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I am starting to see some mispricing in Brazil too most probably because of the Spanish woes and the nationalization of YPF. Capital outflows have finally given some space to the Real and Brazilian exporters. Some potential ideas:


Telefonica Brazil VIV: almost no net debt despite being a telecom, ROE around 20%, P/E 8x.

Santander Brazil BSBR: very well capitalized  TCE/TA ~15%,  P/E 9x, P/B 0.8

Petrobras PBR: P/E 6x, ROE 11%

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Brazil protests: it’s not the economy, stupid.



Brazilian stocks set to reap protest dividend



On the one hand, there is the chance that Brazil’s biggest demonstrations in more than two decades could deliver a potential “protest dividend” for listed companies, as demands for better public services leads the government to pour more money into education, infrastructure and public health.


On the other, however, the government could become more averse to passing on price increases to consumers, leading private sector operators of utilities stuck with the bill.


Adding to the uncertainty is a rapid depreciation of Brazil’s currency, the real, against the dollar.



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Batista exit from MPX begins breakup of EBX empire



The main source of cash for the restructuring will be Batista's stakes in MPX and iron ore miner MMX Mineração e Metálicos SA (MMXM3.SA). As of May 21, Batista owned 29 percent of MPX and 57 percent of MMX, according to Thomson Reuters data.


MMX on Thursday suspended operations for six months at its high-grade iron ore mine in Corumbá, Brazil, near Bolivia's border. The suspension is an effort to preserve investors' capital, according to a securities filing.


"These assets (MPX and MMX) are cheap compared to their real value," the source said.


Instead, MPX will sell 800 million reais of stock at 6.45 reais a share in a private placement in which Batista, partner E.ON SE (EONGn.DE), a German utility, and BTG Pactual will be allowed to participate, the filing added.


"MPX is the best company in the group and they are working quickly to insulate the company and separate it from the risk associated with Batista's EBX group," said Ricardo Correa, energy company analyst with Ativa Corretora, a Rio de Janeiro brokerage.
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Just wondering if anyone has looked at BSBR or any other Brazilian asset lately.  I am aware of the risks of currency depreciation against the dollar, high interest rate, and inflation; but still felt that when the world is most pessimistic about the region it is time to start looking at mispriced assets.  I started BSBR around $6 and OIBR around $1.8 and have been averaging down lately.   

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I used to own them.  How do you handicap the government though? 


From the article you posted:


President Dilma Rousseff allowed Petrobras to raise prices for the first time since March, the Nov. 29 statement fell short of disclosing details of the methodology for future adjustments. Selling imported gasoline below cost drove down profit the most among major producers last quarter.


The ‘internal use only’ nature of the apparent pricing methodology will pressure the stock as one does not know how the methodology works, when it will be used and most importantly, whether the government will or not allow the price adjustment to occur, when the methodology calls for one


Those quotes pretty much sum it up.  You have government owning shares and controlling the prices they sell in order to gain votes.  A scary situation as an investor.  Also note that there has been significant dilution over the past several years.


For me, it is just too hard.

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