Federico Zaldua

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  • Two Elephants Buffett Would Like

    By Federico Zaldua - March 15, 2013 | Tickers: CPB, K

    The H.J. Heinz takeover by Buffett's Berkshire Hathaway and 3G Capital at $72.50 per share (or almost 21 times 2013 earnings) made me think of two other companies with similar competitive strengths: globally strong distribution networks and strong brands. The companies I thought of were the almost entirely family owned Campbell Soup (NYSE: CPB) and Kellogg Company (NYSE: K). When I take a look at how much more »

  • Craft Brewer Watchlist

    By Federico Zaldua - March 13, 2013 | Tickers: SAM, BREW

    Consumer goods companies (CGCs), once they are well established within a specific geographic area, constitute durable cash machines. That’s the reason why so many investors (like Warren Buffett) pay such high earnings multiples to own them. Once a CGC has built strong distribution networks within its area, it has also built a competitive advantage that is extremely difficult to defeat. This is reason to explain why international companies such more »

  • This Elephant Deal Will not Happen (yet)

    By Federico Zaldua - March 7, 2013 | Tickers: BUD, CCU, GPMCY, SBMRY

    I just came from a Banking conference in Bogota, Colombia. Most people were consumer goods experts, and the talk revolved about brewers. Having worked at AB InBev (NYSE: BUD) , brewers are always a matter of interest to me. As a matter of fact, brewers are usually a matter of interest to most bankers, since its an industry that has been consolidating itself very aggressively for the last twenty years. Huge more »

  • Protecting Your Purchasing Power

    By Federico Zaldua - March 6, 2013 | Tickers: XLP, KXI, SPY

    I just read Bill Grosss's column in the Financial Times today, Feb. 27. He writes about a common theme nowadays: currency wars. It's evident that there is a global trend towards currency debasement. Most G10 central banks are printing paper money, and hence re-inflating real assets in nominal terms. As a matter of fact, nominal currency depreciation might be one of the main factors behind the 35% price more »

  • Tips To Finding M&A Deals

    By Federico Zaldua - March 5, 2013 | Tickers: BUD, SAM, CCU, HNZ, PKD

    Last week I wrote about the transaction that Warren Buffett and 3G Capital are intending to complete: taking Heinz private. In the Heinz post I tried to explain why, to my understanding, that company was a clear M&A target: strong global brands, solid (and stable) free cash flow generation, and low leverage. In this post I will try to make a short but useful analysis of what to look more »

  • Equity Versus Bonds II

    By Federico Zaldua - March 3, 2013 | Tickers: DDS, JCP, M

    A few weeks ago I wrote about J.C. Penney (NYSE: JCP). I tried to make a case against its equities despite the long position held by one of the smartest investors in the street, Bill Ackman. His theory about two J.C. Penneys within the same corporate roof -- one growing fast and the other one declining -- might still be valid but the results shown by the company this week more »

  • The Future of Yields

    By Federico Zaldua - March 1, 2013 | Tickers: SHV, TBF, TBT

    George Soros and his theory

    Yesterday night I was watching some interviews with top investors during Davos 2013. One with George Soros particularly interested me. He made several remarks on his famous reflexivity theory, which basically states how the interpretation of events can actually affect those events. He made a connection between his theory and the future trajectory of U.S. interest rates. Soros defended the way U.S. Federal more »

  • Mr. Einhorn's Cash Quest

    By Federico Zaldua - March 1, 2013 | Tickers: AAPL, GOOG, MSFT

    Not so long ago I wrote in this blog about David Einhorn's opinion on Apple (NASDAQ: AAPL). His take is that Apple has created actual annuities through its different products. Einhorn thinks that the existence of iTunes and Apple's closed software platforms have tied users to the company's different product lines. If this was the case, Apple's strong Free Cash Flow (FCF) would be here to more »

  • The Pari Passu Bet

    By Federico Zaldua - February 28, 2013 | Tickers: BMA, BFR, GGAL

    Yesterday, February 27th, we added a new chapter in the "Pari Passu" saga between the Argentinean government and the holdouts from the 2005 and 2010 defaulted debt exchanges. The New York Court of Appeals heard the arguments given by Argentina and the holdouts. We should have a final resolution in a few days.  

    Some Recent History on the Saga.

