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Adding More Latin Flavour:

One of the main themes in my post last year on Taking Stock in BNS was to highlight the company’s ability, through management, to focus on growth, execute accordingly on their Canadian assets and continued push into global markets. Dating back now to early 2005 BNS’ acquisitions have been strategic, methodical and calculated purchases that have been implemented effortlessly into established operations and align to their very clear long-term objectives.

While some Canadian banks have bit off more than they can chew after being allured into a highly fragmented and competitive US banking sector, BNS has turned their attention elsewhere and largely flown under the radar while doing so. Through patience and poise this Canadian bank has been building a solid platform in the Caribbean, Central and South America by initiating minority positions in moderately sized banks and assisting them in banking development while adopting a North-South approach to their growth strategy. Their identification, training and injection of top talent and resources from acquisitions into other small regional banks have been one that the North American & European equity markets have largely discounted or not recognized for some time now. What is abundantly clear is that BNS has studied other large global acquirers and learnt from their mistakes by not simply injecting carbon copied operations from North America and assuming immediate adoption or success. They instead strive to recognize the unique cultural needs of this consumer base in each respective market and flourished by doing so. Add in a strong Canadian currency in recent years and these acquisitions begin to look very favourable with the advantage of their improved purchasing power.

After the market close today BNS reported that it is set to acquire complete interest in Banco del Trabajo in Peru. While Banco’s market share currently stands at only 1%, this acquisition continues on the established moderate pace BNS has endured in recent years to now secure strategic majority or minority operations in Brazil, Chile, Costa Rica, Dominican Republic, El Salvador, Guatemala, Mexico, Panama, Peru, Puerto Rico and Venezuela.

Since the beginning of this year I have taken an avid interest in researching, following and identifying investing opportunities in Latin America as I feel the regions’ long-term fundamentals and existing value have been largely disregarded by global markets with feverish focus on China, India and other emerging markets. In the first quarter of this year I purchased shares in Banco Bilbao Vizcaya, a Spanish bank with significant operations in Latin America, for my re-organized RSP account. While the majority of my research has yielded this one investment, I still remain focused on monitoring opportunities through global companies who share a common interest as my own for investing in this often over-looked region of the world economy. Brazil, an economic giant in the region, is well represented in many BRIC ETF’s and mutual funds, but I remain confident that there may be other high quality companies with direct or indirect exposure to Latin America that could provide value in years to come. I would compare the current focus on Mexico and Brazil in current emerging market products to a North American investor focusing solely on investing opportunities in Alberta and New York State. Many investors have been hurt financially in the past through weak regional fundamentals, but as with any investment you need to take the time to focus on where value exists and look past the largely myopic views of the market.

Disclosure: I own positions in all stocks and ETF’s mentioned or linked in this post.

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