Going Beyond the Numbers

Shopping for Investment Opportunities in Latin America

Paulina Amieva, Equity Investment Analyst

Our investment approach at T. Rowe Price is to go beyond the numbers when evaluating which companies offer the best future investment potential. Investment professional Paulina Amieva, who covers food, apparel, and ecommerce retailers within emerging markets, says that her research process takes her from behind her office desk and directly to the consumer to find the best opportunities for clients.

When a U.S. consumer makes an online retail purchase, the process is usually pretty smooth: click a couple of links, put in credit card information, and receive the order within a day or two. But in Latin America, e-commerce accounts for only about 3% of all retail sales, compared with about 10% in the U.S. Inadequate distribution and Internet infrastructure as well and underdeveloped credit penetration are a few of the “friction points” that weigh on e-commerce growth in Latin America, says T. Rowe Price investment professional Paulina Amieva. For these reasons, Paulina’s research takes her from computer spreadsheets directly to the consumer. “A lot of my work takes place behind my desk. However, my team and I are very engaged in traveling to the region where we can immerse ourselves in what’s going on locally. It is my opportunity to kick the tires.”

Going Beyond the Numbers Reveals the Full Story

At T. Rowe Price, our investment approach is to go beyond the numbers when evaluating which companies offer the best future investment potential. By meeting with executives, employees, and customers firsthand, we can ask the right questions to get a deeper understanding of where a company stands and where it could go in the future. This rigorous research strategy is integral to Paulina’s analyses for the food, apparel, and e-commerce retailors she researches within emerging markets.

Opening Quote ...my team and I are very engaged in traveling to the region where we can immerse ourselves in what’s going on locally. It is my opportunity to kick the tires. Closing Quote

Field Research Yields Deeper Insight

On a relatively recent research trip to Brazil, Paulina visited Lojas Renner, a large clothing retailer that is transforming to a fast fashion business model. She liked that the store’s e-commerce site was ahead of many of its local competitors. She also sees the company producing merchandise that customers would find appealing and seek out online or in stores. She has spent a number of hours visiting stores, studying how the clothes were displayed and watching staff interact with shoppers. Paulina always tries to purchase an item on site visits to approximate the customer experience as much as possible. On her site trip to Renner, she bought several items that left her with a strong positive impression: “I think the store visit combined with the management meetings really raised the conviction level for me.” Several T. Rowe Price funds increased their exposure to the company based on Paulina’s recommendations. As an added bonus, Paulina remarks that she still gets compliments on the clothes she had purchased from the store.

Positioning for Change

As consumers demand more goods via e-commerce, Paulina is keeping a watchful eye on shifts in the industry so she can get ahead of change for her clients. The pace of e-commerce penetration in Latin America is accelerating, she says, with one Argentina-based retailer, Mercado Libre, smoothing out many of these friction points. It successfully managed the migration from desktop to mobile, allowing customers to bypass expensive and unreliable broadband service. “It has been a very exciting story.”

At a time when U.S. equities are outperforming, are you moving beyond core to make your clients' international portfolios as diverse as they can be?

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Important Information

This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action.

The views contained herein are those of the authors as of September 2018 and are subject to change without notice; these views may differ from those of other T. Rowe Price associates.

This information is not intended to reflect a current or past recommendation, investment advice of any kind, or a solicitation of an offer to buy or sell any securities or investment services. The opinions and commentary provided do not take into account the investment objectives or financial situation of any particular investor or class of investor. Investors will need to consider their own circumstances before making an investment decision.

Information contained herein is based upon sources we consider to be reliable; we do not, however, guarantee its accuracy.

Past performance cannot guarantee future results. All investments are subject to market risk, including the possible loss of principal. All charts and tables are shown for illustrative purposes only.

T. Rowe Price Investment Services, Inc., Distributor.

© 2019 T. Rowe Price. All rights reserved. T. Rowe Price, INVEST WITH CONFIDENCE, and the Bighorn Sheep design are, collectively and/or apart, trademarks of T. Rowe Price Group, Inc. 

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