Petrobras has been under tough scrutiny after proven allegation of wide spread corruption, bribery and price fixing. The stock took a dive from the $20 range into the $6 range. Last week after flames and explosions ripped through one of their rigs and killed 3 people the stock took no further dive.
The leadership has been gutted with 36 persons fired and under investigation. The Brazilian President has appointed the new CEO Aldemir Bendine from a state run Banco do Brasil at the dismay of many investors as the believe looms that Petrobras will continue to serve the needs of government before it looks at improving P/L and EPS outcomes given the interference by government and the proximity of the new CEO and the President.
The new CFO has also made headway coming across Banco do Brasil and 4 internal staffers have been promoted to join the ranks.
We consider Petrobras a good long play as an asset rich company that is being cleaned out of corruption and likely with new reporting obligations is going to be more profitable and EPS driven to recover investor confidence.
We are buying any stock under $8 and will likely to continue to buy under $10-12 range. This a good stock with good fundamental economics and currently available for a vast discount. Don’t expect any dividends in the next 12 months but expect a well rounded, competitive and transparent company.