Companhia Sanea (SBS)

[flatlander_60048]

Hi listner

I still have a significant position. However, since SBS has not been able to break above the 50 dma I think the technicals suggest that it is quite likely that it will follow the trend line back to the mid or upper 3 range (depending on currency translation). I think it might test again in the 1st quarter before rallying for good next year. I did not not unload everything since I like the long term story (monopoly supplying a necessity in a growing market). My trading around the core position and covered call options will enable me to lower my overall cost basis when the inevitable dips occur. I don't want to exit this position entirely since I can be wrong or market conditions might change quickly. Hell, Sao Paulo might start getting hit by monsoonal rains that quickly relieve the drought concerns. I think SBS could appreciate by 500% by 2020. The tariffs passed this past year maybe maintained long term since the regulators and the populace now understand how precarious the water supply of Sao Paulo is.

Think I'll leave off on that positive note. Have a good weekend.

FL