its a buy here at 18.25…
i expect the Brazilian Real to appreciate from current level and Bovespa Index could be breaking out also.
so you’re declaring a long position right?
Do you have a reason to expect the Real to appreciate from current levels, or is this just a moistened finger-in-the-air kind of thing?
the long Vale thesis has many other factors, independent of the Real. but I am confident the Brazilian Real can appreciate a modest 5% till the end of the year based on my forecast for the central bank easing cycle and other brazilian domestic indicators. the downside risk to the real is limited by the central bank and that should support Vale for USD based investors.
Those seem reasonable. I hadn’t thought much about the Real lately. Thanks.
appreciation of the Real by 5% would kill exports which are largely agriculture and commodities driven…brazilians want the real to go down plus they’re easing rates over there…not sure what model you’re using but the real going up by 5% seems a stretch.
With drought in the US and elsewhere, I don’t think 5% will make a huge difference in commodities. In things like iron ore and so, it might be more influential. I agree that 5% may be a stretch, though. For me, I’m more about getting the direction right than nailing the magnitude.
considering it was about 30% stronger 12 months ago… @ 1.55, a 5% appreciation to 1.90 in the next 3-4 months is within all risk models. the real is a very volatile currency and i am hesitant to trade it outright because its a dirty float with relative low liquidity and the central bank can step in at any minute. kudos to anyone that trades a blatantly manipulated instrument.
when it traded down to 1.525 in 2011 I read a GS FX report that specifically called for a cyclical double bottom and recommended a short Real trade. that was epic…
i would say that the Real has a downside risk of about 5% right now to 2.10 and the central bank has already stepped in an sold dollars to support that level. (a much weaker real may help exporters, but it also effects inflation and this is already a becoming a problem) 1.90 is a very realistic trading zone in the next quarter…
the “market” forcast for 2013 is 2.05 which in my opinion means nothing
Bump, read about this co. on Damodoran’s website and decided to give it a shot yesterday morning (small position), after another drop. I think when he valued it, the ADR was around $8 and now it’s in low $7’s.
Any thoughts?
http://aswathdamodaran.blogspot.com/2014/11/go-where-it-is-darkest-when-company.html
^My first thought is OP got slaughtered.
I remember almost buying Vale after Goldman was pumping it a few years ago as a value play when it was $30/share. I don’t follow Vale outside of their small potash business but Dilma Rousseff (President) has been a total disaster for the Bovespa and she just won re-election a couple months ago. I’ve followed Petrobras for a few years and it’s a shame how much wealth has been destroyed by bad policy, corruption, bad investment after such a major, major oil discovery off the coast.
I’m not a geopolitics expert or anything, but Brazilian leadership has flat out sucked the last few years and I’m not sure it’s changed much. So that’s a big risk investing in Brazil – to the extent it’s already priced into the market? I don’t know. I admit it’s tempting looking at companies like Vale and Petrobras and their resource bases, but I can’t get behind it until leadership changes in the country. Just my opinion.
I can think of better quality firms in all major areas of their operations. Buy quality. Good firm at a good price is better than garbage at a great price in the long run.
^ That is good advice. I usually buy quality but I’m speculating on this deal. Haven’t had time to look at much other than Damodoran’s thoughts.
Damodoran just ripped up Petrobras. Not exactly bold at this point though.
I wouldn’t ever recommend buying garbage. The question is whether medicore at a great price is better than great at a mediocre price. It depends on the specifics and time horizon of each. Medicore at a great price can still do pretty well in the stock market.
lol VALE, that’s somewhat similar to ARCO with real dynamics. There is a smart guy who was peddling his presentation around on ARCO last year at $10. I did some work and passed. It’s gotten clubbed harder than a baby seal. The real has been ugly and I can’t ever wrap my head around the idea of buying something with exposure to Venezuela because that’s not a real country and ain’t nobody got time for those shenanigans.
i wouldnt touch any mining stock with a 10 foot pole.
^ Uranium? Fertilizer? Oil sands?
gah, 2013 20-f is 256 pages
Which is why I bought BBL 10% ago. Sure, commodities could suck for a long time but that’s no reason to avoid oversold good stocks.