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  • Banco Santander Brasil: Declining Asset Quality And Growing Headwinds Hamper Profitability [View article]
    My pleasure I have added CPL to the list and will take start on an article this weekend on the Brazilian utilities sector.
    Aug 23, 2012. 11:13 PM | Likes Like |Link to Comment
  • Fortescue Stays Confident On China As H2 Profit Rises [View instapost]
    I think Twiggy like Vale's Ferreira is overly optimistic and may have ulterior motives for being so overly optimistic on the outlook for iron ore. I have far more confidence in the views expressed by Kloppers and BHP which appear to more accurately reflect the data coming out of China and what is happening in Latam with resources.
    Aug 23, 2012. 11:03 PM | Likes Like |Link to Comment
  • Banco Santander Brasil: Declining Asset Quality And Growing Headwinds Hamper Profitability [View article]
    Tucson more than happy to dive into the world of Brazilian utilities I have been quite interested in that area in the past but it is not my area of expertise, which is why I tend to focus on financials and resources. But will certainly take a closer look.

    I like SAN, but I am only a recent convert to the Santander story and so far it has proven to be a good value pick if you were able to pick it up since April. But out of the Spanish banks operating in Latam my pick is BBVA because I really like their U.S business and their Argentine bank.

    Overall I believe that investors in Brazil will be feeling pain for sometime because of the economic issues which I don't see improving for sometime despite the government stimulus package. The key problem I believe is that too many analysts took a way to optimistic view on Brazil and the growth prospects without truly understanding how the country's economy works or what was triggering growth. This also saw many analysts and investors forget about the fundamentals of investing and get caught up in the hype that was being generated, you only need to look at the hype surrounding BSBR's IPO in 2009.

    But I still do believe that the majority of the larger companies are sound companies, albiet with issues. In particular the Brazilian utilities sector has some very strong positives, which means that while the sector may not perform strongly from a growth perspective it has a strong defensive nature with moderate to good yields.

    Regards,

    CV
    Aug 23, 2012. 10:52 PM | Likes Like |Link to Comment
  • Banco Santander Brasil: Declining Asset Quality And Growing Headwinds Hamper Profitability [View article]
    Derastone thank you for the feedback. if you have any specific Latam stocks or issues you would like covered let me know.
    Aug 23, 2012. 08:34 PM | Likes Like |Link to Comment
  • Spain's Non-Performing Loans Continue Climbing [View instapost]
    liz I would agree it has been a tragedy for Spain and the Spanish people and the current situation is going to create a lost economic decade particularly for anyone under 25 who are the hardest hit. When I was last in Argentina I met a large number of young Spaniards who had gone there to find work. Given the problems in Argentina including high inflation, high unemployment and social and economic instability it was surprising and only reinforced how bad the economic situation in Spain is.
    Aug 23, 2012. 08:06 PM | Likes Like |Link to Comment
  • Banco Santander Brasil: Declining Asset Quality And Growing Headwinds Hamper Profitability [View article]
    Wayne thank you for the feedback. That is the million dollar question and very difficult to answer. At the end of completing this article I found myself sitting on the fence. Much of the answer comes down to your personal circumstances such as the reasons for holding your portfolio, your tolerance for risk and whether your a trader or an investor.

    The bank is well managed and has strengths and once the Brazilian economy improves growth opportunities will open up but that will take some time. BSBR's focus on costs control are taking effect but loan deterioration is going to continue over the short-term so provisions will continue to rise continuing to affect profitability. It does pay a healthy dividend giving it a good dividend yield with a sustainable payout ratio and that will give current investors some solace if they continue holding the stock.
    Aug 23, 2012. 08:02 PM | Likes Like |Link to Comment
  • Banco Santander: Paying The Price For Its Association With Spain [View article]
    I agree that at the moment banks do not look the best but as Tack points out that is the time to buy. Santander was looking very appealing at sub $6 when I wrote this so what its Spanish peer BBVA. There is still some opportunity in Santander and BBVA for investors and over the long-term they should deliver strong returns for investors from their diversified operations across Europe, Latam and the U.S.

    My preferred banking investment at this time is Peru's Credicorp http://seekingalpha.co... but there are other opportunities in developed markets most of which Tack has kindly listed.
    Aug 23, 2012. 07:50 PM | Likes Like |Link to Comment
  • Latin America's China Addiction (Part 1): China's Soft Landing Impacting Regional Growth [View article]
    Tony thank you for the link and the additional information. The greatest impact on the market at this time is the European crisis and until there is a clear point of resolution established I doubt that the market will bounce back to what would be expected. I also think that we have seen the end of the greatest bull market of all time, thought I don't ascribe to the views of doom and gloom profits.

    The market will still be there and companies will continue to perform but we won't see the broad based growth experienced up until late 2007 when the market peaked. This creates a lot of opportunity for astute investing and stock picking. I'll answer your questions the best way I can.

    Q1. The methodology you have given is a good quick and dirty way to measure the value of a mining/oil company. Obviously there are a wide range of other factors that influence its values but a resources company is essentially a leveraged play on the value of the commodity they produce.

    Q2. The perception of the levels of violence and crime is very different from the reality. Overall the impact in most countries is not as severe as people think and it would only in many cases be similar to what is experienced in the U.S. This to a point also includes corruption and market manipulation. The severity of these issues and their impacts also vary from country to country, which is why I chose Brazil, Chile, Colombia and Peru. Basically each is at a different point in the developmental cycle and have different levels of political, security and infrastructure risk. You have Chile which is much like a resources dependent developed economy to Colombia or Peru which are the least developed. But to really answer this question effectively would require a doctoral thesis. In short it depends and with the exception of Chile political risk is probably a far greater problem for investors.

