We study ethnic investing, using transaction level data from Kenya's stock exchange (NSE) and CEO/board turnover. A given investor invests more in a given firm when the firm is run by coethnics, and earns lower returns on such investments. However, rather than pay to satisfy a taste for coethnicity, investors react differently to news about coethnic firms---buying more in response, and earning especially low returns on news-triggered coethnic investments. We show that this form of ethnic investing lowers the average value of firms on the NSE and misallocates value across firms as investors forego high(er) returns in ethnic minority run firms.