Yesterday I sold all my Taesa shares (B3: TAEE11).
Quickly, for those who still don't know Taesa:
TAESA – is one of the largest private electric energy transmission groups in Brazil in terms of Annual Permitted Revenues (also known as RAP).
The company is exclusively dedicated to the construction, operation and maintenance of transmission assets, with 13,832 km of lines in operation and 1,323 km of lines under construction, totaling 15,155 km of extension and 109 substations.
In addition, it has assets in operation with voltages between 230 and 525kV, and is present in all 5 Regions of the country (19 States and the Federal District), as well as an Operation and Control Center in Brasília.
Currently, TAESA holds 43 transmission concessions: (i) 13 concessions that comprise the holding company (TSN, Novatrans, ETEO, GTESA, PATESA, Munirah, NTE, STE, ATE, ATE II, ATE III, Saíra and Sant’Ana); (ii) 11 full investees (Brasnorte, São Gotardo, Mariana, Janaúba, São João, São Pedro, Miracema , Lagoa Nova, Ananaí, Pitiguari, and Tangará ); and (iii) shareholding interest in 19 companies (ETAU, Transmineiras, AIE Group, and TBE Group).
EBITDA of R$ 1340 million and EBITDA margin of 65.10%
IFRS Net Income of R$ 88.1million / Distributed Dividends and JCP (2022) (Interest on Equity) of R$ 506.8 million
Gross Debt of R$ 10,160.7 billion / Cash balance of R$1,686.0 billion / Net Debt of R$ 10,400.3 million. Average Nominal Cost of 4.0% and Average Term of 4.7 years
Net Debt/EBITDA: 3.7x (it considers jointly controlled and associated companies)
Market Cap: R$ 13 billion (US$ 2.6 billion)
Going back to my story, I made a rational decision, not an emotional one.
This is another one of those companies that arouse passions. Taesa sellers are often labeled stupid, crazy, and the like.
This is very similar to the WEG case I shared here in mid-2023.
Until a few years ago, we didn't hear much about Taesa.
But a Chinese man decided to drink bat soup and we know how the story ended, right…? (contains irony)
IGP-M (Brazilian CPI) of 23% in 2020 and 18% in 2021.
At the same time, millions of individuals were imprisoned in their homes, eager to do shit with their savings. Boom of retail investors on the Stock Exchange.
What do individuals on the Stock Exchange like?
Dividends.
Who doesn't like a little money dripping into their account, right?
And there were even people who supposedly became billionaires in Brazil by applying this strategy over decades.
Then a certain company called Taesa becomes the hottest stock around, the darling, the Holy Grail.
Safe, stable, predictable business, contracts indexed to inflation (mostly IGP-M) and good dividend payer!
The IGP-M soared and Taesa's dividends went with it.
Individuals thinking they were Warren Buffett.
But what happened afterwards?
I will tell you in detail why I sold my entire Taesa position.
I'm going to show you all the analysis I did that led to making this counter-intuitive decision to sell the best cash cow on the Stock Exchange.
Let's go.