Kyle I have to agree with the other comments, thank you for an excellent and insightful article, I have always wanted to analyze why WTI and Brent prices have diverged and you have clearly explained this. Looking forward to seeing more.
Argentinean Energy Stocks: The Nationalization Fear And The Dead Cow Appeal [View article]
Value Digger thank you for a nice summary of E&P in Argentina and for covering a much neglected area. I agree that if the right risk reward trade off can be found that there are value investment opportunities starting to emerge at this time in the country for those investors with a high enough risk tolerance.
Gafisa: A Speculative Play On Brazilian Residential Property [View article]
moatfrog thank you for reading. You may note that I have disclosed that I may initiate a position over the next 72 hours. This also seems to be a recurring point made by readers but I can't take a position in every stock that exists in Latin America nor every stock which I analyze with over 90 listed Brazilian ADRs available that would be impossible. There are a number of reasons for this ranging from how I structure my portfolio through to the range of stocks that I cover. But I will point out that my analysis is always balanced and not influenced by either the company being analyzed nor do I receive any remuneration from the company being researched.
Brazil's Case Against Chevron Oil Nationalism In Disguise [View article]
LFVCL thank you for your comments they are appreciated. I am fully aware of the structure of the legal system in Brazil and that the federal prosecutors office is independent from the government just as is it is in most Latin American countries, Europe and the U.S. But if you believe that the federal prosecutors office is not capable of working to an agenda, does not play politics, is not politically influenced by its political masters or at times is not used as a tool of the government to drive political agendas then you certainly live in a different world and a different Latin America to the one that I live in. The facts in the article speak for themselves, so rather than casting aspersions on my knowledge and the information presented I challenge you to present a factually based argument that supports your assertions and demonstrates otherwise.
Caiman Valores Positions For 2013: Colombia, Chile Offer Best Upside In Latin America [View article]
bsorge thank you for the comments. That is a god point to raise and it is an oversight on my part not discussing currency risk for U.S. investors. With regard to the withholding taxes on dividends and interest in those countries I typically set those them out in individual articles and analysis, although as a non-U.S. resident I only have a rudimentary understanding of U.S. taxes on investments. Again this is a good point and it would be useful for readers to have a summary of withholding taxes in the region and I will pull together an article on that topic.
Petrobras' (PBR) first quarterly loss in 13 years has more to do with the real's depreciation than recurrent factors, CEO Maria das Gracas Foster says. The company lost 1.35B reais ($666M) vs. an expected 2.94B-real profit, and the need for international financing means heavy exposure to the dollar. Production gains of 1.5% in the past year (to 2.62M bpd) marked the slowest rate since 2007. (Beyondbrics: It's not just the FX) [View news story]
Herr Hansa I wholeheartedly agree. It amounts to Petrobras being the Brazilian government's preferred tool for developing the country's oil reserves.
They have taken a number of measures to essentially lockout foreign oil companies from operating in Brazil, from defining oil assets as strategic assets, forcing foreign oil companies to enter into partnership with Petrobras to taking a heavy hand prosecutorial approach for oil leaks by foreign companies.
If anything Petrboras is ill equipped to access the oil in the deepwater pre-sal fields and will need all of the technological help and expertise it can get. That as you have pointed out can only come from companies like Chevron and Transocean.
On top of which you have local content laws which are delaying Petrobras ability to obtain the equipment required to access the pre-sal fields.
I certainly don't expect to see much relief for investors in Petrobras in the short to medium term or even the long-term until the government and its policies change.
The case against Chevron and Transocean is probably one of the most heavily manipulated, disparate and interventionist applications of the law ever seen. Every tie it starts to appear that the Brazilian courts have come to recognize this there is another order made against Chevron and Transocean. The latest being that they have to cease all production in Brazil.
All of this will only harm Brazil's oil industry and the country's reputation while acting as a deterrent for international companies seeking to operate there.
Vale: A Promising Mining Investment Overwhelmed By Uncertainty [View article]
Mercy thank you for the feedback. Sometimes I feel that I am being to harsh on the government and President Rousseff, but every time I get that feeling they implement or announce the implementation of an even more extreme policy. The direction of the government's policy is far more extreme than under Lula and it seems that ideology with a healthy dose of revenge and megalomania is driving it.
My fear is that if the government continues down this path all of the great work put into developing the country and the economic development that has occurred over the last decade will be brought undone leaving Brazil with a structurally unstable economy taking it right back to the end of the 70s.