    On November 29, 2012, a last-minute stay order from the New more »

  • Thinking Dividends

    By Federico Zaldua - February 27, 2013 | Tickers: MO, SAN, EPB, E, PM

    Several times in this blog I have stressed how important it is to focus on how you, as a minority passive investor, get your cash back. You should think of stocks as actual cash for cash investments (if you make a cash investment, you should receive a stream of cash payments). Unfortunately, most "investors" just buy speculatively. This means people buy because they think others are buying and, eventually, prices more »

  • Argentina's Errant Energy Policy

    By Federico Zaldua - February 26, 2013 | Tickers: EDN, PAM, TGS

    Many of my friends working in the US are asking me about Transportadora de Gas del Sur (NYSE: TGS). The Buenos Aires based company which transports and processes natural gas is the only US quoted Argentinean utility that has been profitable during Kirchner's administration. But, is it a good equity idea at current market prices? I will try to answer that question in this post. I hope this serves more »

  • A New Era In The Airline Industry

    By Federico Zaldua - February 25, 2013 | Tickers: DAL, UAL, LCC

    Anyone who has been investing for a while knows that airlines are a tough business. For decades overcapacity and price competition have been destroying shareholder value. Not even great investors such as Carl Icahn have managed to make money in this industry. Nowadays airlines keep on losing money most of the time, but the economics in the industry are ameliorating fast thanks to the ongoing cut in seat availability (capacity more »

  • Luxury You Should Own

    By Federico Zaldua - February 25, 2013 | Tickers: COH, LVMUY, KORS

    I have been watching luxury goods companies for a long time, but I never chose to invest in them. That said, I know they are resilient growing businesses. Now, for the first time, I am considering to include one luxury goods company in my personal equity portfolio. If I do it; I know which way I am going.

    The first question that appeared in my mind when I was looking more »

  • Is Eni a Buy?

    By Federico Zaldua - February 22, 2013 | Tickers: BP, E, RDS-A

    This is not the first time I write about Eni (NYSE: E), Italy's energy champion. I have been positive in the name for a few years now and I have owned its debt since early 2012. Not surprisingly, its management, led by CEO Paolo Scaroni, is delivering great results. Some time ago, I did learn that happiness equals reality minus expectations. No matter how high my expectations were, I more »

  • Heinz: Buffett will Succeed

    By Federico Zaldua - February 22, 2013 | Tickers: BUD, BRK-A, HNZ

    The best investor in the history of modern times and the Brazilian owners of the best managed consumer goods company in the world just made a $28 billion bid (including debt) to take Heinz (NYSE: HNZ) private. Of course I am talking about Warren Buffett and Anheuser-BuschB InBev's (NYSE: BUD) trio Mr. Telles, Sicupira and Lemann who own Private Equity (PE) firm 3G Capital.

    Buffett will be helping through more »

  • This Telecom Provides Good News

    By Federico Zaldua - February 21, 2013 | Tickers: CHU, TI, TEF

    If you follow my blog, you may already know Telefonica (NYSE: TEF) is part of the small equity portfolio I assembled a few weeks ago. This time, I am writing about this company because there was one highly significant event which -according to me- was not fully taken into account by the market. The event was that TEF decided to put on hold a plan to spin off 10% to more »

  • Argentinean Banks On The Watch

    By Federico Zaldua - February 19, 2013 | Tickers: BMA, BFR, GGAL

    On February 27th we shall have a new chapter of the Pari Passu saga between the Argentinean Government and the Holdouts from the 2005 and 2010 defaulted debt exchanges.  On November 29th 2012, a last minute stay order from the New York Court Of Appeals stopped what was surely going to be a technical sovereign default. The judge Thomas Griesa had ordered Argentina to fully pay the $1.3 billion more »

  • JCP: Bonds Vs. Equities

    By Federico Zaldua - February 19, 2013 | Tickers: DDS, JCP, M

    Since I heard Bill Ackman talking about J.C. Penney (NYSE: JCP) a few months ago, I started my research on the name. As you may already know from reading my blog, I am basically a bond investor and JCP's debt caught my interest, even when the company had been performing poorly from an operational standpoint. I basically think that, given JCP's real estate asset base, my investment more »

  • 4Q Results for 3 Names I Follow.

    By Federico Zaldua - February 11, 2013 | Tickers: AKS, MT, BP

    In this post I will try to review the 4Q results posted by some companies I always follow: Arcelor Mittal (NYSE: MT), British Petroleum (NYSE: BP) and AK Steel (NYSE: AKS). Only BP and AK Steel are already a part of my equity portfolio, though I have written many times about Mittal and I follow this company very closely. Let's start reviewing BP's financial results and comments from more »

  • DOJ Vs. AB InBev

    By Federico Zaldua - February 10, 2013 | Tickers: BUD, STZ, GPMCY

    After working for over a year for AB InBev (NYSE: BUD) I realized not only how good the company was for making acquisitions and cutting costs but also how smart it was at using its high share of the market to increase prices. The company's results speak for itself, its EBITDA margin is 39%. Such great profitability is achieved through dominant market position in many of the markets where more »

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