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

To: Jyoti sharma who wrote (3040)	1/15/1998 12:15:00 AM
From: Michael Burry	Read Replies (1) \| Respond to of 78644

I also do not consider Brazilian market a great bargain now. Asian markets have already corrected 60-80%, Latin American markets are yet to have a correction. My take is that Latin markets don't deserve the shellacking that Asian markets got. Brazil in particular is acting responsibly and biting the bullet fiscally. TBR is the most liquid LatAm stock, so it gets dumped when the general public wants outof LatAm, and it rises when they want in. Generally, this sentiment parallels Asia's turmoil and is irrational. Chile has been LatAm's star. Brazil differs from Chile in that no significant export industry has developed. Whereas exports to Asia are a significant part of Chile's economy, the Asian crisis really means much less to Brazil. If anything, it spurred Brazil into fiscal tightening - a good thing. That said, TBR trades at a value discount to its Chilean counterpart, on a cash flow basis. Its cash flows protect it from the need to incur debt and hence from most direct effects of short term rate hikes. You expect $70? That would mean the government will get about 11.2B for its share. A B band license just went for over $1 billion itself. There are 9 A band cellular licenses, which if anything should command a premium to the B band licenses, coming out of Telebras. Maybe each won't go for a billion, but you add in the long distance carrier and the three regionals and they don't need to go for a billion each to make $70 ridiculous. I feel a lot of projections on TBR growth is typical enthusiastic projections of analysts. I agree. A slow economy will adversely affect that growth even more. But with 11 month waiting lists for service alleviated by foreign capital investment, I expect there to be growth nonetheless, and it won't take much growth at all to make the current valuation at 5X cash flow and very little debt attractive. The privatization and the bids coming down the pipeline put at timetable on TBR's appreciation, and makes it hard for me to see a fall to $70 on simple volatility, if that is your tack. It would take a currency devaluation. When HK unpegs its dollar, I think we will see another TBR buying opportunity. $70 should be very unlikely. Good Investing, Mike