I Will Hunt Them Like Rats - Here Comes Colombia's New President (and global investors)
Will the newest right wing leader in Latin America put Colombia on a new path to follow countries like El Salvador and Argentina?
Cali, Colombia is locked down as I type this out.
The third largest city in Colombia has over 11,000 security forces deployed with fighter jets flying overhead, snipers on top of buildings, and bomb sniffing dogs roaming the entire city.
The King of Spain, Presidents from all over Latin America, and delegations from countries around the world (including Marco Rubio) are all in Cali right now.
The most notable person absent: Gustavo Petro, the outgoing Colombian President.
Back in June, Colombia had their presidential run-off election leading to a win for right-wing candidate Abelardo De La Espriella.
This is all part of the bigger story I explain back in May:
"The bigger picture is clear: There is a struggle going on in Latin America that seems to be coming to a head.
It’s a struggle between the takers and the doers.
The socialists have had their run over the past several decades, and the results have been unsurprisingly horrible.
Now it’s the capitalists turn.”
Drugs, Gangs, Surf - Now Time for Investors
My El Salvadoran travel companion was an acid licking, weed smoking, direct decedent of the inventor of the atomic bomb.
Petro was furious. Not only did he contest the election results, he also stated he wouldn’t attend the swearing in ceremony nor shake the new President’s hand.
That’s not surprising.
When it comes to leading Colombia, De la Espriella has committed to taking the exact opposite approach of Petro’s.
“De la Espriella has pledged to build large prisons, refuse negotiations with any armed group and secure the capture or death of five significant leaders within three months, as well as to cut the size of the state by 40% and lower taxes. He has said he will make Barranquilla an alternate capital and that Medellín and Cali will also serve as seats of government.” -MP
Colombia is facing a similar situation as El Salvador was just several years ago.
Rampant crime and corruption, cartel operated portions of the country (and government), and a struggling economy that has been held back by oppressive government policy are just the beginning.
Now, De la Espriella is coming in to clean up shop… Just like Bukele has done in El Salvador and Milei has done in Argentina.
Will the results be the same?
Only time will tell, but investors are already positioning themselves, and in some cases, already reaping the rewards.
Colombia, Finally Bottomed?
As many of you know, I have been invested in Colombia for over a decade.
I still own real estate there, and many of you reading this are invested with me. The projects are in Cali, where Colombia’s new President is being sworn in today.
If I’m being honest, our investments have not gone completely to plan. In addition to problems within Colombia, our project started construction just as the pandemic kicked off. If you can think of a challenge, we’ve probably encountered it.
Still, we yield a modest annual return on our multi-unit luxury rental building, not including the capital appreciate of the building itself.
On the equities side, Colombia has performed very well so far this year. Here are the four Colombian companies that trade on US exchanges:
If you think you’ve missed the boat, don’t be fooled. This upward trend for Colombia hasn’t even gotten started.
Remember, Colombia is still hated. And the valuation of the above companies are still dirt cheap.
I’m not saying to rush out and buy Colombia right now. There could actually be a lot of volatility over the next year.
If De la Espriella is serious about what he’s committed to do - which I think he is - there are going to be some very turbulent times.
Colombia is not like El Salvador or Argentina. There are language and cultural similarities, but geography and regional factions are what set Colombia apart.
The industries and guerrilla groups that operate in Cartagena versus Cali, or Medellin versus Barranquilla, or Bucaramanga versus Buenaventura are all completely different.
It’s going to be a fight.
Who’s ready to go back?