I also just want to point out that I am not a big fan of IMF style development economics nor a fan of the Chicago school of economics. I also understand the important role the government plays in the provision of public goods, the need for regulation and its important social responsibilities, but they need to strike a balance and that balance needs to be supported by transparent and equitably applied laws in the interests of all stakeholders in society (I am cringing as I use the word stakeholder).
Banco Santander: Paying The Price For Its Association With Spain [View article]
Austinbroker thanks for the comments, I am looking to do a similar analysis on BBVA as I quite like the bank. I agree it does have a strong global footprint and has pursued a similar expansion strategy in Latam. I used to bank with them in Colombia, where incidentally they were able to successfully penetrate the local market, which Banco Santander was not.
Banco Santander: Tantalizing Value Or High-Risk Investing? [View article]
Charboil, thankyou for the comments. However, the dividend payout ratio is not being sustained at such a high level due to STD paying a large portion of the dividend in shares. My previous answers explain why the payout ratio is so high. Furthermore, historically the payout ratio has been substantially lower than 100%. For greater clarity and further detail please refer to the 2011 Annual report which is available through a hyperlink in the article.
Pullback In 2 Oil Stocks Offers Investors An Attractive Entry Point [View article]
Roger Chevron still operates in Venezuela as a partner with the state owned oil company and Venezuela is Chevron's highest producing oil operation in Latin America. Secondly the company is not locked in litigation in Ecuador, a judgement was awarded against Chevron for the actions of Texaco in the oilfields near Lago Agrio and the matter has now been referred for arbitration in the Hague.
Brazil's Case Against Chevron Oil Nationalism In Disguise [View article]
rajan thank you for the feedback it is appreciated. I think you have missed the point of the article. The article certainly does not state that Chevron should get richer to the detriment of the Brazilian government or Brazilian people. The company should however be able to compete in a level playing field and be subject to the same laws that its competitors are subject to. The legal and environmental requirements should also be transparent and evenly applied otherwise you only end up with a system based upon manipulation, corruption and cronyism. That would be a far worse outcome for the country and its people as petro-dollars obtained by authoritarian Latin American government's have historically been used to strengthen their hold on power and add to the wealth of individual members rather than for infrastructure, health or education which is why the region has one of the largest disparities of wealth and income in the world.
Banco Santander: A Safe 12% Yield From Europe [View article]
I agree that SAN/STD looks tempting at its current price due to its PE and dividend yield but there are a number of red flags: 1. It has a high NPL ratio, which indicates the quality of its loan book is questionable and there may be further provisions coming. 2. Its loan book has substantial exposure to the Spanish RE market and a high proportion to the high risk construction and property develpment sectors. 3. Its loan to deposit ratio is particularly poor at 117%, which raises additional issues around loan funding, as well as capital and cost impacts if short-term rates rise. 4. It has set aside substantial provisions due to exposure to poor quality loans. Besides the opportunity costs associated with setting this money aside it leaves quesitons about the robustness of its risk management culture and systems, therefore making me think are there any other problems hidden from view. 5. At this time with the funds allocated to provisions and the issues with the quaity of its lending portfolio it is inevitable that the bank's profitability will decline and I think it is only a matter of time before it reduces its dividend payment.
Overall its Latin American operations in particular its seperately listed subs of Banco Santander Brasil (BSBR) and Banco Santander Chile (BSAC) look far better.
A Major Australian Bank With A More Generous Dividend Than JP Morgan Or Wells Fargo [View article]
Paulo I am not sure what you have been reading but there is certainly no RE bubble in Australia that is anything like that which existed in Spain, the UK, US or Portugal. The significant degree of economic fallout that arose from those bubbles in those countries was primarily caused by the easy access to cheap credit and the high portion of sub-standard loans that were made. That will not happen in Australia due to the substantially tighter prudential regulation and the regulation of credit at both federal and state levels. Furthermore, all of the major banks and licensed ADIs have very conservative lending policies compared to the institutions you have mentioned. The key drivers of the growth of real estate in Australia are primarily: 1. Government policy through favorable taxation treatment of property in comparison to shares. 2. A societal mentality of 'bricks and mortar' are the safest investments. These will never change and while the market has certainly in some major cities seen strong growth in property prices it is sustainable due to these unique factors.
Overall buying Westpac (WBK) is nothing like buying any of the Spanish, US, UK, Irish or Portuguese banks prior to the credit crunch. It has a conservative lending portfolio, far stricter lending criteria, it has never been involved in sub-prime lending, it has a good deposit to loan ratio therefore meaning that it funds a large portion of its lending through its deposit base rather than wholesale funding and both its PDLs and loan provisions are falling as a result of conservative credit risk management.
