The Hidden Gems of the Ecuadorian Stock Market. "Cheap and Ugly" can be beautiful - Bruce Greenwald
Bruce Greenwald - "Cheap and Ugly" can be beautiful
“You are looking for things that are ugly, cheap, boring, out of fashion, small and obscure, or otherwise on the other side of the existing finance industry mania” - Bruce Greenwald.
In finance, liquidity is often seen as a sign of a healthy market. But sometimes, it's the illiquid markets that hold the most potential. Take the Ecuadorian stock market, for instance. At first glance, its trading volumes might not impress many. To put things into perspective, less than $80,000 was traded in stocks just yesterday, with an additional $20 million in debt, which includes government bonds. The total market capitalization of the entire stock market stands at $8 billion. Here's where things get interesting. Some stocks are incredibly undervalued.
While I usually keep these findings to myself to avoid creating competition, I've been toying with the idea of setting up an LLC. The goal? To pool resources from interested investors and acquire significant blocks of these stocks.
To give you a sneak peek into what's available:
- A bank that can be likened to Ecuador's version of Wells Fargo is trading at a Price-to-Earnings (PE) ratio of just 6.
- The combined PE ratio of the entire financial market is also 6. And remember, this is in a dollarized economy.
- Ecuador's banking system is not just robust; it's conservative.
- The country has only two stock exchanges, both public entities. Their PE ratios? are 6 and 8, respectively.
- And if you're looking for a real bargain, there's a bank with a market cap of $102 million, trading at a PE of a mere 2.48!
These numbers are not just intriguing; they're a testament to the untapped potential of the Ecuadorian stock market. While it might not have the liquidity of its larger counterparts, it offers opportunities that are hard to come by in more mainstream markets for the discerning investor.
So, the next time you're scouting for investment opportunities, maybe it's time to look beyond the usual suspects. Sometimes, the most rewarding treasures are found off the beaten path.
