I bought Telefonos de Mexico, the Mexican phone operator controlled by Mexican Billionaire Carlos Slim, last year, and in 2004, because it represented value. The stock is now fairly priced.
Sold about half my position in Telmex (TMX – $35.64) today at $35.64. I bought the shares back in January 2004 and in June 2006 – my blogs on how cheap I thought TelMex was were from DavidNeubert.com. Specifially, I thought TMX was cheap on June 2nd and 6th, 2006, when I paid $20.42 and $19.89, respectively, and on April 2006, when I bought back short calls against my long position. What has changed? Dividend yield is now only around 2%. The p/e ratio was in the single digits, but now it's almost 15. In general, the emerging markets have been on a tear. I'm now dumping another emerging market stock. After being a bull on the emerging markets for years and selling this year, Telmex was one of my last ones (only Unibanco, Usiminas and Korea Electric remain).
Disclosure and What I Own:
I own TMX and am short Jan 2008, 30 strike calls (basically, I sold the upside on my remaining Telmex above $30/share). I own Unibanco (UBB) and Usiminas and thought I might sell them, but I would like to retain some exposure to Brazil. I also feel both are very well managed. Also both positions have capital gains to me that represent 80%-95% of the stock price. I don't feel the opportunity present in selling the stocks justifies the capital gain I'd have to pay. Currently, I plan on letting the rest of my Telmex position get called away in January, but if I need to raise cash I could unwind the remaining TelMex position as well.
Disclaimer: Nothing in this trade log is meant to be specific financial advice or a recommendation to buy or sell. I do not give investment advice. Do your own research. Do not rely on anything in this weblog to make investment decisions. I do not log all my trades here. I only describe or mention those that I think might be interesting. Consult an investment professional familiar with your specific financial situation before buying or selling any security. Options may be for me but they are are not for everyone. Futures are highly speculative. You can lose more than your initial investment in futures.
