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  • The Secret Is Out: Petroamerica Oil Is Well Positioned For A Significant Price Appreciation [View article]
    Great article VD and I have been looking at Petroamerica for some time. Hope you don't mind if I write another article based on yet another superb call by you.
    Oct 18, 2013. 09:31 PM | 4 Likes Like |Link to Comment
  • Despite Its Recent Share Price Spike, Gran Tierra Offers Considerable Upside [View article]
    Dennis thank you for the kind words and feedback. Overall it is an exceptionally well managed company which is starting to show considerable potential.
    Oct 1, 2013. 11:53 AM | 4 Likes Like |Link to Comment
  • Husky Energy: Undervalued And Unloved, Solid Growth Prospects Offer 35%+ Potential Upside [View article]
    Brian thank you for the feedback and kind words. I have to admit this is one of the most difficult articles I have had to write on SA yet given the complex multifaceted nature of Husky's business.

    I have the impression that in the past the business has performed poorly because it has lacked focus and strategic direction with too many moving parts operating across the full spectrum of the oil and gas industry. I am also somewhat intrigued as to why the market has yet to recognize the value that Husky has built and unlocked for investors with its current turn-around strategy.

    I also like the fact that they are focused on increasing their light crude and conventional natural gas production, reducing the company's dependence on oil sands and bitumen, which are costly to produce and have low margins.
    Sep 5, 2013. 11:14 AM | 4 Likes Like |Link to Comment
  • The World Bank's IFC Investment Arm In Emerging And Frontier Markets: What We Can Learn [View article]
    Jon thank you for an excellent article and conducting the interview. Certainly presents a compelling case.
    Jan 24, 2013. 11:04 PM | 4 Likes Like |Link to Comment
  • 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.
    Jan 4, 2013. 09:23 AM | 4 Likes Like |Link to Comment
  • 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.
    Aug 4, 2012. 08:19 PM | 4 Likes Like |Link to Comment
  • 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).
    Jul 5, 2012. 10:31 PM | 4 Likes Like |Link to Comment
  • 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.
    May 31, 2012. 10:26 AM | 4 Likes Like |Link to Comment
  • 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.
    May 6, 2012. 08:00 PM | 4 Likes Like |Link to Comment
  • 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.
    Apr 27, 2012. 07:32 AM | 4 Likes Like |Link to Comment
  • 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.
    Apr 26, 2012. 08:02 PM | 4 Likes Like |Link to Comment
  • 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.
    Apr 17, 2012. 09:25 AM | 4 Likes Like |Link to Comment
  • 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.
    Apr 13, 2012. 09:42 PM | 4 Likes Like |Link to Comment
  • Chevron's Push In Argentina's Vaca Muerta Shale [View article]
    Jennifer nice article, well written. It would have helped if you had fleshed out the reasoning behind the nationalization of YPF and the current policy environment which is particularly favorable towards O&G companies with a range of tax concessions, the effective removal of the price cap on oil and the ability for companies to offshore their profits. I covered these in this article late last year:� The political risk for Chevron is quite low because Argentina needs to exploit and develop its energy assets in order to avoid a balance of payments crisis. To do this it needs foreign expertise and capital. The key driver of the nationalization of YPF was Repsol placing the company effectively into run-off mode and using it to pay a tasty dividend while failing to reinvest in the company. That would have helped to show the level of risk is relatively low for Chevron while the prospective pay off is quite high with the Vaca Muerta shaping up as the biggest unconventional play in South America.
    Apr 21, 2014. 11:41 PM | 3 Likes Like |Link to Comment
  • Canacol Energy: Successful Shale Oil Test Underscores Compelling Value Proposition [View article]
    Hi Malcolm

    Great response having lived in Colombia now for around 4 years I couldn't agree more. The level of political risk is low with a pro-business and foreign investment environment. While the security situation is still quite fluid it has improved drastically and the Army is regularly deployed at well heads, oil fields and pipelines to provide security against terrorist attacks.

    The outcome of the peace talks is increasingly more positive, but the biggest concern is if a lasting peace is made with the FARC and the leadership accepts the peace and disarms the individual fronts will fracture into smaller armed groups focused on kidnapping, extortion and narco-trafficking, much like the AUC did when it accepted Uribe's peace deal in 2006 and disarmed.

    But great article and looking forward to more.


    Mar 8, 2014. 11:40 PM | 3 Likes Like |Link to Comment