Telebras (TBH) & Brazil Message Board

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Strategies & Market Trends : Telebras (TBH) & Brazil

TBH 0.517

-9.2%

3:59 PM EST

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To: DMaA who wrote (647)	1/5/1998 11:09:00 PM
From: Michael Burry	Read Replies (1) of 22640

I see what you're saying. I do not see it as terribly speculative, however. Maybe it's because they told me to my face, but here's my logic: Theoretically, Telebras could seriously screw its ADR holders, but the majority of those holders are US institutions. And it is the preferred that is the most traded in San Paulo, so Brazilians would be screwed as well - remember we have all the rights of them. And Telebras still has a way to go on its privatization plan. Would it willingly tick off all those institutions? If it was just us small fry then I would worry, but the company maintains close contact with the major US institutions out of necessity. Brazilian ADRs are on the rise, and the government I'm sure would like that to continue. Ripping off the ADRholders of its most publicized privatization would not seem to be the road to prosperity. The common (voting) stock trades about 10% higher than the preferred (non-voting, ADR) stock on the SP exchange. ADR's reflect the preferred price thanks to arbitrageurs, and hence the market has already priced in the relative discount for ADR shares. The government should use this as its guide. Good Investing, Mike

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