Historically, successful value investors have always bought stocks when blood is running in the streets. Unless you’ve been on a total news fast this summer, then you probably know the streets of Europe are knee-deep in type A-negative. As expected, value hunters have been watching that market closely, waiting for the right time to snatch up stocks when they’re dirt cheap.

This is precisely what Mexican telecom mogul Carlos Slim just did. 

If you read StreetAuthority’s articles regularly, then you know that we’re big on following the moves of the world’s greatest investors. In fact, StreetAuthority co-founder Paul Tracy’s special report “The 10 Best Stocks to Hold Forever” is one of the most widely-read pieces of research in our company’s history.

Bottom line: you should follow and learn from the moves of guys like Warren Buffett, Bill Gates, Carl Icahn and George Soros…

Add Carlos Slim to that list. 

Slim, currently topping the Forbes billionaires list with an estimated net worth of $69 billion, made his titanic fortune in the telecom business through his stakes in Telmex and Latin American wireless provider America Movil (Nasdaq: AMOV). Now, the mega-investor has his sights set on European telecom assets, primarily Dutch communications carrier Royal KPN (OTC: KKPNY).

Under Slim’s guidance, America Movil has skillfully acquired 28% of Royal KPN, giving the Latin American company a significant foothold in Europe. The billionaire’s modus operandi has always been to buy distressed assets at what would seem like the worst time possible — just like Warren Buffett and other Wall Street legends.

Clearly, this approach has paid off big time for him. And it could pay off for you, too.

Opportunity in the euro chaos
Like many large European firms, Royal KPN’s affairs currently look like a slow-motion train wreck. Fundamental and psychological weakness in the continent’s financial markets and economies has wrought havoc on balance sheets of many companies.

Royal KPN has not been spared.

In its most recent financial report, Royal KPN’s second-quarter net profit fell 24% to $382 million compared with $505 million for the same period last year. Accompanied by this not-so-glowing earnings report was an announcement that the company was slashing its dividend by 55%, from 72 cents a share to a recent 42 cents.

This is clearly news income investors don’t like to hear, but, there are other reasons why Royal KPN makes sense for bold, deep-value investors…

1. The stock is cheap now and dividends still yield a nice 5%
Shares of Royal KPN’s, which you can buy in the form of American depositary receipts (ADR) here in the United States, are off roughly 10% since the dividend-cut announcement. What’s more, they currently trade at a 40% discount to their 52-week high. Another positive is that this stock is not widely held (or known for that matter) in the United States. Imagine the carnage that would ensue if AT&T (NYSE: T) announced a dividend cut?

Royal KPN’s CEO, Eelco Block, said that due to the challenging economic environment in the Netherlands “…it is even more important to strike the right balance between a prudent financial framework, continued investments and shareholder remuneration.” That’s a vocal commitment to a dividend. Plus, in a world of 1.5% 10-year Treasury bonds, Royal KPN’s 5% payout is still quite attractive.

2. A European foothold in a high-quality market
Holland has one of the highest percentages of smartphone penetration in Europe. The margins on smartphone hardware sales are always much higher and because of the huge demand for data services these smartphone users require, the result is significantly higher revenue for the company. Carlos Slim knows this.

3. Slim is committed
Although he bought the stock a few months ago, his transaction was brought to my attention during a recent conversation with an analyst/portfolio manager who specializes in the telecom industry. This analyst has also discussed the investment in Royal KPN directly with Carlos Slim in a one-on-one meeting. Slim told him that Royal KPN offered value and he has always wanted to expand the business beyond Mexico and Latin America. Owning a 28% stake in a company is quite a commitmentm, and Slim’s track record proves he is determined to keep his investments successfully positioned.

Risks to Consider: Daily headlines reflect the financial turmoil currently engulfing Europe. Most European companies are or will be directly affected by the slowdown of the euro-zone economy. In fact, earlier this month, I wrote a piece describing the dangers the European crisis will present.

Also, any dividend income derived from Royal KPN may be subject to foreign withholding tax. Typically, investors can recoup some or all of it when filing their income taxes. This one may make more sense in a taxable account rather than an IRA. Lastly, the stock can, at times, be thinly traded, so always use limit orders.

Action to Take –> Royal KPN ADRs currently trade around $8.50, with a forward price-to-earnings ratio of 6.3 and a new dividend yield of about 5%. Because the share price is so depressed, upward movement is possible based on any positive news flow.

Slim’s majority stake is also important as he tries to gain market share in Europe. Considering these two factors, a 12-month price target of $11.20 would represent a 32% return. When adding the dividend, the total return comes to 37%. The fact that the world’s richest man believes in this company is just icing on the cake.

P.S. As I said earlier, Carlos Slim isn’t the only mega-investor we follow. And in Paul Tracy’s special report, “The 10 Best Stocks to Hold Forever,” we’ve found that Warren Buffett, Goldman Sachs, John Kerry… maybe even YOUR own Congressman already own many of these “Forever” stocks. Click this link to get the names and tickers of these stocks…