By Request: Checking up on an old Idea of the Month

By Travis Johnson, Stock Gumshoe, December 2, 2011

There’s certainly a lot going on in the markets these days — most of it, of course, driven by the massive buy/sell herd that feels the need to trade on the macro news of what’s happening in Europe or in Washington, D.C. Since I don’t live in DC anymore I can’t even pretend to have run into the Obamas at Starbucks, so I can’t say that I have any particular insight into what will happen with the budget, or with regulation, or with the collapse or revival of the euro, or whatever.

But what I can do is keep plugging along, finding interesting investment ideas, and trying to make it so that the Gumshoes don’t have to grind our own corn for sustenance in our dotage.

And to that end, there’s been a fair amount of news flow of late about a stock that’s both a significant holding in my personal portfolio, and a pick that I’ve shared with you as an “Idea of the Month” in the past: Lonrho, a miniature conglomerate that’s trying to leverage itself to the growth of Africa.

You may know the Lonrho name even if you’re not familiar with them recently — they were a legendary pan-African force in the colonial and early postcolonial era in Africa, helmed by outsize personality Tiny Rowland and a flashpoint for critics of cronyism, colonialism, and corruption. The company was broken up and essentially left for dead, but was brought back to life by an Australian mining guy a few years ago, and they’ve rebuilt a new conglomeration of businesses — starting with a hotel and moving on to a variety of infrastructure, agriculture, tech services and tourism companies that they’ve built or acquired, along with a few little oddball operations in the mix. The current Lonrho has essentially no connection to the old one, though the name still resonates in many places on the continent.

Right now, the company is largely reliant on agriculture — much of their revenue comes from processing and marketing produce and fish from Africa both for African consumers and for Europe and the US (mostly). Slightly smaller divisions of importance are focused on infrastructure, which is built around a prefab building business and a large oil services port in Equatorial Guinea, and on transportation, which is mostly a startup airline across several key African countries. You can see my original ...

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