24 Hours in South America with Jennison Analyst Sara Moreno

Red-eye flights, company tours, and mall food courts—all part of how Jennison Associates finds winning investments.

November 15, 2019

It’s a Sunday night in August, and Sara Moreno is leaving for a five-day research trip to South America. She’s checked into her flights. She’s charged her iPad and two phones. Her bags are packed … at least, they were. Moreno smiles as she looks behind her and sees her young daughter. “Que haces mi amor?”

What’s happening is that Moreno’s 16-month-old is digging through her mother’s carry-on. “She’s at the age she just wants to grab anything mommy is using,” Moreno says. “It’s adorable.”

It’s the job of a Jennison research analyst to travel—a lot—and as an emerging markets equity portfolio manager, Moreno travels more often than most. By her estimate, she’s made more than 20 trips this year—short hops from her home in Boston to Jennison’s New York headquarters (twice a month, on average), week-long assignments in China once a quarter (where she covers health care companies), and travel to her regions of responsibility (Latin America, Central & Eastern Europe, Middle East and Africa.)

Trips like this are at the core of the decisions made by Jennison portfolio managers. Now in its 50th year, Jennison has a long history of scouring the world in search of companies poised to be future market leaders.

“My job is to travel the world, talk to management teams, talk to consumers, talk to suppliers, talk to key thought leaders and hunt for the truly special companies that deserve a slot in one or more of our portfolios,” Moreno says. “The truly special companies don’t come around that often—maybe once or twice a decade.”

The car arrives to take Moreno to the airport. She says goodbye to her daughter (there are only a few tears, for both), then it’s off to catch the red-eye to Buenos Aires.


Sara's first 24 hours in South America

In a window seat at 30,000 feet, Moreno reclines and lowers her sleep mask over her face. The mask is one thing she never travels without—she actually packs several, just in case, one in every bag. The plane is scheduled to land at 4 a.m.; her first meeting that day is four hours later. Though she’ll have a hotel room to freshen up before the day begins, she won’t even spend the night there before her next flight to Sao Paulo, Brazil. “When I put on the sleep mask, it doesn’t matter what’s happening, I can fall asleep,” Moreno says.

There will be little rest over the next five days. Moreno and Tom Davis, global equities portfolio manager, will visit more than three dozen companies across Argentina and Brazil, companies that, according to their research, may benefit most from the region’s rising middle class and locals’ corresponding need for new financial tools to spend, save and manage money.

Day one will primarily be spent with just one company, the largest, MercadoLibre, the “other” Amazon of South America (not the rainforest).

Over morning coffee, Moreno and Davis discuss news that broke overnight: Argentinian president Mauricio Macri was resoundingly defeated in the country’s primary elections. At market open, Argentinian equities across the board are expected to sink deeply on fears of a new party in charge.

“We didn’t plan for that,” Moreno says. But experience tells her that it’s no time to panic. “In Argentina and Brazil, they’re used to volatility in politics. They know how to adjust.”

After a morning stop at a local digital bank startup, Moreno and Davis fight their way through morning traffic to MercadoLibre headquarters. This trip is one Moreno has made many times since first recommending MercadoLibre as an investment, back when the company was merely a promising entrant in the South American e-commerce space. Now, with a product called MercadoPago, MercadoLibre is presenting itself as a major player in the rapidly growing digital payments arena. It’s up to Moreno and Davis to examine that claim—and determine the risks, rewards and size of any opportunity.

From the outside, the company’s Buenos Aires headquarters isn’t flashy, but inside, the space is fitted with all the amenities of a high-tech startup, with architectural details like a grand staircase of sculpted wood and rainforest greenery that doubles as amphitheater-like seating for special presentations.

The mall is abuzz, and that doesn’t go unnoticed by Moreno. A good place to look for investments, she says, is in places where the middle class is growing, and per capita income approaches $10,000. International Monetary Fund studies have shown that number to be an inflection point—when people in emerging markets begin to purchase more than basic necessities and fill their shopping bags with consumer and luxury brands.

“As these countries continue to emerge, you see growing demand for services, real estate, cars; then it moves on to health care, more tourism, travel, luxury goods,” Moreno says. With another billion people expected to join the middle class in emerging markets in the next six to eight years, she says, consumer-oriented companies that operate in these countries have high potential for growth.

That’s why wherever she goes, Moreno makes it a point to strike up conversation. What do locals like? What are they buying? What do they aspire to have?

“The most fun thing about my job is it gets to satisfy my innate curiosity,” she says. “I don’t just want to go somewhere, I want to experience what that place has to offer.”

