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  • Arcos Dorados: A Not So Golden Investment Opportunity [View article]
    omttepescott thank you for the insight. My own experience has been the same, my friends and acquaintances can't afford to eat at McDonald's in Colombia because of the pricing structure. This as you point out is going to be a tremendous hurdle for Arcos Dorados particularly when you consider the average incomes in the region.
    Jul 21, 2012. 11:20 AM | Likes Like |Link to Comment
  • Colombian Oil Update: Escalating Security Issues Interrupt Production [View article]
    inspector if you had read my initial comment you will see that I actually refer to the existence of corruption and the system of patronage. I only refute your statement that is as extreme as you state. I am not denying that there isn't corruption I am only stating that it is not on the same extreme scale that you initially implied and it is comparable to many other Latin American countries and in fact far less than some.

    I am fully aware of how the royalty system functions and the corruption that has grown around that as well as how the system for the allocation of exploration and drilling rights functions. While I appreciate your view I would like to point out that I also live in Colombia and I am fully aware of what is happening in the country having lived in Cauca and Putumayo before moving to Medellin. I am not sitting in a basement in the U.S reading the internet and writing articles about a part of the world I know nothing about. It maybe useful if you had read my profile before writing such a vitriolic comment. I am also fully aware of what salaries are paid and the lifestyles of a wide variety of people.

    From my experience many foreigners living in Colombia tend to take an extreme and simplistic view of the country, its culture and the degree of corruption and violence, with little to no understanding of the culture. If the degree of corruption is as severe as you state then it would have to be a failed state with no central government control. If you live in Colombia you would know that is far from reality. 
    Jul 21, 2012. 11:16 AM | Likes Like |Link to Comment
  • Telefonica: A Compelling Investment Or Value Trap? [View article]
    Warren, the information is appreciated but you still haven't addressed the points about the high degree of debt, the need for high capex the company can't afford to sustain growth and the thin margins in Latam.

    The dividend is being paid predominantly as shares rather than cash which in itself is an indicator of significant cash flow and cash problems and low cash holdings. The company has also been very vague on its asset sales other than selling half of its stake in China Unicom and the partial listing of O2 which to me is another indicator of significant internal problems.
    I would speculate that all of this indicates that If the share price drops much further it is likely that debt covenants will be triggered and if that occurs creditors will start calling in their loans and I doubt Telefonica will survive.

    And there is all of that to consider before the issues in Spain are taken into account, which is one of Telefonica's key markets contributing a quarter of its revenue.

    Overall the company's future does not look particularly bright and the only way it will survive is to divest itself of considerable assets at bottom of the market prices. This will lock it into a prolonged period of little to no growth with low revenues.
    Jul 21, 2012. 10:20 AM | 2 Likes Like |Link to Comment
  • Arcos Dorados: A Not So Golden Investment Opportunity [View article]
    Jamodit thank you for the feedback. Apologies for the delay it was on my list of stocks to review and articles to write earlier but was distracted by developments with Petrobras and Vale. If you have any Latam stocks you want covered or matters investigated please let me know.
    Jul 21, 2012. 09:14 AM | 2 Likes Like |Link to Comment
  • Colombian Oil Update: Escalating Security Issues Interrupt Production [View article]
    inspector thank you for the added comments. While corruption in Colombia certainly exists and the system of patronage is still very deeply ingrained in the way of doing business as it is in every other relationship, I have seen nothing showing it to exist on the scale to which you allude and I would argue it is far less than Argentina and about on par with Brazil and Mexico.

    Santos has put in place a number of initiatives to fight corruption and one of the key initiatives was changing the distribution model for oil royalties in an attempt to stem corruption through greater central control. It has definitely reduced corruption but it has shifted regional and local governments and politicians from being the focus on extortion to the oil companies, well heads and pipelines.

    I am also quite intrigued by your claim that official salaries are $2,000 USD per month. I know and used to work with many Colombians whose monthly salary would be 1.5 to 2 times that amount and they only worked in middle management for major companies like Ecopetrol, EEB, Bancolombia and Davivienda. Executive salaries in Colombia adjusted for the cost of living are commensurate with other major corporations in other parts of the world. Furthermore, particularly when they are courting foreign investors and listed on foreign exchanges they do their best to ensure that corruption is minimized as it is not in their interests for it to exist. Overall the extreme corruption to which you allude is something of a figment of the popular American imagination and not the reality.
    Jul 20, 2012. 11:21 PM | Likes Like |Link to Comment
  • Arcos Dorados: A Not So Golden Investment Opportunity [View article]
    LPeter thank you for the additional insight. I unfortunately omitted the potential the World Cup and Olympics in Brazil have to giving Arcos Dorados a much needed boost in sales. Thank you for raising it.
    Jul 20, 2012. 03:07 PM | Likes Like |Link to Comment
  • Arcos Dorados: A Not So Golden Investment Opportunity [View article]
    SkipK thank you for the comments and feedback. One thing I forgot to mention in my article is that as LPeter pointed out there should be an improvement in sales with the World Cup and Olympics in Brazil.
    Jul 20, 2012. 03:05 PM | 1 Like Like |Link to Comment
  • Arcos Dorados: A Not So Golden Investment Opportunity [View article]
    Arthur thank you for the additional information. In response I'd point out the following:
    1. If sales are consistently growing QoQ then why have revenues for Q1 2012 dropped by 4%?
    2. There are other reasons for the loss in confidence and sell down other than the original investors cashing in their investment once the IPO lockout period ended. If the business is as solid as you are stating it is then as a insiders they would surely be aware of this and increasing their investment rather than exiting the company all together.

