Fund managers diary
David Reid is a research analyst for BlackRock’s Eastern European Trust. His diary runs from February 14-20.
Monday I am travelling to Ukraine so I head to Heathrow at 6am. From the window seat I see the landscape turning icier as we head east. The temperature on landing in Kiev is minus 16C.
My first meeting is with a local “oligarch” for a wide-ranging discussion on the business environment. He is a strong personality who appreciates active debate. There is the added bonus of a quick viewing of the stunning artwork in his office before heading to the hotel to check in. In the evening I meet the management of the largest investment bank.
Tuesday Ukraine is famous for its highly-fertile “black earth”. In the past it was considered so valuable that invaders stole it by the wagon-load. I look for companies that have effective farming strategies and good infrastructure, allowing them to generate consistent profits to reinvest - large land banks alone are not enough. I have a good meeting with a company we own in the Eastern European Trust, and identify a new prospect.
Wednesday I see manufacturers of railway carriages, helicopters and vehicles. Manufacturing was hit hard by the recession, but may have brighter prospects if sufficient investment can be attracted to modernise, as Ukraine is a cost-competitive country. In the evening I have a four-hour drive east to an iron-ore mine in Poltava, on a bumpy road past miles of frozen fields. I arrive late at night, but the guesthouse has been kind enough to provide a simple Ukrainian-style dinner. After several years of travelling to the region I have even come to like the ubiquitous pickled cucumber.
Thursday An early safety briefing, before meeting management for a tour of the mine. The pit stretches to the horizon and the vast processing plants are typically ex-Soviet in style, but notably better maintained than many facilities I have seen. The workforce is evidently proud of its achievements.
Subsequently I visit a gas company’s rig, drilling a well 3,000m deep with incredible precision for such depths. Ukrainian gas is an interesting sector as consumers have to pay higher prices for Russian gas after years of heavy discounts, a strong incentive to develop the considerable domestic resources.
Friday I meet a senior politician who contacted me directly on hearing that BlackRock was in town - a real case of the firm’s reputation opening doors. We have a productive discussion about the sort of initiatives that could promote the country as an investment destination. After lunch, I head to the airport for my journey home.
Saturday I go for a morning walk with my girlfriend through Wimbledon Common. It is a welcome contrast to working in the City to have green spaces close to home. We go for lunch to the local pub and spend some of the evening planning a summer holiday - I try to visit a different country every year.
Sunday Journeys abroad always help me appreciate free time at home. I am reading the autobiography of a young British diplomat in Stalin’s Russia who took various unauthorised expeditions around the country and went on to be a founder member of the SAS. While I admire his sense of adventure, I am glad that the challenges I have to face in travelling around the modern CIS [Commonwealth of Independent States] are much diminished.
Have you looked at investment trusts more since RDR?