Grupo Suramericana de Inversiones S.A., also known as Grupo SURA in Colombia, is an amazing holding company that controls some of the most prominent blue chips in Colombia. In fact, these blue chips are held as publicly-traded subsidiaries or affiliates and include the largest insurance firm in Colombia and namesake controlling entity known as Grupo Suramericana de Inversiones S.A., the largest cement maker in the country known as Grupo Argos S.A., the second largest commercial bank nationwide known as Grupo Bancolombia S.A., the biggest food processor in the country known as Grupo Nutresa S.A. and the third largest asset manager regionwide known as SURA Asset Management S.A. In addition, the group wholly owns various businesses as subsidiaries including a textile business, a private equity and venture capital firm, a forestry enterprise, a nursing home, a catering company and two petrochemical concerns. Moreover, trading for book value at around $ 12 billion, the group possesses solid finances with indebtedness of less than $ 1 billion while expected to reach close to $ 800 million in net income this year. As a consequence, the company trades at a discount to NAV after valuing conservatively the wholly-owned businesses in its portfolio. Indeed, the shareholdings the company has in Grupo Argos and Grupo Bancolombia alone by themselves fetch close to $ 10 billion in NAV. Likewise, when the other shareholdings the group holds are included in the valuation we are looking at a least $ 15 billion of NAV without including the wholly-owned subsidiaries which I’m sure fetch at least $ 2 billion in intrinsic value. Accordingly, this holding company is fairly debt light while trading for less than its underlying NAV. By the same token, this one is an attractive stock to buy right at the present juncture because the entity trades at a sizable discount to NAV while being a strong and safe investment in a holding company that has very little debt while being run by some of the most capable businessmen the country has. These businessmen, who each one participate in ownership and run different major subsidiaries including the controlling insurer itself, are Nicanor Restrepo Santamaría, David Bojanini García, José Alberto Vélez, Carlos Raúl Yepes Jiménez and Carlos Enrique Piedrahíta Arocha.
To conclude, Grupo SURA is a holding company trading for less than its underlying NAV while holding a very low amount of debt and consequently, this is an opportunity that represents a safe and clever investment for anyone wishing to add exposure to a country whose stock market has just experienced a rally. In addition, Colombia is a country that has tackled effectively problems dealing with leftist insurgent guerrillas as well as drug trafficking successfully and now the nation is experiencing unprecedented real economic growth.