Portugal Telecom, SGPS (ADR) (NYSE:PT)

I'm Portuguese !!!! Yes dear fans, I am. And as, probably, the best rated portuguese in CAPS I thought I should leave a pitch on this one.

This stock has never been followed by Wall Street, until a fine day in February 2006 that a small portuguese telecom company (sonae.com), less than 1/10 the size of PT , convinced some big spanish banks to loan them 11 billion euros and tried to buy PT offering a premium of about 17% !!! By then, I was already a stockholder, a happy one I must inform.

The following day on Finantial Times and other newspapers were filled with news like David tries to buyout Golias, and then the world woke up - thank you very much Finantial Times... meanwhile a portuguese value investor bought 2% of the shares in the open market, and a few others did the same, Carlos Slim (now the 2nd richest man in the world after taking over Buffet) bought a big stake of PT and a few others followed. Then the management offered a shareholder compensation plan and tried to show that the company's intrinsic value was much higher than the offer Sonae.com has done...and of course it was, Sonae.com wanted to buy a rabit paying for a rat, Sonae.com has a great management is great and the main shareholder family father, by then CEO of Sonae is also one of the richest men of the world, a self made one although his son, by then CEO of Sonae.com was the mastermind behind the plan.

Anyway... PT managed to convince that Sonae.com was trying to buy PT on the cheap and nobody sold their shares to Sonae.com, not even our rival that used to be a partner, Telefonica, who owns 10% of PT. Another insider is one of the biggest banks in Portugal, also having excelent management (BES - www.bes.pt) owns 8% and they too tried hard to avoid the buyout, if the buyout was a good offer they would have taken it.

Meawhile telecoms in Europe went up, and PT stock price stayed anchored to the buyout offer price, then Sonae.com raised the price of the offer but nobody sold anyway. Then Charles Brandes, a trusty Value Investor who wrote a great book and manages tens of billions in his portfolio, bought a bunch of shares and now it's about 1% of his portfolio and a considerable percentage of PT's total amount of shares outsdanding. This is also an indicator the shares are still at a discount.

And now...PT itself is going to take 10% to 20% of their shares out of the market and spin-off a highly overvalued division PTM.com... historically spinoffs and spinoff parents beat the market. All these measures have been approved by the board of directors which include representants of some of the major holders, like BES (the sexy bank, yes).

So... this was the story. Go and buy PT, ok ?

And please give me a rec too :)))