 Good day, fellow investors. In our search for higher returns with lower risks, we look all around the world and one place where nobody wants to go now and where there might be blood on the streets is Argentina. So in this video, we'll start with a macroeconomic investment overview of the country. What does Ray Dalio says about investing in such hyperinflationary depression crisis situations? What could be the likely outcomes? And then we're going to discuss the stock that most of my Argentinian analyst, brokers, economists, friends are very excited about and that is Pampa Energia. So let's start with the discussion. Let's start with the macroeconomics and then see about an investment idea. Mind disclaimer here. This is extremely risky. I expect huge volatility on the upside, on the downside. There are political uncertainties. So if you can't stomach that volatility, forget about this video. However, if you want to play a speculation with small part of your portfolio, then stick to this. Let's go. So taking it from Dalio's book, Big Dead Cycles, within an average inflationary crisis, I think that Argentina is somewhere in the depression part now. So we have the boom, bust cycles. This is probably second, third round of boom, busts for Argentina. But as the currency depreciates, every market forces simply make it again an attractive territory for investments, for developments. Their products are placed on a global market, exports increase, imports decrease. And sooner or later, you might have in the most likely scenario an average statistical scenario. You have normalization. And then if you look at this chart with equity prices, those equity prices increase what in this case on average four times over five, six years. So weaker growth causes investors to pull their money out anyway. The assets that had been seen as fabulous treasure a short time ago now look like trash. They quickly go from overbought to oversold and prices plummet. Exactly what has happened with Pampa. So prices were extremely high just a year and a half ago. And now they have plummeted. Other companies that I analyzed crash so simply plummeted prices. And you have to see whether these kinds of companies fit your portfolio or your investment style. As investors, if we can buy when it is the darkest, we can expect the above 4x returns over the next 84 or 48, 46 months, even shorter, as we are already in the depression. So the sooner, the better, right? But there is always the possibility that it goes to zero. We can have Venezuela situation. And then you can simply forget about your money, perhaps somewhere down the road, five to 10 years, you get something back. But I would that consider it a zero. So there is potential for permanent capital loss in this situation. Something to keep in mind. So inflation is very high. 30% interest rates in Argentina are 60%. But when the country usually hits bottom is when the balance of trade, balance of payments changes and the balance turns into positive from negative. And this is already slowly happening in Argentina. Perhaps it will happen sooner or later. But it's going on. So we are closer to the end of the depression. The more time passes, they should be easier. They got a 50 billion dollar loan for the IMF that should surely help. However, there are plenty of risks. Not stable political country, very, very socialist potential to come in the next elections that are close in October. A big part of the population is not satisfied with what's going on. Anything can happen. And we know that in history, Argentina hasn't been as considered as reliable when it comes to these things. However, from an investing perspective, there weren't many nationalizations. So there were intrusions in the normal market forces, but not nationalization. So this is a risk you have to keep in mind. And what might happen is always unclear. So you're really investing in something unclear. If there is value, I like to buy just with a little bit of my portfolio. The key are the political elections. We have Kirchner from the left, where if you look at stocks back then, they were terrible. When she was the president, then Macri came and things improved. And now people are again scared that Kirchner comes or that the economics don't improve. And then we see trouble. So we'll see what happens. Expect high volatility. My situation, my view is that, okay, I have a 10% chance of loss, 100% loss, buy-buy money. Perhaps I get something after 10, 20 years. 40% chance Kirchner wins, 50% down, short-term, long-term neutral, hopefully. If I buy value and we'll see how much value there is, 25% Macri wins, things stay as those are now, give it time, 25% Macri wins, 200 and higher upside. I think this is a little bit conservative. But if I can find a business that offers 25% return, I might invest. So also on a portfolio perspective, if I find five such businesses over five years, I think, okay, in five different countries with same problems, I think three will do very well, one will break even, and one will go to zero. Three times, let's say three, it's nine plus one that breaks even is 10. If I invest five over four or five years, I double my money, which is a good investment return. Let me discuss Pampa energy. So just a quick overview of the company. What are they doing? Why? It is a potential triple with some risks. What's their debt, power generation, oil and gas exploration and production, subsidiaries or parts of companies that they own, associates and transportadora del gas de sud, how they call it. So Pampa energy is a holding