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Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: MONTY22 who wrote (6303)	8/4/1998 6:40:00 PM
From: RockyBalboa	Read Replies (1) \| Respond to of 22640

Steve merely ment that TBH traded at a discount instead of the usual 9/16 - 7/8 Premium, so you could even trade on TBR bid and TBH ask, with barely any market value in the box. Also you can step in the quotes which works good in TBR, not so good in TBH making even more use of it. Monty if you think it should adjust, trade it wherever you seea possibility. At least, arbs add liquidity. For me it worked out fine in the meantime (see post 6207), as I found a premium of almost 1 for TBH too high. Comparing the charts shows that the premium prevails often in neutral-to-bullish momentum, and turns to 0 or discount in bearish tide. Yesterday and today it was off for short time especially when TBR/TBH went south. SF mentioned it earlier already (posts as early as #5955). This was in particular the case when the dow reverted its +50 this morning and the bovespa and TB got red the first time. The TBH premium and advantages have been discussed for long, since the first time it was mentioned, along with the conversion offer. Yet the liquidity issue remains, incurring some costs and "slippage" on closing positions in then 12 or 13 stocks. For the options side, I also consider a tradeable underlying an advantage to some extent. It might draw volume to the TBH options side in the future. But this is not true for now and future value of TBHs availability is difficult to estimate right now. I do have concerns about TBHs liquidity, as TBH/TBR turnover ratios are diminishing again. From a more practical point, I found it somtimes more difficult to trade it, and get it executed inside market in comparison to TBR. Christian

To: MONTY22 who wrote (6303)	8/4/1998 10:16:00 PM
From: Steve Fancy	Respond to of 22640

Monty, I understand how bid and ask prices work...I've watched TBR trade lightly till 4:30 almost every trading day for the last year, and have witnessed how the bid and ask react to news despite the generally wide spread after 4:10 or so. However, my point was the difference between TBH and TBR, and the fact that from a couple of minutes of 4:00 when the bid and ask oscillated wildly for a couple minutes, TBH was clearly trading at a discount. FWIW, the stock was trading while the bid and ask were within the ranges I posted. I am not suggesting TBH will continue to trade at a discount, but I suspect there were many more sellers than buyers this afternoon as the DOW tanked. Potentially a taste of what's to come in the near term with TBH if and as interested wanes. I believe the last Merrill document I posted suggested even they were looking at about 2 years max. At some point liquidity should start drying up based on these projections. sf