1 Foreign Banking Stock To Play A Brazilian Rebound

In an email sent to investors on Friday, Ronnie Moas, Founder and Director of Research at Standpoint Research, shared some comments regarding Bancolombia SA (ADR) CIB.

The expert had exited his position in 2011 at $65.00. However, he is now reinstating the name with a $48.00 price target for 2017-2018. This implies an upside of more than 30 percent. In addition, the analyst upgraded the stock’s rating from Hold to Buy, seeking to better reflect the upside potential – and a 3.3 percent dividend yield.

Although Moas promises to release a long report on Bancolombia in two weeks, he briefly explains why the stock should be reinstated. “An over-reaction to the oil price collapse, lower Colombian peso [a fall of more than 50 percent], problems in Brazil [corruption scandals, inflation, higher interest rates, falling commodities prices, reduced GDP outlook…] and other headlines has dropped Bancolombia by 45% in the last twelve months,” he expounds. So, with the stock now trading at 1.3 times the company’s book value and 1.5 times its tangible book value, an attractive entry point seems open.

Increasing Support

In addition to Mr. Moas, several major institutional investors are betting on Bancolombia. For instance, Northern Cross last disclosed having increased its exposure to the company by 24 percent over the second quarter of the year, to 12,950,106 shares, worth almost half a billion dollars.

Among hedge funds, there’s Thomas E. Claugus’ GMT Capital, which also boosted its stake in the company, by 27 percent, over the second quarter, last disclosing ownership of 325,900 shares.