Article: Why getting the best data on companies in Frontier Markets doesn't involve more Excel.

We’ve spent much of the past ten years with a sceptical, somewhat disbelieving look on our faces. Why? Because we don’t much believe what’s we’re hearing from management teams in target companies we’re visiting.

You might think this weakens Due Diligence, and in some ways we’d agree. But we also see this as a great excuse to find out what’s really going behind the scenes.

We’ve developed a playbook with three fairly sharp weapons:

Weapon #1: Triangulate

Triangulating different sources can be a great way to reinforce a data landscape. For example, a census (if it exists) is a helpful start point to quantify population in a district. But data from mobile subscribers, heating oil usage, food consumption can provide a more accurate estimate. We get creative in the data we look at, and each time we add a new lens or data set our view of the whole gets better.

Weapon #2: Sample and Measure

Transparency and accuracy in financials and audits can leave a lot to be desired. We often create analytical tools to check financials reports, for example, sampling Accounts Receivables by finding and interviewing customers, looking at production logs, weigh-bridge records, power consumption and input variables. In one case when we did this, we found an entire unrecorded shift happening in a plant between midnight and 5am!

Weapon #3: Hang Around and Chat

Some investors are unwilling to use this most powerful of tools. But we’ve found the best way to find out what’s going on is to slow down, stop, and have a casual chat with the Production Boss, ideally when the owner is nowhere nearby. Most factory and office staff are a) delightful, b) generous with their time and c) happy to tell you what’s going wrong and what they’d do it make it better. More often than not, this is good fun - and usually gold dust!

Of course, none of this is a substitute for rigorous, disciplined financial and legal DD. But it’s a key part of our investor playbook which we use time and time again.