Stocks in the Boondocks

In the remote reaches of the Argentine pampas, the only stock that most inhabitants have known for years comes live and fourfooted. But Argentine stock salesmen--the portfolio kind--know that back-country men have money too, much of it stashed away in drawers or secret hiding places. They have learned how to rope and brand it. When a securities salesman stopped his car outside a doctor's office in Cordoba province recently, an old man in rags stuck his head through the car's open window. "How much are the Ledesma shares?" he asked. The surprised salesman quickly quoted a price. "I'll take 7,000," the man replied, and produced a bank statement that proved he could afford it.

Idle Cash. The company that is introducing stocks to the Argentine boondocks is the Deltec organization, a many-faceted (paints, petrochemicals, motor scooters), hemisphere-ranging investment house that specializes in Latin American finance. Deltec set up and controls an affiliate known as Valardel, formed to tap idle cash in the hinterlands, where owners have had little to invest in except land. Deliberately staying out of the big cities and concentrating on rural customers, Valardel has sold stocks in twelve Argentine companies, including a steelworks, several auto firms and a paper maker.

Valardel's boss is Deltec Vice President Julio Nunez, 38, a Cuban-born U.S. citizen who was educated at Georgetown and Harvard Law, served as assistant U.S. Attorney in the Eisenhower Administration and was tapped to prosecute the Puerto Rican nationalists who, in 1954, shot up the Congress. Operating out of a Buenos Aires office decorated with a scarlet rug, wildly abstract art and carved African statuettes, Nunez has set an ambitious goal: to make Valardel the Merrill Lynch of Argentina. "We have reached the point," says reform-minded Nunez, "where it is necessary to prove not only that private initiative can make possible sound development but that the private sector can gain self-confidence through its ability to get a job done."

Higher Purpose. Nunez' 45 salesmen are on the road five days a week to earn about $125 a month in commissions, an average salary for Buenos Aires white-collar workers. They use compelling means to part the country people--many of them prosperous from land and cattle--from their idle money. One that works best is flashing an early 100-peso bill bearing the signature of Eusebio Campos, a former Argentine Central Bank official. "That man," the salesman says, "is now one of our directors"--and he is.

By design or accident, Valardel is breathing the first sobriety into a financial atmosphere that has never known much but get-rich-quick schemes, boom and bust. It has re-established underwriting as a service for Argentine corporations for the first time since Juan Peron squeezed private underwriters out of business 17 years ago. And from the standpoint of Argentine companies, the stock sales are an excellent hedge against future expropriation; the small investors who consider a company theirs constitute an effective vote bloc.

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