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  • Seeking Contrarian Value In Brazil: Does Banco Bradesco Represent Value? [View article]
    Kekkonen I have been looking at Bladex for sometime and I am planning on writing an article about it but I am still trying to get a solid feel for the bank. It is a very different creature from your standard commercial bank and carries very different risks and return opportunities for investors. This is predominantly because it is a government sponsored trade finance bank and not a commercial bank or even an investment bank. Also investing in such an institution does not give you true exposure to banking and finance in Latam.
    Nov 4 04:18 AM | Likes Like |Link to Comment
  • Seeking Contrarian Value In Brazil: Itau Unibanco Shows Potential Despite Rising Risk In Brazil [View article]
    Hi Col

    Thank you for the feedback. With regard to retail investors it really comes down to the reasons for making the investment and their personal circumstances. Normally I would see any equity investment as a long-term 5 year plus investment and given the economic and political risks in Brazil at this time I would see any investment in ITUB as being a long-term investment. Overall the potential upside for investors is higher than it was for BBD, but BBD is a better managed institution, so investors also need to be aware of the investment risks as well.

    Obviously if there is a shorter time frame for investing, then the risk is greater but there are means of off-setting that risk through other trading strategies, but investors would need to be cognizant of the fact that many of these foreign ADRs do not have the same degree of liquidity on U.S exchanges because trading volumes are far thinner than domestic equities.

    While I haven't given a time frame on the indicative fair value I normally calculate that on today's data and that is represents the bank's fair value as of the present, but it is directed towards the long-term investor.


    Nov 3 09:25 PM | Likes Like |Link to Comment
  • Seeking Contrarian Value In Brazil: Does Banco Bradesco Represent Value? [View article]
    Thank you Jack, you'll have to excuse my slightly odd sense of humor, it comes from looking at numbers and writing formulas in spreadsheets for too long. I agree Chile has certainly had its ups and downs and problems politically, economically and socially. But it has stabilised and then developed very impressively over the last two decades. I also believe that it is could serve as a good model for other Latam countries to follow as they seek to further develop.
    Nov 2 12:26 AM | Likes Like |Link to Comment
  • Does Austerity Work? [View article]
    Freddy I would certainly agree that the Euro is not going anywhere and in the greater scheme of things the current crisis will only force the EU to take the measures and implement the policies that should have been in place at the time of the currency union. This should see the EU become far stronger and hopefully act as a bulwark against further crises.

    Hopefully this will include taking steps to move the EU toward a fiscal union and broad based assistance for the periphery countries to rebuild their economies using stimulus rather than forced austerity measures. Overall through using the case of Portugal Labutes has highlighted many of the issues relating to the use of austerity as a means of repairing an over leveraged economy in crisis. Lets hope the IMF and other international financial organizations learn from this and develop a far better system for dealing with financial crises.
    Nov 1 06:37 PM | Likes Like |Link to Comment
  • Does Austerity Work? [View article]
    Default still doesn't eliminate the debt for the sovereign as bankruptcy does for other legal entities within a sovereign legal system. Essentially a sovereign can not declare bankruptcy and have its debts legally extinguished, it needs to have the full agreement of all creditors that they won't pursuse the debt, Argentina in this context is a very useful example.
    Nov 1 06:25 PM | Likes Like |Link to Comment
  • Seeking Contrarian Value In Brazil: Does Banco Bradesco Represent Value? [View article]
    Jack some very good points, I am wodering whether you have hacked into my PC and been looking through my upcoming articles?
    Chile is on the agenda and it is one of my preferred investment locations in Latam for a variety of reasons including the strong economic growth. The other main reason being that it is quite stable politically, has low political risk and in the 2011 Corruption Perception Index was rated at 22nd which placed it lower than the US as 24th. I completed an article on Banco Santander Chile at the end of August and I am currently working on Banco de Chile and Corpbanca.
    Nov 1 06:20 PM | Likes Like |Link to Comment
  • Does Austerity Work? [View article]
    Interestingly those 'fiscally responsible' nations private financial sectors were happy to lend considerable sums of money those so called less fiscally responsible nations on the periphery, even when it was clear to the lenders that those countries were incapable of repaying the loans. Perhaps a different standards of credit risk analysis is applied to sovereigns that are part of the E.U.? Or the bankers thought we can squeeze a higher return that is 'safe as houses' because it is a sovereign that will always pay and if they don't our government with the assistance of the ECB and the IMF will be able to apply considerable pressure to force them to repay those loans.
    Oct 31 07:28 PM | Likes Like |Link to Comment
  • A Valuation Model For Those On A Tight Schedule [View article]
    Paulo thank you for the article and sharing the valuation model, very impressive. I think the most important thing is that it is simple and easily applied and fits well into any investors toolbox and can be used in a complimentary manner with other methodologies. I am not a big fan of DCF not only because of the variable and complexity of the model but also because it doesn't work particularly well on a variety of companies such as banks, miners and E&P oil and gas.
    Oct 31 01:34 AM | Likes Like |Link to Comment
  • Seeking Contrarian Value In Brazil: Does Banco Bradesco Represent Value? [View article]
    Hi Dr George

    Thank you for the information, I am surprised that you couldn't find BBD it is covered by a range of broking houses and is one of the few Brazilian stocks still rated by the majority as a buy. Hopefully this link can help you out .

