Unfortunately, there's really not much on the company (no SeekingAlpha articles or anything of the sort. It's largely limited to presentations on the company website or brief articles on Bloomberg and elsewhere. Additionally, it was a Wintergreen (WGRNX) holding for a while, not sure if it still is (Winters discussed Cielo in a "Wealthtrack" video interview not that long ago part of his play on emerging market consumers.)
The interview is here:
http://www.wintergreenfund.com/news/2013/0719-wealthtrack/The Cielo discussion starts at about 16 minutes in.
I think my "issue" is that I'd like to invest a little bit in Brazil. My problem is that I like to do so in a way that I can get my head around. A fund can be volatile, too, but if I can have a thesis for something like Cielo (which goes along with the larger holdings that I have that are payment-related), it's easier for me to hold through the volatility than a fund that I don't have a real connection to/thesis for and may just dump if things get rocky (well, with how Brazil is now, rockier.)
I definitely like the payments space (a lot) and Cielo has a very large share of the market in Brazil. Cielo also bought US company Merchant E-Solutions (
https://www.merchante-solutions.com/about-us/overview/)
Also, Cielo is an ADR where I can actually reinvest dividends. It varies by brokerage, but I've found that DRIP/reinvesting is usually no problem with US shares. When you get into ADRs or foreign ordinaries, then it becomes possible much less often and seems almost random as to what can/can't (possibly depends on which bank is the adr depositary?) Additionally, Cielo has also split twice in the last four years or so.
Anyways, it's not something that I'd recommend for a conservative investor
at all. It's my way of investing in Brazil in a manner that I can feel comfortable with longer-term. Most people
COMPLETELY UNDERSTANDABLY (and again, they're certainly not wrong) feel more comfortable if they were to invest in something like Brazil investing in a fund. I'm weird though and feel more comfortable investing in one company whose business I can wrap my mind around and feel fairly strongly about long-term.
For me, investing in the last few years or so has become, how can I structure my investments in a way that allows me to feel comfortable with a long-term view point and far less concerned about the day-to-day. The funny thing is, for most people, that would likely involve being less in single names and much more in funds. I feel more comfortable more in single names than funds because I feel strongly about various themes, sectors and companies. Plus, nearly everything I own pays a dividend.
Again, I'm weird - most people would understandably feel more comfortable in funds and probably rightly so. Older and/or more conservative investors should go the fund route.
Again, Ambev (ABEV) was the other name that I often thought about in terms of Brazil, but ultimately was more interested in the payments space. As I also noted above, Femsa (FMX) is something that I've thought about a lot, but I think the issue that I had with Femsa is its investment in Coca-Cola Femsa and the obesity problems in Mexico. There was a terrific hour-long presentation by a futurist in front of Femsa execs on Youtube and one of the major topics of discussion was in regards to health issues. (edited to add: found it)
Mexico ultimately decided on a soda tax to combat one of the world's highest obesity rates (
http://www.theguardian.com/world/2014/jan/16/mexico-soda-tax-sugar-obesity-health) and it's apparently been successful.
While the conglomerate nature of Femsa is appealing, as is its reasonably solid track record, the problem that I have is: what's the future? The company's Oxxo stores are very compelling, but I have no interest in investing in Coca-cola in this country or any other (Asian conglomerate Swire is a Coke bottler, another company I want to like but can't.) Bill Gates was a large shareholder in Femsa for a while, but I believe he sold his shares not that long ago.
Although, that said, there was an interesting article on "The Most Successful Company in the World" the other day, and it wasn't a company that makes things that are good for people. (
http://www.fool.com/investing/general/2015/02/13/the-extraordinary-story-of-americas-most-successfu.aspx)
I certainly don't own all things that are good for people. I own a liquor stock, although it's not a large holding. People do drink in good times and bad, but I think what's really kind of compelling is that you have this enormous industry where the big public names are now down to a few (and one less after Beam was recently bought.)
Long, rambling story short,
1. If I'm invested in a single name, the intent is a long-term holding with reinvesting dividends. It may have periods of under-performance, but I'm definitely diversified.
2. Most people
should go with a fund and if I were to go with a fund, I'd likely go with T Rowe Latin America.
