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Companhia de Saneamento Basico do Estado de Sao Paulo Message Board

  • barrons_reader barrons_reader Oct 17, 2013 8:55 AM Flag

    Have The Short Sellers Moved On?

    A fall in price for SBS could have been forseen when the Brazil currency lost 20% vs. the U.S. dollar. But, the fall of almost 50% was a tiny bit overdone, even if you expected that the Brazilian government (which owns half of SBS) to cut SBS's profit. The 10% gain in share price over the past week is a tiny clue regarding where SBS should be heading now. Now that the short sellers have moved on, things are beginning to look a little brighter.

    Sentiment: Buy

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    • Overlay that timescale with the decline in the value of Brazilian currency relative to the buck, and correlate with the decline in SBS... see how that works for you.

    • You do appreciate that (i) SBS derives ALL of its revenue in Brazil (i.e., it suffers no ForEx rate risk vis-à-vis the US dollar) and (ii) the dominate BY FAR exchange upon which SBS trades is in BRAZIL (i.e., the US ADR-based trading on the NYSE simply follows the trading in Brazil with only minimal arbitrage separation on the NYSE from what happens in trading in Brazil). You do appreciate that, right? So how does Brazil currency vs. US currency matter AT ALL in the directional trading of SBS?

      The answer is that it doesn't matter. I don't mean to pick a fight with you on any personal level, but your post shows I fundamental lack of understanding re the trading of SBS and the factors that affect it.

    • Gee, I thought (warning, sarcasm alert) it was the e-mail from UA. After all it, got 27 thumbs up.

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