Churchouse Letter
April 2015             by Peter Churchouse

A Hidden Opportunity at the End of the Earth

A beautiful country offers up some beautiful investment opportunities.
There's a lot to love here... growth, stability and fantastic dividends in a world starved of income.
We bring you three investment suggestions we think will be welcome in your portfolio.

"An outdoor adventure park masquerading as a country..."

That’s what a famous travel writer had to say about the country that is the subject of this month's Churchouse Letter. It’s a good line, and there’s some truth to it.

Unlike most of the investment plays I write about, this country is environmentally pristine – a far cry from China and its browned-out sky. Its natural beauty and scenery are breathtaking, and they are protected religiously. And yes, sometimes that goes to far.

Travellers have to make an effort to get to this destination. Its nearest neighbour is a three-hour flight away. But I believe that, whether you take a look at it with your own eyes or through a Bloomberg terminal, people who put their money in this far-off land stand to make sizeable profits right now. It is in the investment sweetspot, and not many people know that.

This is a hidden rough diamond of an investment, and I’ll explain how I think you should play it now and turn that potential into a valuable gem.

I began my own travels back in 1972 to explore the surf and wilderness of Africa. I travelled the length of the continent from bottom to top in a banged-up VW combi van. That journey continued on to the United Kingdom and then to Hong Kong. I have loved every minute of the ride.

But I didn’t have to go anywhere to discover this nation, one of the hottest investment plays on the planet. It was right on my doorstep.

The country has led the world in a number of ways over the years, and has a key edge in certain industries. It was one of the first to give women the vote. The country provided some of the very first public-welfare benefits and healthcare services, back in the early part of the 20th century. It is a world leader in agriculture. It punches well above its weight in sports, despite having a national population roughly half the size of New York City.

It was the first country to establish a bilateral trade agreement with China.

You might have guessed it by now. This country is New Zealand.

Abel Tasman, the Dutch explorer, was the first European to set eyes on the country back in 1642. Mapmakers then named it after the Dutch province of Zeeland.

Of course, Europeans tend to forget that the country had been discovered and occupied hundreds of years before our Dutch explorer sailed by. There is evidence that both the Arabs and Chinese discovered the country much earlier, and of course the country’s native Maori people landed there around 1280, according to data tracking the arrival of Pacific rats.

Tasman simply sailed past his “discovery” on his way around the world. It wasn’t until 127 years later that England’s Captain Cook landed and claimed the country for his majesty the King.

The first settlers started arriving in 1840, developing a strong agricultural economy that continues to this day.

They were not convicts … unlike their neighbours! They paid their passage to the New World to start a new life.

Today a new crowd is paying to get to New Zealand. It is a billionaire’s bolt-hole, a lifestyle destination for the rich and famous. High-profile hedge-fund managers like the legendary Julian Robertson have invested substantial sums in real estate. They like New Zealand’s sound, British-based legal system and user-friendly tax regime. Survivalists who seek refuge in bunkers in the mountains of West Virginia would found this place more attractive. Particularly if they have a private jet.

Too Close for Comfort?

Before I get accused of bias, let me explain. Yes, I was born and raised in New Zealand. I left when I started my travels, and never returned to live there.

And I don’t plan to. But business and pleasure takes me back several times a year. I love spending time there. The fishing is good, the surf can be excellent, the air is clear, the food top-notch… and all against that backdrop of spectacular natural beauty.

I have also found some good investments there, and written about them in these pages before. They have served me well and continue to do so.

I only put my money where I feel comfortable, and where I’m certain there’s a good opportunity. There’s no hurry. Like Warren Buffet says, investment ideas are like buses. There will be another one along in a while.

So when it comes to my investments, and the advice that I give you, I always make sure I step back and take a good hard look at anywhere I go. In fact I am even more sceptical when it comes to New Zealand because I want to make sure I’m making my investment decisions with a clear, cool head – not my heart.

But I do have a local understanding and can marry that with a global perspective that comes with investing in and following global markets for many decades.

New Zealand has gone through tremendous structural changes in the past 25 to 30 years, more than most Western countries. And it has come out the other side much better for it, in my view...

  • In this edition, Peter gives his top 3 picks for investing in New Zealand to his subscribers...
  • 3 of his outstanding picks for New Zealand are already up double digits.
  • Find out where else he expects to see profits and how you can invest.

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