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Mr. Berger is the creator and developer of the YDP screening tool, a chart system and its analysis for screening and monitoring dividend income equity investments. The recipient of Seeking Alpha's Outstanding Performance Award, he also has been Seeking Alpha's #3 ranked Author for Income... More
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  • Climb To The Top Of The Andes To Catch This Peak Performer From Chile ( PVD )  0 comments
    Feb 1, 2013 10:20 AM | about stocks: PVD

    These days an investor has to explore the far corners of the world to seek out the best opportunities and diversify for geographic, currency, market, political, and other risks. Doing so can insure that your portfolio achieves PEAK performance.

    Continuing the theme, lets take a PEEK at ...

    Administradra de Fondos de Pensiones Provida SA (NYSE:PVD) - NYSE

    This fast growing "can do" achiever has seen share price rise over 800% in the past 4 years and dividends grow from $5.32/share to $8.39/share for 2012 over the same 4 years. Their P/E remains a comfortable 11.91 and the payout ratio is only 39%.

    PVD is a Chilean Pension fund administrator. Administradora de Fondos de Pensiones Provida S.A. offers private pension fund administration and related services in the Republic of Chile. The company also holds investments in private pension fund administrators operating in Peru, Ecuador, Mexico, and the Dominican Republic. As of June 30, 2005, it operated 134 branches. The company was incorporated in 1981 and is headquartered in Santiago, Chile. It operates as a subsidiary of BBVA Inversiones Chile, S.A.

    From the onset of their dividend payments in April of 1995 and continuing until March of 2007, the company was a micro growth hidden gemstone in an almost invisible market (South American financial services). Even during this time laboring in obscurity, they were a solid dividend performer.

    Throughout this period the dividend was variable, growing from $0.49 in 1995 up into the $1.20 to $2.00+ ranges with a general trend toward increases containing a few notable setbacks from year to year.

    This dividend growth trend was accompanied by a much more lack luster upward trending creep in share price from monthly average prices in the $21 range in 1995 slowly drifting in an upward trend to average $25 by the close of 2006. Share volume and price strength began to solidify and grow at that point (not without set backs). Average volume in the 9,000 though 25,000 range was seen though out the period until January of 2007 when we saw a leap to over 60,000 shares average trading volume. Volumes averaging less than 25,000 have rarely been seen during any monthly range since then. Share prices began to rise considerably also with this expanded attention.

    Shares reached a temporary peak of $43.45 in April 2008 and then declined steeply as global financial markets entered crisis. Yet at the same time, dividends remained strong and even grew, $1.77 for 2008, $1.59 for 2009, $5.42 for 2010, $6.47 for 2011, and $8.39 for 2012.

    Have I gotten your attention now? !!!

    Share prices have likewise caught on fire, running up from $12.00 at their low of December 2008 to their record all time highs of $112.00 this week.

    If you are like me and lucked into this jewel in early 2009 at $22 per share, the effective basis yield is over 33% now and there is every reason to believe it will continue to grow as there is enormous growth in population, wealth, and demand for such pension management in their geographic business area. And of course even room for geographic expansion for areas served.

    Again, the Chilean peso of the companies home country has been in a slowly advancing trend versus the US Dollar long term since January 2009 and as a more recent trend since late 2011. Thus offering a currency hedge advantage in their home currency performance.

    Chart forCLP/USD (CLPUSD=X)

    A few cautionary comments ..

    The stock trades very thinly, averaging less than 10,000 shares/day. It MUST be considered illiquid on any short term basis. Entry and exit must be planned and gradual for both, under 1000 shares per day seems a limit if you don't want to significantly move the market with your own trade.

    Bid/Ask spreads often exceed $10 and sometimes even $20. Always use limit orders to enter and exit to bypass these ridiculous spreads.

    Buy for long term hold with growth and income yield, pick your entry points on pull backs and technical factors ($99 is a support level currently) and its probably best to avoid the current double top the stock is now showing.


    FEBRUARY 1, 2013: MetLife has agreed to buy Provida for $2 billion

    This opportunity is gone unless the tender is rejected by shareholders, an unlikely event.

    This article was submitted for Premium publication on January 28 but was not accepted before news developments have over run it. I therefore post it as an instablog now.

    Disclosure: I am long PVD.

    Stocks: PVD
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