The changing investment thesis for National Foods

A New York-based hedge fund acquires a 12% stake in National Foods, one of Pakistan’s most recognized consumer foods brands and a company widely regarded as having corporate governance standards that most foreign investors believe they can trust.

If this story were published in the latter half of the Musharraf era, or even in until about 2018, one would have chalked it up to a desire from a sophisticated global investor to profit from the rapidly expanding Pakistani middle class. But this is 2024, and that Pakistani middle class has seen its purchasing power absolutely battered. So why is Millville Opportunities Management, a $200 million hedge fund (small by American standards), investing in National Foods now?

It is because National Foods has figured out a way to profit from the expansion of purchasing power of dual-income Pakistani households, regardless of whether that Pakistani household lives inside or outside Pakistan. In other words, Pakistanis inside Pakistan are struggling under the weight of skyrocketing inflation, and many are leaving in droves, but National Foods has decided it will not give up its share of their wallet even as they leave Pakistan and will continue to serve them abroad, particularly Pakistanis who migrate to Canada.

Here is what is going on.