Reprinted from: Minority Report / 少數派報告

by Michael McGaughy

Jamaican Twofer: Book Review and Notes

In my research and investing I stress three things: people, structure and value.  I look for companies that are controlled and managed by quality people, have corporate structures that align minority and majority shareholder interests and trade at valuations that are below fair value if not outright cheap.

This post is mostly about people and a bit about value.

Let’s get value out of the way.  My interest in Jamaica was spurred close to two years ago when it came up on my screens as having some of the world’s least expensive listed companies.  Stocks were cheap, but what about their value? To answer this question I started to research the country and its listed companies.  Most of what I learned seems positive for investors and ‘cheap’ quickly became ‘value’.

Part of that learning process included reading “Jamaican Entrepreneurship: A review of the characteristics, traits and ideas of some of the island’s most accomplished entrepreneurs”.  It is simply one of the best books I’ve read for a while and near perfect for my type of research and investing.

Positive Vibrations

Before reviewing the book, below are some interesting and lesser-known information about Jamaica that I came across.  Most of news flow has been positive in the short time I’ve been looking at the country.  Consider the following:

• Investors are bullish about Jamaica’s future. If stocks markets make indicators of future growth, the Jamaican economy should do well in the next few years. The JSE All Jamaican Composite recently hit its all time high this month and is up 72% so far this year in Jamaican dollars and 65% in US dollars.
• Sovereign borrowing resumed.  Jamaica issued its first sovereign bond in three years in July 2014.  It was way oversubscribed (related article here).
• SME support. According to the 2015 Doing Business Report by the World Bank, Jamaica has the best laws for small and medium-sized businesses in the Caribbean.  It ranks as the 58^th best place for small businesses in the world, jumping 27 places from last year (article here).
• Reinvigorated bauxite exports.  Despite the price of aluminum falling close to its 2009 low, bauxite production appears to be increasing with Russia’s Rusal expanding production.  Bauxite is an importance source of foreign exchange for Jamaica (article here).

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