A Global Investment Management Company with a Long-term Horizon
Author: Abdallah Toutoungi
My name is Abdallah Toutoungi. I am chief capital allocator of Cordoba Fund. Having lived on the bleeding edge of technology for many years, Warren and Charlie were a breath of fresh air and a reason to slow down and contemplate business and life. After leaving Microsoft, I set up a family and friends fund and have been enjoying the wisdom seeking journey and the deep intellectual content that investing brings to my life and others.
In Dan Ariely’s book Predictably Irrational, the famous Veladone RX experiments conducted on a college campus vividly exposes our bias to the power of price when participants of the experiment were able to withstand more pain from electric shocks taking the full-priced painkiller than those that took the discounted cheap painkiller pill.
Although we later learn that both painkillers were placebos (vitamin C), we wanted to dive into the power of price and how that affects our social decisions when making purchases that have to do with health.
In Ghana, it is not uncommon that a member of my family has malaria from time to time. A friend of mine,
Basha the pharmacist, tells me there’s an alternative to the more expensive anti-malarial Coartem 3-day course by Novartis which generally costs anywhere from Ghc35 – Ghc39 equiv. $8-$9. The alternative referred to as ACT Artefan is subsidized and costs roughly $1 or Ghc5.
My understanding from Bendi, another pharmacist friend, is that pharmacies only pay the shipping of the product and Bill Gates pays the rest. Regardless what the truth behind the subsidizing authority or body, there’s an 8x price difference.
The BIG Question is: Which anti-malarial will you buy for your sick daughter or son or spouse? Not only are they weak in bed shivering from fever with sweat dripping from their forehead, but also too weak to move or eat or drink.
Will you go for the discounted ACT or will you ask for the original fully-priced 3-day course and more expensive drug, yet we know they’re the same. Many of us go for the expensive option.
Dan Ariely is the James B. Duke Professor of Psychology and Behavioral Economics at Duke and a founding member of the Center for Advanced Hindsight. Dan’s books, Predictably Irrational, The Upside of Irrationality, The Honest Truth About Dishonesty, are NY Times best sellers. Dan also has a podcast “Arming the Donkeys”. A new book by Dan and Jeff Kreisler is expected to go on sale November 11 2017 titled Dollars and Sense.
The real old-fashioned-style bike horn with long trumpet and rubber bulb sounding outside means that the Fan Milk ice-cream bicycle is close by. For the past fifty years and in the heat of sub-Saharan Africa, the Pavlovian association between the horn and the quenching ice cold ice cream has been building millions of loyal customers.
How do you build a business that can provide ice cold products in a hot sub-Saharan climate?
Erik Emborg, a Danish entrepreneur, came with the idea of a frozen treat during his several visits in the 1950s to the Gold Coast then. His dairy skills and ability to source milk powder from Denmark were the foundation of what became a 7-nation (Ghana, Nigeria, Togo, Cote d’Ivoire, Liberia, Benin, and Burkina Faso) operation with more than 25,000 employees, agents and vendors today.
Abraaj Capital, a Dubai-based investment company, in 2013 paid over $350m according to the FT “making it the largest-ever private equity transaction for a fast-moving consumer goods company in Sub-Saharan Africa, outside South Africa.”
The Investment Fund for Developing Countries (IFU) takes pride in showcasing the success of Fan Milk. Prior to Abraaj’s takeover, some reports say company turn over three quarters of 2013 were a billion DKK (108m USD) a year and made 90 million DKK (13m USD) in profit in 2011.
In my opinion, one of the current challenges facing analysts researching businesses in sub-Saharan Africa is finding written business and financial coverage – like FT, WSJ, SEC Filings (10K, 10Q, S1), Investigative Reporting, etc… It was refreshing to come across the Enterprise Map Series by Professor John Sutton at LSE. Professor Sutton faced the same challenges and ran into the same wall. Rather than whine about it, he got on a plane and tried to find the answers.