How Oil Really Gets Priced [View article]
Endgame: A Book Review [View article]
Argentinean Energy Stocks: The Nationalization Fear And The Dead Cow Appeal [View article]
Gafisa: A Speculative Play On Brazilian Residential Property [View article]
Brazil's Case Against Chevron Oil Nationalism In Disguise [View article]
The World Bank's IFC Investment Arm In Emerging And Frontier Markets: What We Can Learn [View article]
Caiman Valores Positions For 2013: Colombia, Chile Offer Best Upside In Latin America [View article]
Petrobras' (PBR) first quarterly loss in 13 years has more to do with the real's depreciation than recurrent factors, CEO Maria das Gracas Foster says. The company lost 1.35B reais ($666M) vs. an expected 2.94B-real profit, and the need for international financing means heavy exposure to the dollar. Production gains of 1.5% in the past year (to 2.62M bpd) marked the slowest rate since 2007. (Beyondbrics: It's not just the FX) [View news story]
They have taken a number of measures to essentially lockout foreign oil companies from operating in Brazil, from defining oil assets as strategic assets, forcing foreign oil companies to enter into partnership with Petrobras to taking a heavy hand prosecutorial approach for oil leaks by foreign companies.
If anything Petrboras is ill equipped to access the oil in the deepwater pre-sal fields and will need all of the technological help and expertise it can get. That as you have pointed out can only come from companies like Chevron and Transocean.
On top of which you have local content laws which are delaying Petrobras ability to obtain the equipment required to access the pre-sal fields.
I certainly don't expect to see much relief for investors in Petrobras in the short to medium term or even the long-term until the government and its policies change.
The case against Chevron and Transocean is probably one of the most heavily manipulated, disparate and interventionist applications of the law ever seen. Every tie it starts to appear that the Brazilian courts have come to recognize this there is another order made against Chevron and Transocean. The latest being that they have to cease all production in Brazil.
All of this will only harm Brazil's oil industry and the country's reputation while acting as a deterrent for international companies seeking to operate there.
Vale: A Promising Mining Investment Overwhelmed By Uncertainty [View article]
My fear is that if the government continues down this path all of the great work put into developing the country and the economic development that has occurred over the last decade will be brought undone leaving Brazil with a structurally unstable economy taking it right back to the end of the 70s.
I also just want to point out that I am not a big fan of IMF style development economics nor a fan of the Chicago school of economics. I also understand the important role the government plays in the provision of public goods, the need for regulation and its important social responsibilities, but they need to strike a balance and that balance needs to be supported by transparent and equitably applied laws in the interests of all stakeholders in society (I am cringing as I use the word stakeholder).
Banco Santander: Paying The Price For Its Association With Spain [View article]
Banco Santander: Tantalizing Value Or High-Risk Investing? [View article]
Pullback In 2 Oil Stocks Offers Investors An Attractive Entry Point [View article]
Brazil's Case Against Chevron Oil Nationalism In Disguise [View article]
Banco Santander: A Safe 12% Yield From Europe [View article]
1. It has a high NPL ratio, which indicates the quality of its loan book is questionable and there may be further provisions coming.
2. Its loan book has substantial exposure to the Spanish RE market and a high proportion to the high risk construction and property develpment sectors.
3. Its loan to deposit ratio is particularly poor at 117%, which raises additional issues around loan funding, as well as capital and cost impacts if short-term rates rise.
4. It has set aside substantial provisions due to exposure to poor quality loans. Besides the opportunity costs associated with setting this money aside it leaves quesitons about the robustness of its risk management culture and systems, therefore making me think are there any other problems hidden from view.
5. At this time with the funds allocated to provisions and the issues with the quaity of its lending portfolio it is inevitable that the bank's profitability will decline and I think it is only a matter of time before it reduces its dividend payment.
Overall its Latin American operations in particular its seperately listed subs of Banco Santander Brasil (BSBR) and Banco Santander Chile (BSAC) look far better.
A Major Australian Bank With A More Generous Dividend Than JP Morgan Or Wells Fargo [View article]
1. Government policy through favorable taxation treatment of property in comparison to shares.
2. A societal mentality of 'bricks and mortar' are the safest investments.
These will never change and while the market has certainly in some major cities seen strong growth in property prices it is sustainable due to these unique factors.
Overall buying Westpac (WBK) is nothing like buying any of the Spanish, US, UK, Irish or Portuguese banks prior to the credit crunch. It has a conservative lending portfolio, far stricter lending criteria, it has never been involved in sub-prime lending, it has a good deposit to loan ratio therefore meaning that it funds a large portion of its lending through its deposit base rather than wholesale funding and both its PDLs and loan provisions are falling as a result of conservative credit risk management.