    Q3. Overall the financial statements are as trustworthy as most companies operating in developed economies. But this also depends on the size of the company and whether it is listed on an external exchange. I tend to take the financial statements of any small-cap whether it be Brazilian, Colombian or U.S based with a grain of salt and the degree of manipulation of company statements is probably not as problematic as China. But there are issues and as part of any DD they need to be reviewed and cross checked where possible.
    A common practice (which was widespread in the U.S pre Sarbanes Oxley) is inflating asset values particularly intangibles and goodwill. There have also been a range of governance problems throughout the region with executives treating the company, particularly small-caps as an extension of themselves which means accounting statements can be quite opaque.

    Thank you for the comments and I look forward to further discussion as the rest of this series of articles is published.
    Aug 22, 2012. 06:28 PM | 1 Like Like |Link to Comment
  • Vale: A Promising Mining Investment Overwhelmed By Uncertainty [View article]
    Jimmy thank you for the comment and feedback. The political risk in Brazil at this time is particularly high with government protectionism and economic intervention now seen a valid economic management tools. This is becoming even worse because as the economy slows and the Rousseff government comes under greater pressure to fix it, the more interventionist it becomes.

    The problem with Vale is that it is a company with tremendous potential this is finding itself having to make decisions that are in accordance with the government's wishes but destroys value for share holders.
    Aug 22, 2012. 06:01 PM | Likes Like |Link to Comment
  • Vale: A Promising Mining Investment Overwhelmed By Uncertainty [View article]
    Colin thank you for the feedback and support. It wasn't an easy article to write and accurately presenting the facts is not easy. I had to spend a considerable amount of time researching the article. I agree I think that Kloppers is one the money with the direction of China and the resources boom.

    The CEO of Vale has taken a very optimistic view which I believe is unrealistic, but this could also be due to the pressure Vale is being placed under by the Brazilian government. Interestingly despite Vale's particularly positive outlook the company continues to diversify its operations across coal, base metals, fertilizers and now hydro-electricity.
    Aug 22, 2012. 05:56 PM | 2 Likes Like |Link to Comment
  • Latin America's China Addiction (Part 1): China's Soft Landing Impacting Regional Growth [View article]
    mrj thank you for the feedback. That is a very good point, the EU as a whole is Brazil's second largest export partner and the head winds coming from Europe are having a significant impact on Brazil's economy, particularly as the region also receives a significant portion of Brazil's manufacturing exports.

    I will be covering the Brazilian economy and EWZ in more detail in the next two articles. I have for sometime been arguing that China's soft landing and the European headwinds are the catalyst that has brought the structural issues within Brazil's economy to the fore and it these which are probably the key reason for the sudden economic slow down. I also be believe that these will more than likely lead to another lost decade in Brazilian manufacturing unless the government changes tack and starts resolving these issues.

    Overall it is starting to look more and more like the Brazil of the 70s when the oil shocks acted as a catalysts that caused the policy of import substitution industrialization to fall apart and Brazil to experience of decade of negative growth.
    Aug 21, 2012. 09:49 PM | Likes Like |Link to Comment
  • Latin America's China Addiction (Part 1): China's Soft Landing Impacting Regional Growth [View article]
    Wolfe they were investments that I picked up sometime ago along with Ecopetrol as part of building a portfolio of Latam stocks through ADRs. I haven't reached a decision to divest myself of those companies as yet because there is still sometime to go before this all of this plays out, plus for any Latam portfolio they are core stocks to hold. But overall my view is that the tremendous growth in commodities demand and hence prices is essentially over though we will continue to see China expand and demand for commodities continue on a more subdued and cyclical basis.
    Aug 21, 2012. 09:43 PM | Likes Like |Link to Comment
  • Gafisa: A Speculative Play On Brazilian Residential Property [View article]
    dawentz thank you for the feedback. I spent sometime sifting through Latam markets trying to find a speculative value buy for investors and the only company that had U.S listed ADRs that met the criteria and presented as an opportunity was Gafisa. I note that it has hit its $4 target price today on the back of an almost 5%. I am in the process of reviewing the company's 2Q 12 results to see where it is up to and whether we can expect any more gains.
    Aug 21, 2012. 09:38 PM | 1 Like Like |Link to Comment
  • Latin America's China Addiction (Part 1): China's Soft Landing Impacting Regional Growth [View article]
    Chris thank you for the feedback. I prefer to treat Mexico separately from these articles because it is somewhat different to the other Latam economies and has a far more established relationship with the U.S through NAFTA etc. This may sound a little strange but I tend to treat it as belonging to North America rather than Latin America for a number of reasons. But I will endeavor to include more analysis of Mexico in the later articles in this series.
    Aug 21, 2012. 07:43 PM | 1 Like Like |Link to Comment
  • Latin America's China Addiction (Part 1): China's Soft Landing Impacting Regional Growth [View article]
    Tony thank you for the comments and additional insight. I agree with your thoughts on China and while the country will continue to grow for sometime yet we won't see the explosive growth and hence super demand for commodities seen in the run up to the GFC. As part of researching this series I took a closer look at Canada and expecially Australia to see whether the effects of the Chinese economic miracle were similar.

    I also agree that Brazil that has a lot more to loose yet and investors haven't seen the worse with Brazil yet. Plus when the economies of Peru and Colombia complete their initial catch-up growth stage I think economic expansion in those countries will slow. Of all the Latin American economies the one that is the most mature and I believe has the most to offer investors is Chile.

    Despite China's growth cooling and its dependence on copper as its key export its economy has continued to grow and has developed a degree of development and stability that puts many of the European economies outside the core of German, France and the UK to shame. Will be diving deeper into these issues and points as the series continues to run. If you have any specific issues or points to raise or would like covered please let me know.
    Aug 21, 2012. 07:22 PM | Likes Like |Link to Comment
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