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Strategies & Market Trends : BAK - Investing -- Ignore unavailable to you. Want to Upgrade?

To: batman10023 who wrote (436)	3/3/2012 7:46:10 PM
From: Covenant	2 Recommendations Read Replies (1) \| Respond to of 3249

Re: NTL *i think 20% discount for holding company is severe but 10% is probably too low (assuming dividends are flow thru).* Looks like we both came to 15% independently. The illiquidity discount is also captured here. there is currency risk but isn't that picked up in the difference between the adr's and the local shares? No. The risk is peso denominated local shares go to fair value while peso devaluation causes ADRs to not get any benefit at all, or worse, go down in price. Telecom Argentina makes up about 8% of the Merval index. A general attraction or aversion to Argentine equities will effect the price as a result. Right now we are seeing aversion which is probably the source of much of the current TEO discount. Is there any type of catalyst to make Argentina equities in general more attractive? I think current pricing captures the currency risk. *you i guess could hedge the risk by shorting TEO adr's to capture the spread.* This would change the trade to a simple arb on the holding company discount, and the potential returns there aren't that big, particularly since the time period is unknown and liquidity is poor. Shorting the peso would be one way to hedge that risk, but that is more a directional bet than a hedge. *i think it's worth a gamble* Both TEO and NTL look like good values for someone comfortable with the macro risks. There is also the potential for Telecom Italia to provide a catalyst by again increasing its ownership. It is anybody's guess on whether this is likely to happen or not. Argentina trade restriction make this a good market for RIMM blackberries with final assembly in Tierra del Fuego. online.wsj.com It is tough to find good news for RIMM, but Argentina is a bright spot for them. Thanks for bringing up this idea.