By Tim Seymour
Continuing our call from yesterday, Petrobras (PBR) is seeing tremendous short-covering follow-through. This is a stock that remains guilty until proven innocent, and has many wondering whether the government has reached a point of pragmatic sanity in terms of how they address the cash flow needs. It's hard to accept that this is anything more than a "trade," despite deep value on a standard multiple play.
Value traps in state oil and gas companies should be also accepted to be the norm until proven otherwise (see Gazprom, SNP). In fact, after a move that is outsized even for PBR, it may be time to take some profits off the table.