company that owns power generation, oil and transmission. If we look at the market cap of Adenor, Transnair and TGS, that are TGS, that are all listed companies, Adenor and TGS on the New York Stock Exchange, 51% of Adenor is on a 731 million market cap is 365 million, 26% of Transnair is 100 million on a 400 million market cap, 25.5% of TGS is 500 million. So the holding company has 234 million in cash. So Pampa's energy generation, oil and petrochemical businesses are valued at just 500 million. EBITDA for debt parts were 700 million in 2018. So we were practically buying a business at a price to EBITDA below one. Let's look at other issues. There is Pampa's debt. It's a little bit expensive, 7%, 8% in yields, which is okay for Argentina in US dollars. However, if you look it from a normalized economic perspective, 1.3 net debt to EBITDA isn't much. Total gross debt is 2 billion. They have a lot of cash, 700 million. So it looks okay if it would be in a normal country, but this is always Argentina. It owns on electricity production 11% of production there and this is very important. So it all already has 4,000 megawatts of installed capacity and they have just invested 900 million to add 900 megawatts. So the value, the replacement value of what it has already installed is about 4 billion and you're getting that for what 700, 500 million. So you have discount to replacement value of 80%, something like that. The EBITDA is 400 million in power generation, so 400 million. I'm not even going into ratios because they look absurd. I think they could get 25% return in this moment that you would expect from Argentina when the situation normalizes as it was the case when Argentina issued 100 year bonds in 2017. The company should be valued at 8 EBITDA, which is 3.2 billion just for the generation part. So that's already a double. Then we have oil and gas. They are the leading exploration and production in Argentina. Reserves are 140 million barrels, equivalent barrels and most Argentinians I know are very excited about the vaca muerta, which has a quarter of the resources like in the US of shale gas, but production just 1%. So Argentinians are very excited that they will be able to produce a lot of gas and oil from these fields. They will invest 200 million plus another 20 million per year. A lot of investments will go there and they sold 25% of their reserves for 400 million. So on what they sold I would say this value of what's remaining is 1.6 billion. So that is still a lot or 1.2 billion if we take what they have sold. EBITDA was 200 million on 1 million in debt for the segment. So 1 million in debt is significant, leads to 100 million in costs, yearly costs and I don't know, I'm not sure about oil and gas. I keep it as a bonus. I would detach a value of zero because oil and gas, shale gas hasn't been really profitable in the US, so it might not be really profitable in Argentina. If it is profitable, if they can sell it, then I would be happy to see value here, but from now zero from a business perspective and 500 million from hopefully a sale perspective. If they put a lot of capital into this and it doesn't end up well, then they are in trouble. Adenor, market share in Argentina 20% for distribution, EBITDA 200 million on low debt, 100 million on free cash flows, so value about 200 million or 100 million for Pampa, 150. So depending on how you value it, they are going to invest again a lot, which is another risk for Pampa, but as risk it might also mean an opportunity if they invest a lot now, when there is blood on the street and then things normalize. Transnair also another company again with high investments. TGS is something a lot of people are excited, they have to develop, probably might be able to develop a gas pipeline to vacan Huerta, that's again going to cost a lot, so I'm looking this from a capital perspective, but it offers huge potential. There are other projects with the company and the company is a nice dividend yielder, so it pays 5%, but it did pay 15% a few years ago, so that was the time to buy, but okay. Now it looks good time to buy in compared to a normalization period, but what was there in 2012 is something you can again expect. Some of parts valuation, TGS 300 million, Adenor 150, Transnair 100 million, Pampa Energia 800 million, total value 1.3 billion for hopefully 25% return. The market is valuing this at 1.8 billion, so if I add 500 million for the oil assets that could be gotten I think, there is 200 million in cash, so I come out. Return expected business return is 25% from Pampa, when things normalizes this goes to 8% for such a growth business, which means this is a triple and the stock price goes back to 75%. It's a good company, I wanted to analyze the sector, I'm not going to invest in it because I don't like the high levels of debt and the high levels of capex investments that I am not that certain will work out that well, plus there is the country risk. However, if all those things work out well, this is not a triple, this is a 10-beggar over the next 10 years, macro environment, political environment, development of oil and shell resources and pipeline and growth. If all that works out, you have a 10-beggar here, now. And actually 10-beggars are created from when nobody sees them and then those explode. The risk is a little bit too big for me from a business perspective, so I prefer more certainty. Thank you for watching, looking forward to your comments. If you want to check everything that I do, please check my website and I'll see you in the next video.