2. Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR)
14-day RSI: 32.01
Number of Hedge Fund Holders: 36
Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) is a Brazilian state-owned oil and gas company that has recently been pushed into oversold territory due to its latest smaller-than-expected dividend payout. The dividend controversy remains unsolved as the company’s CEO and the government-appointed board of directors are in a battle regarding the dividend payout. Earlier in March, the board of directors rejected a proposal of special dividend payments to Petróleo Brasileiro S.A. – Petrobras’ (NYSE:PBR) shareholders as the government wants the money to be reinvested into the company.
The sell-offs following the dividend controversy have pushed Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) toward a 14-day RSI of 32.01 as of March 13, and the stock is trading at a TTM price-to-earnings multiple of 3.57.
As of the fourth quarter of 2023, Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR)’s stock was held by 36 hedge funds. Rajiv Jain’s GQG Partners remains the most prominent shareholder of the company, with over 213 million shares worth $3.4 billion.
Fairlight Capital made the following comment about Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) in its Q3 2023 investor letter:
“Throughout the year, we have reviewed thousands of companies, including many in the oil sector. While we are generally cautious about commodity-based businesses where the company lacks control over the price of what it produces, the valuations in several cases have reached extremely compelling levels. For example, Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) and Ecopetrol (EC). Petrobras has distributed dividends of over $2.30 paid this year3 , while Ecopetrol has traded as cheaply as the $9-$10 range (close to our purchase price) and is paying approximately $2.50 in dividends this year.
We factor in the potential cost of FX movements over time, but even under the most pessimistic scenarios the investments should work out well. We initially came across these ideas while looking at South American stocks in general. We saw that many market commentators had expressed concerns that Ecopetrol’s dividends might be halted, especially following the election of Gustavo Petro as president of Colombia in June 2022. Similarly, there have been reservations about the sustainability of Petrobras’s dividend. However, the government owns substantial controlling stakes in these companies and is also a recipient of their dividends. For Ecopetrol, the Colombian government owes money to Ecopetrol due to the Fuel Price Stabilization Fund (FEPC). This fund aims to stabilize fuel prices for Colombian consumers. It bridges the gap between international and national Colombian consumer prices by compensating producers and importers for this price difference. The primary goal is to cushion the impact of global oil price fluctuations on the Colombian market. This is achieved either through cash payment or by forgoing dividend payments due from the government’s stake in these companies. In Ecopetrol’s case, the dividends paid (or those that would be paid to the government) are applied against the outstanding balances…” (Click here to read the full text)
Follow Petroleo Brasileiro Sa Petrobras (NYSE:PBR)
Follow Petroleo Brasileiro Sa Petrobras (NYSE:PBR)
