Tesco Poland, Tesco Slovakia, Tesco Kipa, Tesco in China, Tesco Bank and dunnhumby. The Company's brands include Finest, Everyday Value, Chokablok and Technika. Finest and Everyday Value are the two food brands in the United Kingdom. more »

LSE Price
163.5p
Change
 
Mkt Cap (£m)
13,365
P/E (fwd)
20.5
Yield (fwd)
1.2



  Is Tesco fundamentally strong or weak? Find out More »


4 Comments on this Article show/hide all

Fangorn 29th Nov '11 2 of 4

Indeed, the conundrum of which funds to choose. I'd personally avoid Russia ( Long standing BP shareholder) so despite the obvious attractions they're a nightmare to deal with,which, coupled with their lack of trustworthiness makes me reluctant to invest full stop.

My favourites:

JPM Brazil, JPM China, Fidelity China)Shocking perforamce), JPM Indian

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Steven Dotsch 30th Nov '11 3 of 4

Hi Fangorn

Personally, I have been exited funds for ages focussing instead, as you know, primarily on dividend income shares. However, I also ran a more 'speculative' (non-dividend paying) undervalued shares portfolio.

With regards to Russia, I gather Aurora Russia (LON:AURR), at http://www.aurorarussia.com/ while not a fund, but instead a development capital outfit, with several near (2012?) exit candidates, fits that undervalue bill.

DYOR!

Steven Dotsch - Dividend Income Investor.com

Book: Guide to Dividend Investing
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Fangorn 30th Nov '11 4 of 4

Interesting, will take a look next week when I'm back at home - popping in now and again whilst enconced in Devon.

Main funds I currently have focusing on the dividend front are BRCI, Invesco Perp High Income, Newton High Income. But like yourself I mainly look for undervalued shafres yielding 5% plus.

Thanks for the research suggestion

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About Steven Dotsch

Steven Dotsch

Steven is the editor of Dividend Income Investor.com and publisher of the Guide to Dividend Investing. Dividend Income Investor.com provide savers, investors and (future) retirees with concise information when dividend paying shares are historically under- or overvalued. Dividend Income Investor.com's investment strategy is aimed at maximising total returns by providing timely information to subscribers on when a dividend paying company is historically undervalued. Focus is on sound stock selection and the ability to recognise value using dividend yields in order to identify undervalued and overvalued shares. As part of the Dividend Income Investor.com premium content offering, subscribers have exclusive access to Dividend Value Profiles of companies whose share prices are historically undervalued, as well as occassional Dividend Income Reports. and DII Snapshots. The latter are mini reports based on exactly the same valuation methodology used for our Dividend Value Profiles and Dividend Income Reports with concise information whether a dividend paying company is currently historically undervalued, overvalued, or, somewhere in between. We have also put more than £75,000 of our own money behind our dividend income investment strategy creating the Dividend Income Portfolio which over time will invest in up to 30 dividend paying companies in order to create a diversified and increasing stream of tax-free dividend income. Steven Dotsch said "In the current climate of low interest rates, increasing inflation, and huge budget deficits now more than ever individuals need to take responsibility of their finances in making sure that they can afford to retire when they want to. By empowering individuals with the right information on how to build a portfolio of high quality dividend paying companies which consistently increase their dividends they can safeguard their futures.” Steven Dotsch - Managing editor - http://www.dividend-income-investor.com - For an example Dividend Value Profile click: http://www.dividend-income-investor.com/british-american-tobacco/ more »

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