    I agree with the probability you have given for selecting an outperforming stock and it is even harder in emerging markets such as Brazil with the BRICS having tanked and the overall global economy in the doldrums. This is part of the reason for looking at economies and sectors that have fallen out of favor or don't receive a high degree of coverage. Overall BBD is a good well managed bank I just couldn't see sufficient upside for investors.
    Kind regards,
    Oct 30 07:45 PM | Likes Like |Link to Comment
  • Seeking Contrarian Value In Brazil: Does Banco Bradesco Represent Value? [View article]
    Kekkonen I don't use Yahoo Finance for data in my articles. The data used has been obtained directly from Banco Bradesco. The full dividend paid made for 2011 totals USD $0.40 as per the Breadesco data, which gives a historical yield of 2.5%.

    However, because Bradesco pays its dividends monthly and has already committed to its full year of 2012 dividends I have calculated the yield using this data as supplied by Bradesco. The data is available here through the bank's investor relations website. The total dividends to be paid for 2012 are USD$0.105, which gives a yield of 0.70% based on a trading price of $15.70. I hope that clarifies the matter and if you require any further information please let me know.
    Oct 30 07:36 PM | Likes Like |Link to Comment
  • Does Austerity Work? [View article]
    This is what is now happening in Spain and further austerity measures will only push Spain backwards by at least a decade. You know things are bad in Spain when you find Spanish university grads in Argentina looking for jobs!

    I agree prevention sounds easy but given the political wrangling, populism and vote chasing that seems to take up the majority of modern politicians time it is unlikely that it is a viable tool, because the problem will always only be recognized after it is too late.

    While a loss of sovereignty and making the problem country the protectorate of an international organization or benign benefactor seems appealing it raises serious issues relating to the principles of sovereignty that underpin the modern international political and legal system. On top of which are a myriad of domestic political issues including the political hot potato of nationalism / national identity and the legality of the extra-territorial application of another states laws. What should there be in place of austerity is a particularly hard question to answer and perhaps this is why it has lasted so long, not because it works but because there is nothing better that is legally and politically viable.
    Oct 30 11:55 AM | Likes Like |Link to Comment
  • Does Austerity Work? [View article]
    Nice analysis I was actually having this discussion with the former deputy counsel of the IMF last week. It seems that the IMF is starting to recognize that austerity in many circumstances doesn't work particularly in light of the European crisis and the impact austerity has had on the PIIGS.

    While reducing fiscal and current account deficit and debt for countries that are heavily leveraged and consuming beyond their means are laudable measures that logically should work, in the end they only further depress the economy and deepen the financial crisis. Pre-default Argentina is a good example where these measures essentially caused an already fragile economy to implode.

    Austerity measures only serve to drive down economic production, increase unemployment, reduce domestic consumption and increase/deepen poverty. The question that then arises is what should be done in their place, particularly when there isn't an inexhaustible money supply.

    Should international financial bodies, better managed and wealthier nations and supranational central banks step in to curb borrowing and expenditure before the country reaches crisis point? Obviously prevention is the best cure but this raises issues around sovereignty and the legal rights and obligations of these organizations, particularly as their charters prevent them from intervening or restricting their actions until there is a crisis.
    Oct 30 11:33 AM | Likes Like |Link to Comment
  • Argentina's Stunning Pari Passu Loss [View article]
    CFK is a very pragmatic president and the likelihood of the Argentine govt choosing to default once they have given sufficient opportunity to any related parties to buy protection is very real. I doubt that it would cause any long-term harm or significant chaos in the market because it has already been factored in. All such a default would do is harm Argentina´s reputation, but I guess once you have defaulted as many times as they have people come to expect it and the overall reputational damage is negligible because you don´t have a reputation.

    While I certainly don´t support or advocate Argentina´s approach to these issues (except in a discussion I was having with some lawyers from the IMF the other day) there is certainly a significant degree of logic and pragmatism at play when it comes to making these decisions and the overall cost/benefit equation is working in Argentina´s favor in a perverse manner. Investors also need to accept that the behavior of Argentina´s creditors, the IMF, other foreign governments and some foreign companies have been significant contributors to the factors that have created this situation.
    Oct 29 10:29 AM | Likes Like |Link to Comment
  • Casino Guichard Is A Buy On Emerging Markets Exposure And Its 4.4% Yield [View article]
    Labutes thank you that is appreciated. The market is very saturated and the French retailers between them pretty much control the market along with some smaller Colombian operations. Exito is the dominant market player and in the past had spent considerable funds on expanding their operations and trying to essentially buy market share. I would be very surprised if another operator can profitably enter the market.

    The other aspect to consider is that a lot of people particularly those at the poorer end of the socio-economic spectrum don't shop in department stores but still at local markets and tiendas. Again thank you for the valuation. Please let me know if you ever require any assistance with anything and also FYI I am trying to get some co-operative articles off the ground with another contributor so if your interested or can think of a company you'd like to compare to a similar or equivalent Latam company please let me know.
    Oct 29 07:40 AM | Likes Like |Link to Comment
  • Casino Guichard Is A Buy On Emerging Markets Exposure And Its 4.4% Yield [View article]

    That sounds like a good way to value the company. I would be quite interested in seeing how it shapes up from that perspective. I have been considering taking a closer look at Exito, but obviously because it is only listed on the BVC it probably won't hold much appeal for SA readers.
    Oct 29 06:54 AM | Likes Like |Link to Comment