I like the basic concept of buying foreign utility stocks, especially in growth areas such as Brazil. I figure you get a decent dividend, potential currency appreciation and the underlying economic growth makes even a utility a potential growth area.
So I have owned CEL (Israeli phone company), SBS (Brazilian water company) and CPL (Brazilian utility). The downside is that other countries are more likely to put into place price constraints than the USA. That happened with CEL, and I learned a very expensive lesson as I rode the stock down from about thirty dollars a share to fifteen and some change. I looked today and they are now 7.70!
The cause? Israel regulating what israeli telecoms could chare.
Today, Brazil announced they will be mandating electrical rate cuts of 16% for households and 28% for businesses. CPL is down six percent on the day and CIG is down over twenty percent. I have no desire to watch them drop another thirty percent, so I sold my shares today. Bottom line, when I include my dividends, I broke about even on my investment.
I am starting to get pretty heavy in cash.
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