Project Ekaris: The importance of insight

TFHZPC had indicated that the portfolio that we would be investing in on the LuSE included four companies. These are companies in various industries in Zambia. However, a snap decision was made on the back of an invitation to attend a show day for one of the listed companies. Through a conversation with our personal broker at Stock Brokers Zambia, we were told of the availability of a performing company’s stock. However, before we made the commitment to purchase, our belief system influenced us to look at the company with an investor’s eye. We had to make the decision based on knowledge of the company’s performance. However, we also had to consider the outlook of the company in the next 5 to 10 years. We are in the long game when it comes to investing on the LuSE.

In order to get an understanding of what to expect in terms of performance, we extracted the company’s historical revenue trend. It showed that year on year this company had been increasing revenue despite challenges of the macro conditions which are ubiquitously mentioned on our website. Furthermore,we assessed the company’s operating performance and compared that with what resources and capabilities this company had. There are additional tests we ran that included the company’s liquidity and risk profile (a SWOT analysis at best). Once the internal and external review was complete, we searched the web for any indicators that could give us an idea of what the projected performance of the commodity our chosen company was dealing in. This global macro outlook gave us the confidence that once we made our final decision, there was no looking back. We were in it for the long term.

Our diagnosis took all but one hour. We sent an email to our broker indicating that she needed to book us a ticket to the show day because we were interested in buying shares. However, we also saw the need to advise caution regarding the investment in this company. You see, growth industries are very rare. This particular company is easily swayed by mega trends that can influence people’s decisions in either purchasing their product or not. Therefore,our faith in this stock is not based on whether the company has reached maturity, but on the love mark that people hold for this company. Furthermore, demographics indicate that this company will be playing economies of scale and potentially scope based on the growth of the population as well its investment in property plant and equipment (resources). Our financial gut feel indicates that research and development will be at the core of what drives the strategy as it navigates the mega trends.

So in the end, that is how we booked a first class ticket toan out of town show and tell day for one of Zambia’s premier companies and became one of their shareholders.

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