Author Topic: LILA - Liberty Global Latin America tracker  (Read 98792 times)

no_free_lunch

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Re: LILA - Liberty Global Latin America tracker
« Reply #50 on: August 18, 2015, 11:31:02 AM »
Are people not worried with LILA about the puerto rico economy?  I know that macro is tough but it seems to be in a long-term decline both historically and forecasted.  The country has missed a debt payment, has net emigration, there are calls for leftist government, I don't see much to like.   Chile on the other hand is in a slump but I am fairly comfortable with.


rogermunibond

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Re: LILA - Liberty Global Latin America tracker
« Reply #51 on: August 18, 2015, 11:33:37 AM »
I've been on the other side of Malone in UCOMA.  But it pissed me off so much I sold out of LBTYA since the exchange ratio for UCOMA to LBTYA was a rip off.  I'm ready to live with it now.  :)

Actually I wasn't sure, so was checking to see if anyone had followed Malone's investment in Columbus International.  I looks like C&W and LILA don't overlap.  If anything C&W would be a takeover candidate for LILA.

Right. But even that could be considered conflict of interest.

As I said, if you invest in Malone cos, you have to live with that. :)

folivera13

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Re: LILA - Liberty Global Latin America tracker
« Reply #52 on: August 18, 2015, 12:11:47 PM »
Economy in PR is horrible (I'm from and live in PR), but LILA can take market share from Claro (DSL) which helps mitigate macro headwinds.  No currency risk with PR either.

JoelS

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Re: LILA - Liberty Global Latin America tracker
« Reply #53 on: August 18, 2015, 12:34:34 PM »
Are people not worried with LILA about the puerto rico economy?  I know that macro is tough but it seems to be in a long-term decline both historically and forecasted.  The country has missed a debt payment, has net emigration, there are calls for leftist government, I don't see much to like.   Chile on the other hand is in a slump but I am fairly comfortable with.

I am. I may average into LiLac over time but, at least for me, the LiLac stock has been too popular given 1. serious economic instability in Puerto Rico, and Chile 2. The point in the cycle we are currently in, and how tracking stocks have historically performed in distressed markets 3. Currency instability in those markets given Lilac has to hedge.

I understand the no-macro approach, but I worry that the macro may affect the micro in this case. Notwithstanding the attractive qualitative characteristics of cable.

Long term I think there is real promise for Lilac, but if I miss out on the gains in the time it takes me to understand the underlying dynamics, and get comfortable with the business - all good.

ni-co

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Re: LILA - Liberty Global Latin America tracker
« Reply #54 on: August 18, 2015, 02:02:02 PM »
I am, too with EM as a whole. I shorted EEM against my LILA. And it's even only half the LILA position because I think/hope I might get the other half much cheaper because of the global macro environment.

frommi

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Re: LILA - Liberty Global Latin America tracker
« Reply #55 on: August 18, 2015, 08:41:54 PM »
Isn`t your internet connection the last thing you cut in case you lose your job? Is this is different in PR or Chile?
I am more worried about the strong USD, but since i am already long USD i see LILA as a currency diversification.

muscleman

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Re: LILA - Liberty Global Latin America tracker
« Reply #56 on: August 19, 2015, 07:09:33 AM »
Why is JM hedging the currency risk of LILA's debt but not LILA's OCF? Does anyone know?

no_free_lunch

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Re: LILA - Liberty Global Latin America tracker
« Reply #57 on: August 19, 2015, 07:16:56 AM »
There are costs to the hedging, even if currency rates stay constant.   I think he hedges the debt because a currency move, even short-term, could lead to financial problems but otherwise he just gambles on the the currency.

DeepSouth

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Re: LILA - Liberty Global Latin America tracker
« Reply #58 on: August 19, 2015, 07:25:09 AM »
Why is JM hedging the currency risk of LILA's debt but not LILA's OCF? Does anyone know?

He's hedging VTR's USD debt (easier to issue) against the entity's operating currency (CLP) through swaps. That's simple ALM for the firm's cash flows. The firm's OCF/FCF is unknown and variable. Attempting to hedge OCF into dollars could put you at a large competitive disadvantage if a currency move went against you - that's really speculation not hedging.

Hedging the debt lowers financial risks for the firm, "hedging" OCF increases risk to the firm.

Shareholders are free to attempt to hedge out currency exposure if they wish.
« Last Edit: August 19, 2015, 07:32:01 AM by DeepSouth »

abitofvalue

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Re: LILA - Liberty Global Latin America tracker
« Reply #59 on: August 19, 2015, 07:33:42 AM »
Why is JM hedging the currency risk of LILA's debt but not LILA's OCF? Does anyone know?

they say they use hedges to minimize the impact of "foreign currency movements, particularly with respect to borrowings that are denominated in a currency other than the functional currency of the borrowing entity"

My understanding is that as a borrower you want to end up with debt payments in the same currency as your revenues / CFs.  You can achieve this by either converting your revenues earned in currency X to the currency of your borrowing currency Y.  Or you can convert your borrowings in Y into X.  You also want to know what those debt payments will be so you can plan your business.  Since you don't know the exchange rate in the future, you use currency hedges to achieve this.  But you only need to convert one - either revenues or debt payments to end up with the same currency for both. Since debt payments are more definite and known, it is easier to hedge debt payments than revenue (notional amount of the contract).