The-Honest-Trader

Petrobras: Brazilian Oil Takes One Step Closer to Nationalization

Yea.

It's not like the government will take Tupi and Iara from Petrobras shareholders. I'm brazilian and can attest that they wouldn't dare.

Henrique Meirelles, president of Brazil's Central Bank knows international markets, he was the former CEO of BankBoston. He will tell the president not to do it... We'd have the oil but lose all other foreign investment most likely... The country would be sabotaged.

Petrobras Looks More Compelling Than Ever

Nice call..

Stock was 10% up today (in reais, not dollars)

Petrobras: Great for Brazil, Not So Great for Shareholders

Alan,

just read your sell recommendation on PBR. Absolutely successful, does it still carry a premium over other oil companies?

I was short the whole brazilian market at the top. I really can relate to your call. It was a really bullish time, I really laughed at the comments people made about the article... That's how I'm laughing of people who did not see it coming.

I confess though that they kinda got me too... I exited the short too soon. I wish I had read your post back then so it would give me ALOT more confidence... I bet the bullish comments would just feed my negative feelings.

Now that I'm realizing that brazilian stocks were so appetizing to sell at the top, I'm considering the "safety" of the US Dollar or maybe Gold, which is always safety in times of uncertainty. My fear is that the short position is so big that it will only push stocks lower. Local investors cannot face the "gringos" (foreign investors). There are still long foreign investors though, but they never faced so fearceful competition on the sell-side like this time. The bubble might deflate to levels we did not imagine before.

Petrobras: Great for Brazil, Not So Great for Shareholders

SeekingTruth,

glad you appreciated the comments.

The players in Brazil really seem to know everything. Probably "investment grade" meant hedge funds could invest in Brazil, and instead of buying they sold stocks short using their insider information about oil. It's a less regulated market than the USA and no one really goes to jail here if they have the right amount of money. It also was the last BRIC to receive the upgrade. Maybe the plan since the beggining was to end the commodities cycle after Brazil received the upgrade? If you check the stock market charts, you'll realize that the index went up more than 15% over the previous top in just a few days, after returns of 50% over the last 5 years. Just month after the rating the index was melting, and short interest had never been so high like it was at the top.

One thing you all must know about the PBR story is that the government is morally dubious here, seriously. The president told all governors in a meeting that Petrobras would go up because it had find alot of oil (it's not me saying this, it was the #1 selling paper in the country). The stock went up like 40% after the Tupi discovery and fortunes were made in off the money options, bought by people with inside information. Why? Out of the money options volume had never been so high like that.

Conspiracy theories aside, I still believe that Brazil probably has more oil fields on the country, not in the sea. This country is very blessed with natural resources. It's just a matter of time until Petrobras finds more. I buy Petrobras because it's a company that is run by idiots and can be run by idiots, because this country has alot of reserves. I sell Warren Buffet's philosophy but I do buy in this phrase.

Now I ask you, if oil is so hard to drill at the sea, why the hell Soros bought so much stock 50% up from it's current price? Ok, so he sold his Vale shares... Still, biggest stock holding in his fund...

Petrobras: Great for Brazil, Not So Great for Shareholders

Another tip I can give you guys as a brazilian is to look at Eike Baptista's companies OGX Petroleo and MMX Mineração. Tickers OGXP3 and MMXM3 on the Bovespa. OGXP3 is dirty cheap, might go down an additional 10%. It's a company that has bought some oil exploring concessions from the government.

I think Baptista will be the richest man in the world in not much time... To say the least. Oh, but he may not be a grown up lol.

Petrobras: Great for Brazil, Not So Great for Shareholders

SeekingTruth,

the dutch boy with the "grown up" comment might not believe it, but brazilian investors are amongst the most astute in the world.

They anticipated the whole investment grade rating story and bought Brazilian stocks like crazy during the whole year. Check the charts, Brazil was the best performing market during most of the year.

I guess that when the investment grade rating was given, the market was really expensive and the new money that should have gone to Brazil didn't go. No foreign investor flow meant a freefall for stocks. But it really had all parts of a conspiracy theory in it.. As always the media pumped stocks real hard... Lots of people who never invested put their money and lost. People say here the banks bought the investment grade rating to short the market and they really seem to have done this.

I would even go further and say that Brazil is a broad market leader. If you trade US stock indexes, I'd suggest you take a look at Brazil everyday to see how it's going. Why? It's kinda hard to explain, but basically, whatever move Dow or S&P500 will do in the future, Brazilian stocks are doing now. They go up before the US goes up, they go down before too...Some days the brazilian exchange is the only one falling and I'm like WTF? Some hours later I get the answer when stocks all over the world are bleeding... Those brazilian traders know their business, we usually say.

Check monday intraday action in the Bovespa after the Fannie Mae and Freddie Mac announcement. We were down more than 2% that day, after starting 3% up. And it went down before all other stock exchanges. Now check the Dow and S&P on tuesday...

I wish I could trade US indexes and profit from the brains of these rats.

Petrobras: Great for Brazil, Not So Great for Shareholders

Thank you for the info Kezorm.

Petrobras found oil in the Iara oil field today. 4 millions barrels it seems.

In the after market there are no more sellers. How much the stock might go up tomorrow?

Petrobras: Great for Brazil, Not So Great for Shareholders

why BM-S-22 is a winner? Is it public information already?

I'm brazilian and have not heard about this. BTW, PBR peaked in may because Brazil received the investment grade rating from S&P and Fitch in that month and all stocks went up. Meanwhile oreign investors shorted the market while the media hyped it up.

I'm long the stock, started buying 10% up from current prices, I always had this stock but sold near the top because it clearly was a bubble.

I agree with the guy who criticized Brazil, about Exxon's credibility adding to the potential ground discoveries. Certainly a market mover, I would go long PBR options if I knew the discoveries in BM-S-22 are a winner.