The market is spooked big time by how the Brazilian government is 'costing' PBR. Between the fixed price for gasoline, the absurd environment lawsuits against Chevron and the stringent local content laws where the locals can't seem to provide content, they seem intent on killing the goose before it lays the golden egg. I am betting that the earnings and stock price drop might get their attention.. it may affect the buildout if they can't get favorable financing before it's too late. The goverment has shown itself to be pretty dumb lately.. we'll see how dumb.
<I am afraid you do not know much about Brazil nor its sordid history of bridges to nowhere, dead golden-geese, dashed dreams and ambitions...
Moreover, plenty of companies get driven into the ground with well intended investment plans that run smack into reality. Exploiting the pre-salt in the way proposed will be a major effort for competent management... for dumb, corrupt, elected officials???? >
Oh come on, Musk, what do you know about Brazil? LOL.
I will be joining you on the BZQ here soon. Sounds like pretty easy money.
*...the company has to grow and be profitable to keep the money flowing to the goverment. Elected officials,. even dumb and corrupt ones.. know where the money comes from....*
I am afraid you do not know much about Brazil nor its sordid history of bridges to nowhere, dead golden-geese, dashed dreams and ambitions...
Moreover, plenty of companies get driven into the ground with well intended investment plans that run smack into reality. Exploiting the pre-salt in the way proposed will be a major effort for competent management... for dumb, corrupt, elected officials????
Thoughtful post. I agree they will not return to average profitability for years. Which is why I wouldn't touch this stock until it got down into the low 20s/7 p.e. At that p/e, it doesn't have to return to average profitability.. just show improvement. Grow the earnings next year to $3.60 or so requiring an improvement in management) and the stock is in the 30s. The bar isn't that high..
And referring to another post.. yes the stock is worth what the Brazilian goverment says it is. But the company has to grow and be profitable to keep the money flowing to the goverment. Elected officials,. even dumb and corrupt ones.. know where the money comes from at some point.
Reading some of these comments makes one wonder if many of you feel like PBR will soon go out of business rendering it's stock worthless. It also makes me laugh how some of you give the impression that you always buy at the lowest and always sell at the highest, never making a mistake trading.(or always short at the precisely right time and of course, cover perfectly)
<Reading some of these comments makes one wonder if many of you feel like PBR will soon go out of business rendering it's stock worthless.>
Do your DD, man. Jeez. Look at the corporate ownership structure. Your stock is worth whatever the Dilma government wants it to be. Go back and watch the Chanos video that I linked here earlier where he goes over the numbers.
<It also makes me laugh how some of you give the impression that you always buy at the lowest and always sell at the highest, never making a mistake trading.(or always short at the precisely right time and of course, cover perfectly)>
Uhh, wrong. My two biggest positions now are EUO and DTO, a double short of the Euro and oil respectively.
If you follow what I have been posting, you know that PBR moves with the Euro and with oil. In short, your bet on PBR is the exact opposite of what I am investing.
EUO is up around 50%, and DTO was recently down 10% from my entry point, and I am now back around even.
I have been posting for the last year about why Europe and the Euro are doomed (as has Zero Hedge) and have been documenting the fall in demand for oil and increase in supply. I have also stated multiple times why IEA and EIA projections were bat s--t crazy. I posted so much on Europe I got tired of doing so.
Now the fall that was inevitable is in place, people like you are crawling out of the woodwork being critical of the veterans who have bought DTO and EUO. With the possible exception of petroglyph, none of the most veteran posters here own PBR. None. We have done our DD and said thumbs down. And PG is wishing he would have gotten out of Brazil.
As for talking PE and all that, what does it mean to you when one in four homes in Miami is being bought by a Brazilian, and the government has said that they want interest rates on the Real to be lower?
It means to anyone with a brain to get out of PBR because the Real is overvalued versus the dollar and the Brazilian government is actively trying to push it lower. Your future PEs and Book value are all based on exchange rates and are worthless when exchange rates are changing. If the Real goes down by 33% (and it should) so should this stock.
But seeing as you and all the other bagholders have the need to blame, I will graciously take your insults, but it is not going to make you any money.
And just to prove it, here is what RG posted back on October 5: http://messages.finance.yahoo.com/Business_%26_Finance/Investments/Stocks_%28A_to_Z%29/Stocks_P/threadview?bn=26953&tid=42841&mid=42856
And what I posted:
We have been waiting for this meltdown for months/years. I don't see any of the people shorting oil and the Euro gloating here, but I see a lot of whining from PBR longs.
BTW, if there were an ETF where I could short the Real, I would be buying it with both fists.
The overwhelming gloom and doom by posters on this board vs the stock price action makes me wonder.
As a long in recently at the 21 level and seeing the 2008 freakout zone at 15+ I can't imagine how horrible the earnings can be.
Reading the posts on here one might think PBR is going the way of YPF in Argentina.
One question. If things are so horrible why did PBR rally strongly at the start of the year before the protracted downturn happening now? I'll have to wait for the earnings I guess
Matt: Even if this was the best run company in the most efficient nation in the world, the challenge is such that they could not exhibit even average profitability for years.
They need to develop the technology (deep-water), train and educate the workforce, build the ships, etc, etc. A company that needs that amount of investment cannot demonstrate the financial returns of a more mature company that needs less investment.
Consider it a life-cycle thing - apart from the political-economic-social factors and all the mixed/competing objectives. They have embarked on a HUGE investment and the returns will not be visible for years.
This has been obvious to some of us for a couple of years now and we have avoided the stock like a plague.