Out of Petrobras

Petrobras was widely hated when I entered the position last December on Lula’s election. It’s still cheap, but with lower payouts and more money going into non core investments as per Prates comments today, there’s less of a reason to own it.

I have moved most of oil investment funds into lesser known GeoPark and Parex Resources, two Colombian producers which have a capital yield around 15% and are buying back 5-10% of shares annually plus paying a decent dividend.

The Petrobras thesis was simple - political risks were overblown, the stock was too cheap for the cash flow and yield. That remains true, but I would prefer to pivot to the names that have under performed at what may be an inflection point in market perception.

Petrobras was a six figure return for me.