    Given the large number of articles emerging pushing the bull case on Arcos and the issues identified in my analysis it is starting to look more and more like another TEF being sold on a simple analysis of operational conditions in Brazil rather than a thorough understanding.
    Jul 20, 2012. 03:02 PM | Likes Like |Link to Comment
  • Telefonica: A Compelling Investment Or Value Trap? [View article]
    northhills unfortunately I don't think we've seen the bottom with TEF yet. There still has not been any firm news on the asset sales other than putting their call centre operations up for sale. They will need to start refinancing debt soon which will be very difficult in the current environment. I think it will take a decade for Spain to recover but the pain for TEF shareholders will be a lot worse. I am hoping to write a second piece as a follow-up to this article soon and I'll post any significant news here.
    Jul 20, 2012. 02:18 PM | Likes Like |Link to Comment
  • Brazil's Selic Rate Cut To New Low: Is It Enough To Spark Economic Growth? [View article]
    JMB I appreciate your input, but I believe that you have misunderstood my argument and have taken a close minded view dismissing my perspective out of hand because you don't agree with it. While there is a cyclical element which I openly acknowledge in the article, there are serious structural problems in the Brazilian economy and these will continue to slow economic growth until they are dealt with. I am not the only person to identify these issues there have been a number of articles in the Economist, plus a number of economists have also identified these issues and there has been quite a lengthy academic debate on this subject. When I have an opportunity I'll post links to the articles.

    I also want to point out that I live in South America and have travelled considerably in the region so I have a good knowledge of what is happening on the ground. In addition, if you read my article you will also see that I am not arguing there will be no up tick in growth but that Brazil's future economic growth will not be as strong as expected, nor will it return to the levels seen prior to the GFC without demand from China returning to higher historic levels.
    Jul 18, 2012. 10:04 PM | 1 Like Like |Link to Comment
  • Arcos Dorados: A Not So Golden Investment Opportunity [View article]
    Advill thanks for the additional insight. There is an element of Arcos Dorados that doesn't sit comfortably with me which I can't quite pin down. You might have picked up on something in this case.
    Jul 18, 2012. 09:53 PM | Likes Like |Link to Comment
  • Brazil's Selic Rate Cut To New Low: Is It Enough To Spark Economic Growth? [View article]
    JM thank you for the added perspective. I'll reiterate that I am not doing a comparative analysis of Brazil's economy or a trend based analysis on whether it has improved. The thrust of the article is that monetary policy is insufficient to generate economic growth because of the structural problems in the Brazilian economy. Some of the evidence which indicates this are the low average income (which is lower or similar to many other countries that are less developed than Brazil), the high income inequality which is a key factor in disrupting the ability of increasing the money supply to kick-start economic growth and that there is a unhealthy dependence on China. Brazil's key exports are not industrial goods they are commodities the majority of which goes to China and then the EU. Furthermore, regardless of whether the reduction of the selic rate is in line with other countries is in consequential to the argument for the reasons explained in my first sentence.
    Jul 17, 2012. 09:31 PM | Likes Like |Link to Comment
  • Arcos Dorados: A Not So Golden Investment Opportunity [View article]
    Advill while I acknowledge there was a strong element of that in the past and there is still an element now, I don't believe it occurs on the scale which you claim. The standards applied to listed companies are generally quite high. Furthermore, any company listed on a U.S exchange either directly or by way of ADRs is obliged to comply with listing rules and U.S compliance requirements. I also point out that there has been habit of similar behavior in U.S companies for decades and that is before considering straight out frauds like World Com, Tyco and Enron or the behavior of Bank of America and Citigroup.
    Jul 17, 2012. 09:24 PM | 1 Like Like |Link to Comment
  • Arcos Dorados: A Not So Golden Investment Opportunity [View article]
    vireoman thank you for the comments. Only time will tell if I am right, but in the case of ARCO the evidence is certainly stacking up against it. Ireally feel it is over-priced and will struggle. I also note there are a number of other analysts including a site that is a direct competitor to Seeking Alpha heavily pushing the stock, which also raises significant concerns.
    Jul 17, 2012. 09:19 PM | 1 Like Like |Link to Comment
  • Colombian Oil Update: Escalating Security Issues Interrupt Production [View article]
    bsorge thank you for the feedback. My plan is to run a bi-weekly update on Colombian oil and examine various events and news on what is happening in the country. I am also looking at doing some updates on EC and CIB (which are 2 of the biggest holdings in GXG) when their Q2 financial reports are released. The escalation in the conflict with the FARC has come as something of a surprise to many analysts as the signs were pointing in the other direction.

    However, they are renowned for playing double sided games and also for playing off the middle. I think there is an element of taking action that raises their profile in a hope of bringing the government to the negotiating table on their terms combined with a need to maintain control of key territory, which is where a large portion of the oil fields are located and the pipelines travel through.
    If you have any specific stocks or issues you'd like discussed please let me know.
    Jul 17, 2012. 09:16 PM | Likes Like |Link to Comment
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