Three Case Studies in Wide-Moat Investing, Thesis on Almacenes Exito

Amit Wadhwaney of Moerus Capital Management shared his insights into global value investing as well as his investment thesis on Almacenes Exito (Colombia: EXITO) at Wide-Moat Investing Summit 2018.

Thesis summary:

Almacenes Exito is South America’s largest retailer, with a footprint covering 75% of the population of South America. It is the leading food-based retailer in Brazil, Colombia, and Uruguay, with formidable and defensible market shares in each country. It commands 42+% share of the formal Colombian retailing market, operating across different store formats (including e-commerce) that span the country geographically and across income segments. This dominant market position has allowed it to dispatch two (of four) new Chilean retailers that had arrived in Colombia a few years ago.

Both of Exito’s principal markets, Brazil and Colombia, are slowly emerging from significant economic downturns, during which retailing has been particularly hard hit.

By virtue of being listed in Colombia, a market far less well-trodden than that of Brazil or Mexico, the company has escaped the attention its peers have attracted. The company trades at 7x EBITDA, based on relatively depressed earnings, as compared to proximate peer Walmart de Mexico at 15-16x EV/EBITDA on earnings that are arguably not depressed.

Amit had previously presented his thesis on Almacenes Exito at Best Ideas 2017.

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About the instructor:

Amit Wadhwaney is a Portfolio Manager and Co-Founding Partner at Moerus Capital Management LLC, and the founding manager of the Moerus Worldwide Value Fund. Mr. Wadhwaney has over 25 years of experience researching and analyzing investment opportunities in developed, emerging, and frontier markets worldwide, and has managed global investment portfolios since 1996. Prior to founding Moerus, Mr. Wadhwaney was a Portfolio Manager and Partner at Third Avenue Management LLC. Mr. Wadhwaney founded the international business at Third Avenue and was the founding manager of the Third Avenue Global Value Fund, LP, the Third Avenue Emerging Markets Fund, LP, and the Third Avenue International Value Fund, an open end mutual fund. Earlier in his career, Mr. Wadhwaney was first a securities analyst, and then Director of Research at M.J. Whitman LLC, a New York-based broker-dealer. Prior to joining M.J. Whitman, Mr. Wadhwaney was a paper and forest products analyst at Bunting Warburg, a Canadian brokerage firm. He began his career at Domtar, a Canadian forest products company. Mr. Wadhwaney holds an M.B.A. in Finance from The University of Chicago. He also holds a B.A. with honors and an M.A. in Economics from Concordia University; at Concordia, he was awarded the Sun Life Prize and the Concordia University Fellow in Economics, and he subsequently taught economics classes there. He also holds B.S. degrees in Chemical Engineering and Mathematics from the University of Minnesota.