Petrobras: Sentiment Has Turned & The Bull Run Is Set To Continue
More Offshore Exploration & Continued Dividends With A Side Of Buybacks
Summary
Petrobras has had a great run over the last six months, and there have been several developments in recent months worth covering.
The company was in the news last week as they received approval to explore the Foz do Amazonas region near the Amazon. Shares were up nearly 7% last Wednesday on the news.
They have updated their shareholder return policy. Investors will still receive sizable dividends, but management is starting a buyback for the A class preferred shares.
Despite the massive run in share price, I still think we are a long way from fair value and shareholders will still be paid handsomely to wait.
I have been waiting for an excuse to write about Petrobras PBR 0.00%↑, which is shaping up to be one of my best investments if the trend continues. It’s too early to take a victory lap, but the short-term results from investing in Petrobras look promising. Oil has rallied in the last couple months, which I’m sure has been a tailwind, but I think sentiment has shifted to be much more positive. This post won’t be a deep dive like my first one, so if you want to read the foundation of my bullish thesis on Petrobras, I have included a link below.
Petrobras: Overblown Risks Lead To A Massive Opportunity For Investors
Summary Petrobras has sold off due to perceived political risks, which are overblown in my view. The valuation is dirt cheap and investors have received huge dividends over the last couple years. Now it looks like we could see buybacks as well in future quarters.
Shares are up more than 40% from my $9.43 cost basis, and shares have paid $2.34 in dividends (including the payouts on the way) since I bought shares in March and early April. Not bad for six months give or take. The first (and potentially most valuable development) worth mentioning is the offshore exploration approval near the Amazon.