At the mall food court, Moreno observes the man in front of her in line step up to pay the cashier and whip out his phone.

She nudges Davis: “Tom, look.”

He sees it, too. MercadoPago. And it’s not just this one man. All around the food court, screens light up, phone after phone, paying for coffee, paying for lunch, not a bill or coin in sight.

Moreno and Davis return to MercadoLibre. Much of the discussion today addresses a well-known challenge for MercadoLibre and e-commerce in the region: logistics.

“There’s not warehousing space anywhere near Sao Paulo, the epicenter of the Brazil economy,” Moreno says. “Sao Paulo is a very complex city, where you can sit in traffic for five blocks for over an hour.”

It’s not exactly an ideal environment for delivering packages with the speed and efficiency of Amazon in the U.S. Moreno and Davis have already considered this—and scheduled time between stops on the Brazilian leg of their tour to meet with real estate companies involved in warehouse space

During a break between meetings, she’s busy typing away on her phone, conferring with her co-portfolio manager Albert Kwok —who is traveling in India—about a potential trade on an IPO.

“The day-to-day responsibilities as a portfolio manager don’t stop, even when you’re abroad,” Moreno says.

Neither do the day-to-day responsibilities of parenthood. Moreno’s nanny texts her with an update from home, and she opens an app on her phone that connects her with cameras set up at home, allowing her to see exactly what’s going on more than 5,000 miles away.

For Moreno, a single mom, good nannies she trusts and technology like Facetime help bridge the gap while she’s away. Despite the demands of the job, however, she credits Jennison with making it easy to balance work and home life.

“One of the things I saw at Jennison right away is the flexibility that the company gives its employees,” says Moreno, who joined the company in 2011. “There’s this philosophy that everyone’s an adult, they know what they need to get done, and they’ll get it done.”

At market close, MercadoLibre is down nearly 10 percent—not the worst performer of the day, but a high-profile loss all the same. Nevertheless, Moreno and Davis don’t see any reason to doubt the company.

“The key metrics we look for are return, revenue growth, margin profile and governance,” Moreno says. “The crux of what we do is thinking very fundamentally, bottom up, focused at the company level. We don’t get too confused by macroeconomic events.”

Sometimes a visit to a company does, however, change their view.

Moreno recalls a trip to a soft drinks company in Mexico—strong brand, high-return profile, with a stock that had done well for several years. During her visit, Moreno observed Mexican consumers eating healthier and interested in healthier lifestyles. Mexico was among the countries with the highest incidence of diabetes, and its government had just passed a sugar tax. While the company was innovating and still growing, everywhere Moreno looked, she saw a Mexico with less appetite for sugary beverages. Everything pointed toward conflict between the company’s strong growth story and a shift in consumer preferences.

“There was a subtle breaking down of our investment thesis,” Moreno says. “We can invest anywhere in the world, why stay around to see how that conflict is going to end?”

Moreno had hoped to get dinner at a local restaurant, but the meetings with MercadoLibre go long, so she and Davis hightail it to the airport for their flight to Sao Paulo. Missing a flight is one of Moreno’s biggest fears, as it could lead to skipping key meetings at her next stop.

Grabbing food from steam trays at the airport lounge, Moreno and Davis debrief on the day’s learnings. Their conclusion? The “moat” for MercadoLibre—its structural advantage over its competitors—continues to widen, and the addressable market for payments is significant. There’s a lot to do to make sure they make the most of the opportunity, but at the moment, MercadoPago is ahead of its rivals.

“Investing can be a wild ride, so you have to be comfortable with a bit of unknown,” Moreno says. “You can’t be afraid to question yourself because you’re not always right, but you also need to have the conviction to stick with what you believe in once you have reached a conclusion.”

Moreno summarizes her findings and sends it back to her Jennison colleagues. Then it’s Facetime with her daughter before she goes into her crib.

After landing in Sao Paulo and catching a ride to her hotel, Moreno wonders if she has the energy for an iPad-guided yoga session in her room, which typically relaxes her after a long day. She’s looking forward to the prospect of sleeping in a bed, even if it’s only for a few hours until another day of meetings begins, this time with a variety of Brazilian payments companies.

As grueling as some days can be, Moreno is energized and inspired by her work.

“Traveling for this job shows you that at the core, everybody wants the same things, even if the problems they are tackling are very different,” Moreno says. “Ultimately in our conversations with companies, we can tell who’s trying to address an unmet need or serve consumers thoughtfully. When this is coupled with the stewardship that the right management team provides—that’s when we go, ‘OK, they’re up to something good here.’




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