Re: TBH, I sold out oh around 120, thankfully. My intent was to await a retreat and buy the individual spin-offs as they hit value levels. Wow, have they - but not for the reasons I thought. You can use adr.com for more information. I started buying TCP when it hit 18 1/2 this Monday, then bought more at 15 3/4 the next day, then more at 13 5/8 the next day. So as usual, I'm pretty good at catching falling knives - with my feet.
TCP is the cellular spin off for the most populous, wealthiest state in Brazil, and includes its financial center. Now at less than 7 times earnings and about three times cash flow. The kicker is it will grow. On CNBC today a communications fund PM was pointing out how telcomm was an integral part of Brazil's growth plans, and devaluation or no, he didn't see the Telebras spin-offs' plans being inhibited or cut back in anyway. The guy didn't have a position in it because of the devaluation uncertainty, so I doubt he was hyping. Plus I can see the same thing, since foreign investment is already committed into these things. For TCP, that means targeted growth in the 20% range/year. And there's a nice dividend. So that's my favorite now, and the only one I'm buying, but a lot of them look good, just not with as much growth potential, and TCP's only a tiny bit more xpensive, if you can call 7 X earnings expensive. I figure you only need one of the spin-offs, since they'll all participate in any rebound. IMO TCP will lead the way when it happens. If capital outflows this week come in less than expected (we're off to a good start - Wednesday's outflows slowed to about 33% less than expected), Brazil will rebound quickly. Don't underestimate the risk in Brazil though- the strong currency was very very important to its economic health, and it really is between a rock and a hard place. My bet is that is what Cardoso wanted - to force Congress into his reforms, pension being the most critical. He knew a limited devaluation would put a big scare into the politicians - I can't see any other reason for a limited devaluation.
I also bought UBB at 14 9/16 back when Armin brought it up. As the guy in Barron's pointed out this weekend, UBB has not been a risk- taker, and a large portion of its assets are govt paper. But I didn't see the devaluation. The bank is much riskier than the telcos but still I bought more UBB in the 10's, and I'll buy more at 7 when it gets there. UBB was already less than 90% of tangible book at 14 and, so I figured a devaluation has already been in the stock price. Wrongo. As with everything, though, I root my holdings lower so I can get them even cheaper.
Good investing,
Mike |
