Fairlight Capital, an investment management company, released the “Fairlight Alpha Fund” third-quarter 2023 investor letter. A copy of the same can be downloaded here. In the third quarter, the fund returned -11.1% net of fees compared to -3.3%% return for the S&P 500 Total Return index. Since inception, the fund returned 421.7% net of fees and 43.3%, on an annualized basis. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Fairlight Capital highlighted stocks like Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) in the third quarter 2023 investor letter. Headquartered in Rio de Janeiro, Brazil, Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) engages in oil and gas exploration, production, and distribution. On November 6, 2023, Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) stock closed at $15.71 per share. One-month return of Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) was 6.80%, and its shares gained 32.46% of their value over the last 52 weeks. Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) has a market capitalization of $102.236 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)
A worker in protective gear near a large natural gas exploration machinery.
Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 33 hedge fund portfolios held Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) at the end of second quarter which was 39 in the previous quarter.
We discussed Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) in another article and shared Ken Fisher’s top energy stock picks. In addition, please check out our hedge fund investor letters Q3 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
