'Island Paradise'

"Time to talk about the year of investing dangerously. 

Did you know that Indonesia just became the world's no. 1 coal exporter?  That means only one thing.  Yeah, you've got to pimp on over to Indonesia to try to make some money.

It's a net exporter of natural gas, although they are keeping it back, because they know they can make more money. 

It's got more oil than they can really drill for because of the stupid rig shortage.  Buy National Oilwell Varco (NOV) if you want to profit from that.
 
And, it's got a ton of gold, which we know from the New York Times, because they've been writing about how Freeport McMoran (FCX) has been practically looting Indonesia for years!

The country's an amazing growth story this Indonesia.  It's gone from being one of the least developed countries, to being almost developed.  And it never would have happened, if it weren't for one man:  General Suharto.

Suharto ran Indonesia with an iron, anti-communist fist for almost three decades.  There's no escaping the fact that after Suharto ousted and took over Indonesia, that's when you started getting this miraculous turnabout.

What do we do?  What do we do with the economic powerhouse that Suharto built?

Do we look at it on some map?  Do we study it with national geographic?  No!  We invest in it.

But, there's a problem.  Indonesia's en fuego.  Normally, i'd tell you to go buy 'if' - no can do - that's the Indonesia fund.  And listen, so many people went into Indonesia right now, and into this fund, that it's trading at a 46% premium to its underlying assets.

That's right!  The stocks that are owned by the fund are worth much, much less than the stock itself.  That's criminally expensive - that's insane! 

People wanted it so badly that they just can't control themselves.

Let's look at the fund - what's it got in it?

Well, first, it's full of really boring bank stocks that I think won't make you any money.  22% of it though is made up of Telekom Indonesia (TLK)

TLK has wireless, wireline, internet.  Mostly a state-owned co. - let's call them quasi-monopolistic practices, which is why it's got 71% gross margins.

And Indonesia has indeed a government that is for, by and run by the corporations!

TLK is highly levered to the overall growth of the country; that’s right, the TLK goes up like the country, because phone lines and internet are what you invest in when you're undeveloped third world economy starts growing up.

The big driver here is wireless.  When you live in a third world country and you want a phone, odds are pretty good you can't just get a phone line installed in your house - or your shack!

They don't have enough phone lines for that to work.  Instead, you go out and get yourself a wireless phone, which doesn't require landlines.  You don't have to wait for the state-owned phone co. To get around to be passing wire through your neck of the jungle!

And that's exactly what's happening in Indonesia.  People are taking their new wealth and buying their cell phones; getting their service from tlk!

The co.s growing at a 30% clip; 3.1% dividend.  What is not to like!

Bottom line!:  Suhartu did good.  You've got to capitalize on his success.  Pimp to Indonesia, and buy yourself some TLK!"

FROM FRIDAY NIGHT'S SHOW:
4/28/06

Lightning Round

Island Paradise

Go West

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