by Travis Johnson, Stock Gumshoe | March 19, 2010 4:45 pm
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I like your selections Travis, I am in transit from Manaus to Rio after spending 50 days in the Amazon drilling an oil well for Petrobras, flying on GOL, and had my lunch at the BOBs in the Manaus Airport. The Pizza Hut and KFC are popping up every where now, and there is a BOBs in pretty much every mall here, and they are building lots of new malls in the smaller centers. The economy is going forward despite itself, and Brazilians are starting to demand more.
The wages here are still very low for the average Brazilian, which makes a trip to Bobs a treat for the average family.
The real wild card down here is that this is a presidential election year, and I would have to confirm, but Lula might be at the end of his term and that makes the future a crap shoot (I don’t for see a Putin type extension down here with Lula being Prime Minister) The economic reforms are slow and the economy is overburdened with redundant excessively high taxation, but the government seems to realize now that slightly lower taxation puts money and buying power into the hands of the people, and creates service sector jobs, which are at the bottom end of the pay scale. There is a massive shortage of skilled labor here as the school systems leaves a lot to be desired at all levels, you cannot fail in public school as long as you show up, so education statistics are strictly government propaganda.
And as always, Corruption is still king south of the Rio Grande! so any company that can grow in this environment needs to be given some credit and is worth a look.
The real estate market is currently fueled by a government subsidy of R$17,000 grant and government backed loan which has sent prices soaring. I personally know people who are making out like bandits them selves investing in building small low quality homes that qualify for these grants.
My word of advice, there is room for profits, but you have to keep your finger on the pulse at the local level.
what is not widely know outside Brazil is the government is looking at taking the Tupi pre salt field away from Petrobras, and creating an independent government body to oversee the field, called Petrosal (translates – Petro Salt).
this is most likely just a political play, especially with the elections coming (Petrobras is still 50%+ owned by the Brazilian government) but if they do take the field away it could have adverse effects, especially on foreign investors in Petrobras ADRs who do not ave good access to this kind of information, until it blind sides the share price.
Happy Investing all participants in Gumshoe world!
Thanks Rod! Nothing beats hearing a local perspective, enjoy civilization!
Thanks Travis and Rob. Great stuff.
I happened to have purchased some BRF (Brazil small cap ETF) this week. I’m feeling a little nervous as BRF has been dropping since 8 sessions now. If it does not bounce soon something might be wrong (election year?).
I like the story, but I find it hard to invest in stocks with so little volume as BOBS. Today the volume was 100 shares and created a 15.06% stock raise! Scary stuff…
The World Cup is an excellent marketing opportunity for Brazil. Not just for the short term local spending but because it’s “free air time” for Brazil, its economy and companies.
Have a good week-end.
Hi Travis
As a new guy here I’m not sure where to do what yet but I came across this article on Forbes regarding Lithium and thought it would be great to get your thoughts on potential plays here
http://www.forbes.com/forbes/2008/1124/034.html
Thanks
Grayson
Travis,
Thanks for all your work. I’m a new comer to the Irregulars and I’m looking to pick up some shares of Altius. I noticed the volume on the pink sheets is about half that on the TO. Do you see any downside to trading this stock on the pink sheets?
Travis(got your name correctly now;)),hi again,thanx for sharing your valuable insights of Brazil,in particular Bobs!
I like to add some general remarks to the irregular community about Brazil!
Being privately involved with Brazil,i spend a lot of time in Sao Paulo,and in Porto Alegre!
What i see there is an emergence of a middle class indulging in the nice habit of spending,especially in big malls resembling the ones in the US of A;)These places are always crowded!!
And they love eating,well,not only churrasco;)
Bobs is a well known brand in Brazil,people love going there,and rumour has it in Brazil,that they will be one of the sponsors of the olympic games.
So,in summary,look for companies with a comprehensive exposure to the material demands of a rising middle class.
Gol is also a nice company to look at,as they were snapping up the remains of former Varig
The mobile sector is also worth to be looked at,like Vivo.
Hydropower is also very attractive as an investment idea.
Interestingly,you were writing about i-shares index Etf,and i share the insight being an attractive investment vehicle,without the need to dig deeper into DD of individual shares!
Much more could be added here,as it is a big country,with lots of investment possibilities.
Best regards,Martin
good gambling idea… it’s between this stock and a college basketball pool.
I think you have to be careful with foreign stocks lately since the dollar is doing so well…once the dollar tops foreign stocks should be very attractive.
Nice call on this one. Stock has been on fire since April 8.
I remember EWZ on 12/2/2009 at $79.61 going to $62.84 on 2/8/2010 on a strong US$…so where is it going now?
Hidden From View. I now own this stock but I thought I’d post some thoughts. I think It has good potential.
Chemical stocks are so Unglamorous and likely no newsletter will pick this up. I am sure the people who KNOW – know this stock and are working with it. CEMJQ.pk. The company is in Bankruptcy CH 11 which few companies ever survive. But Chemtura Corporation seems to be pulling out fine. Why did I even look at the company? It occured to me my old friend had gone to work with Great Lakes Chemical a score of years ago and I was just looking into that company. Found it had been combined with other companies to become Chemtura. .. Summary follows:
My buddy from NJ left a multinational chemical company about the time I did. He went to Illinois and joined Great Lakes Chemical. This was 20 years ago. They grew like gangbusters. Then a few years ago they acquired another big chem company CHEMTURA and expanded MORE but the economy tanked. They went CH. 11. So FIVE months ago the stock was 14 cents. Ch 11 companies RARELY survive and come out. Chemtura is still in BKR. but plan to come out this summer. Things are going well and BR court hearings are working through. Stock is now about $1.40. This is 10X ( 1000%) of the 14 cent low.
Their old price range was in the $12-$15. I think in two years they have every chance to come back to $7 or $8. The world economy totally crashing not withstanding. That would be 300 – 400 percent gain in two years. I like the odds. Here is the stock. Buy when it is near a 50 day moving average. CEMJQ.pk.
I did see some nasty stuff on the yahoo message board about a class action suit (I think) regarding some past possible chemical spill – but it seems to evolve around a natural brine pit – so how do you sue nature? The brine pits out there are the raw materials for many chemical companies. My buddy is still with the company though I have not learned anything there except the public plan to emerge from BK this summer. Those are my thoughts. I’d appreciate anybody taking a look into this from their perspective.
I am thinking that SANDSTORM pick is a great one. I took a position with it. I was impressed with the diligence given to the subject.