James Morton is the Chief Investment Officer and a Portfolio Manager at Santa Lucia Asset Management Ltd. He has extensive expertise in recovering and small-cap companies, as well as emerging markets. Mr. Morton’s career in the investment industry began in 1992. He is an accomplished author, editor and investment columnist. Mr. Morton holds a degree in law from Trinity Hall, Cambridge University, and an M.A. in third-world economics as well as an MBA from Stanford University. He reveals his detailed methodology for finding stocks in emerging markets in this exclusive interview with the Wall Street Transcript.
His interesting specialty is small cap value stocks in Indonesia. “We are a value equity house based in Singapore. We practice value investing in Asia, even though most investors come to Asia for growth. But we do value, traditional deep value, relative value and high yield equities, which I think is a legitimate variation of value investing…We have an office in Jakarta, which makes us slightly unusual. ”
His deep research into these poorly understood stocks creates a lot of upside. “For investors, outperforming in Indonesia is usually a function of two things: first, identify the right sector and, two, then find the best companies within that sector…the ROE of listed companies is pretty high. It’s estimated to be around 17%. And earnings growth for this year will be one of the highest in the region. Probably India and the Philippines will be higher, but Indonesia looks likely to be around 17%, plus or minus.”
The result is finding stocks that are far from correlated from the developed market. “I would have to say that most people in the villages in Indonesia probably don’t know who the U.S. president is or care for that matter. That answers part of the question. Obviously, what happens in America affects everybody, more than anywhere else. But I would say that for Indonesia, China is the focus, and America isn’t so important.”
Read the entire interview in the Wall Street Transcript for details on which stocks James Morton places into his portfolio.
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