Our Approach

Cartica is a long-only, single strategy manager holding a concentrated portfolio of diverse small and mid-cap emerging market companies.

Our investment approach is shaped by the nuances of the emerging markets. Our “active ownership” engagement with publicly-traded emerging markets companies is designed to create long-term value for the company and its shareholders.

The firm employs a three-pronged investment approach: country selection, company selection and company engagement.

Integral to our investment approach is a comprehensive evaluation of environmental, social, and governance factors that are fully integrated into each phase of Cartica’s investment and engagement process through Cartica’s proprietary ESG methodology.

Top-Down Country Selection

“Historically, outsized emerging markets returns are found in countries entering a period of positive economic and political reform. We seek to identify countries with these tailwinds to best position our portfolio.”

At Cartica, we believe differentiation among emerging market countries is a key competitive advantage in our investment approach. Our country selection is an essential tool in Cartica’s risk management. When selecting countries to invest in, we identify “focus” countries with favorable macroeconomic and policy themes that will act as tailwinds to the underlying companies in the portfolio.

Bottom-Up Company Selection

“At our core, we are stock-pickers and we believe our performance supports this. We perform deep, fundamental analysis to identify investment opportunities within our focus countries. Our deep network within these markets enables us to ensure that we are investing in quality companies with high-integrity management and ownership.”

We use fundamental bottom-up analysis to identify investment opportunities within our selected focus countries.  In selecting “Cartica Companies” we perform a rigorous analysis of the company’s financials, its business model, and environmental, social and governance risks and opportunities.  We assess the integrity of management, board and shareholders, and we review the treatment of minority shareholders.  Our vast network within emerging market countries provides us with unmatched insight into target companies and controlling shareholders.

Activism

“Over 80% of listed emerging markets companies are controlled by a founder, family or other controlling group. Standard developed market activist tactics such as public letters and proxy contests are not viable in the emerging markets. We work with the controlling shareholder(s) to drive positive changes that maximize value for all shareholders.”

We tailor our engagement strategies to the nuances of emerging markets companies and the capital markets in which they operate. Historically, Cartica has worked with our portfolio companies on a variety of subjects including balance sheet restructuring, sale of non-core assets, and governance enhancement, including adding important competencies to the board of directors. Cartica engagements include improvements in transparency, especially around environmental, social, and governance practices.

Integrated ESG

“Cartica’s experience demonstrates that for emerging market companies, better ESG disclosure leads to fuller valuations and a virtuous cycle of improvements in practices.”

We apply our proprietary Cartica ESG Methodology to manage risk and identify potential value-adding engagement issues in portfolio companies. A set of analytical and implementation tools hard-wires the Cartica ESG Methodology into Cartica’s pre-investment research and post investment engagement process. The central elements of the Cartica ESG Methodology are: (1) verification of the integrity of key shareholders and management; (2) evaluation of corporate governance risks and engagement opportunities; and (3) analysis of material environmental and social risks against compliance with mandatory and aspirational national, industry and international standards.

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