Until yesterday, investors in Venezuelan telecom CA Nacional Telefonos de Venezuela
In a wide-ranging speech yesterday, President Daffy Duck -- er, Hugo Chavez -- of Venezuela asserted a need for the state to take control of certain "strategic sectors" of the economy. Now, oil investors are already familiar with this story, so presumably the prices of Venezuelan-invested oil majors such as BP
In a nutshell, that changed yesterday when the Venezuelan president asserted his intention to nationalize the nation's utilities. In response, AES
The real tragedy, though, is that even after the stock's run-up last year, CANTV was still looking like quite the attractive investment. Over on the discussion boards at the Fool's premier international investing forum, Motley Fool Global Gains, our own TMFWysocki was suggesting that CANTV's strong free cash flow, "tiny P/E of around 6," "huge dividend yield of 16.7%," and "miniscule debt-to-equity ratio of 1.6%" made the stock a primo investment prospect.
No more. Thanks to the grasping hands of the Latin King, it now appears that CANTV will be absorbed into the same state that, over the last six months, has managed to destroy 54% of the value of its own currency, the Venezuelan Bolivar -- despite record world oil prices that have Russia's ruble and Canada's dollar climbing to new heights. I fear the same fate will now befall CANTV.
And as for CANTV's shareholders, they've already been ruined.
Venezuela isn't the only nation that's bent on reclaiming its economy's crown jewels at a discount. For an even more sordid (not to mention more disingenuous) tale of state-sponsored theft, read:
- Deconstructing YUKOS
- Russian Shell Game
- YUKOS Cored
- Death and Taxes in Russia
- Russia Names Its Price
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