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Strategies & Market Trends : Telebras (TBH) & Brazil
TBH 0.550+2.8%Jan 9 9:30 AM EST
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To: David R. Doerr who wrote (114)8/7/1997 4:12:00 PM
From: dougjn   of 22640
 
David, I've read back through a lot of your messages on this
thread and respect your perspective. I'm into TBR with an av
price in mid 130's.
-------snip
Merrill reported during the rumors of devaluation that they saw no reason to start selling TBR. The analyst at Merrill is the lowest on the street with estimates, why is this a good time to double up? I'm not sure when earnings are coming out. Right now the stock is going sideways in rather violent swings...tells me there may be some truth to the rumors. At this point I'm holding, not buying anymore.
-------snip
Yes, I agree basically. Seems to me the some truth is in the
devaluation rumors. As I understand it, the peg to the dollar has
an automatic 7% devaluation to it, which is pegged roughly to the
diffenence in current inflation rates bet. US & Brazil. But that
some currency bears feel that in addition, a 10-15% devaluation
jump is what is needed to slow current accounts build up, etc. But
gov't is strongly resisting.
Seems prudent to me to expect it will happen at some point. What do
you think the effect on the stock price will be if so?
To me the answer is not obvious. Seems fairly obvious that the
fall from the 160's area a month ago or so to current 130s 140s level
is due to fears over this.
Does this restart at lower levels discount the effect of a 10-15%
devalution do you think? If so, then market effect could actually
be a pop up afterwards, a la Thailand.
But maybe only partly factored in. Any thoughts?

Regards, Doug
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