Artisan Canvas

Craig, happy 11-year Artisan anniversary. To commemorate your time at Artisan Partners and with the U.S. Value team, we have a few questions to better get to know you personally and professionally. To break the ice, please tell us a bit about yourself.

I grew up in South Carolina and have lived in the southern US my entire life. One thing that is interesting about my childhood is my dad was a professional golfer on the PGA Tour (he also played the Senior PGA Tour later in life).

EMsights Capital Group believes that economic and political freedoms and rule of law are important precursors for the economic development, growth, education and sustainability of sovereign countries. Through active due diligence, including on-the-ground country visits, in-person meetings with political, business and government officials, and daily monitoring of political and financial news, we actively follow a country’s pursuit and execution of fair and free elections, civil liberties, functioning of government, and the importance it places on economic freedom in real-time – in both its rhetoric as well as its enforcement of these principles.

Over the past year, Egypt made headlines as it worked to navigate through a challenging macroeconomic operating environment and high external financing needs. In particular, the recent surge in US Treasury yields gave rise to the harmful narrative that “markets are closed” to countries like Egypt that would need to price new issuance yields in excess of 10%. We think this narrative has been harmful as it incentivizes countries to wait until they are facing significant time pressure. Instead, we believe countries should take a long-term view, recognizing that yields move around, and begin to formulate financing plans that acknowledge the reality of current market pricing.

Researchers, investors, the occasional interviewees[1] and even the CEO of Artisan are often incredulous when I say my undergraduate anthropology major is a cornerstone of my daily investment process. Occasionally I get feisty and defend myself, but I often defuse the situation with what passes for humor in the investment world and move on. No more! Gillian Tett’s 2021 book Anthro-Vision: A New Way to See in Business and Life will be my public defender.

I was recently asked to speak about investing to a group of undergraduate students at the University of Florida who manage a university student fund. I was initially stumped regarding what we would discuss, but upon speaking with one of the students, it became clear they were eager to discuss a real-world example in relation to our approach to investment research.

In the emerging markets debt space, the political process can turn the tide of policy and outcomes in a country. As we flip the calendar to 2023, there are several elections and potential policymaker changes on the horizon that could make a splash. As such, we monitor developments on elections closely and find that the following may carry the most weight in the coming months as they will dictate the direction of macroeconomic policy and changes to the quality of governance in the countries we look at.

Merriam-Webster’s word of the year for 2022: gaslighting. After 2021’s market resurgence from the worst of pandemic-lows, investors were left feeling like a spurned lover in 2022—misled, manipulated and filled with self-doubt from the volatility this year.

Following its return to democracy in the early 1990s, investors began to show renewed optimism for Ghana as a pacesetter in the region. In ensuing years, the country was a beneficiary of the heavily indebted poor countries (HIPC) initiative that saw a successful reduction of its public debt from approximately 80% of its GDP in 2000 to around 20% in 2004, putting the country on a positive trajectory. Instead of taking advantage of a clean slate, Ghana’s post-HIPC history has included widening deficits, the abandonment of a disciplined fiscal framework at the onset of Covid-19 and rising core rates as of late. Markets have punished Ghana and given an increasingly unsustainable debt load, Ghana is unable to access external financing sources. Public debt is projected to reach about 100% of GDP by the end of 2022.

Recently, EMsights partook in a due diligence trip to the nations of Kazakhstan, Uzbekistan and Azerbaijan. We found Kazakhstan, which began 2022 in a bit of chaos, headed down a fascinating path towards reform and disentanglement from Russia. While we would like to see more progress made on Kazakhstan’s economic reform agenda, we are excited to see what President Tokayev does next.

“It’s tough to make predictions, especially about the future”
—Yogi Berra

Given it’s that time of year when Wall Street’s market strategists trot out their year ahead outlooks, we thought we might share our thoughts on the value of forecasting or perhaps the lack thereof. If the following sampling of prior year outlooks for CY2022 are any gauge, we doubt next year’s predictions are worth the paper they’re printed on.