Thursday, April 2, 2015

4/2/15 Petrobras

PBR (Petrobras) has now recovered about +37% off its 52-wk low of 4.90.  Opening a position at this morning's high @ 6.72.  Not my usual trading 'style,' but neither is the strategy.  The company announced yesterday (additional) financing of $3.5b by the China Development Bank Corporation.  The stock is -68% off its 52-wk high of 20.94 (last September), not to mention -90% off its all-time high of 70.83.

(a) I believe the company will ultimately recover from its corruption scandal.
(b) Brazil will ultimately recover from its recession.
(c) Oil prices will eventually recover to the $100 range.

The stock appears to have reversed its down trend.  It's still a high-risk trade, so size appropriately.

23 comments:

  1. Scaling back into INTC (Intel) @ 30.93.

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  2. Anyone open positions in CHK this morning?

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  3. EWZ certainly has improved in the last two weeks.

    I like VALE, since its for LT and pays almost 7% div. just went long at 5.78.

    Most of my trades lately its been better to do the opposite of what I do. FWIW

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  4. Ah good, thus the odds of making another mistake should be lower based on the 50/50 rule.

    BXE - Really stinks, compared to AKAM......... of course.

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  5. INXX - I dunno, should that volume impress or is it some kind of warning?

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  6. Partial place bets on RYPMX (miners), RYEIX (Energy), RYVIX (Oil Services), RYTNX (2x SPX) and RYGBX (1.2 long bond) at the close. Call it a field bet on miners + place bets on the 4-5-9-10.

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  7. Damn, I'm relieved this week is over..... Happy Easter, guys.

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  8. So the employment report was a little on the soft side due to the weakness in the energy industry, tech jobs couldn't compensate I guess.

    Kinda thinking our little conversation room here is losing inspiration, if it wasn't for TOF there would be a near vacuum of intelligent dialog.

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  9. What happened today guys? My wife was sick so had to take care of the kids. I did see these notes

    "Good news on Euro car sales keeps coming. After upbeat news from Spain & France yesterday, Italy +15% & Germany +9% in March"

    And

    "Nissan (NSANY) and Renault (RNO.FR) CEO Carlos Ghosn says the high cost of capital which needs to be plowed into the auto industry to develop cars could spur a wave of consolidation. But his companies aren't in talks with anybody. Ghosn, speaking at the New York Auto Show, says deals can come in many forms--mergers, alliances, partnerships- -and will be a necessity for smaller car makers which don't have the scale or capital to compete with larger rivals. His remarks echo Fiat Chrysler (FCAU) CEO Sergio Marchionne, who has repeatedly said car makers need to better pool their resources and get bigger. Ghosn says he does have an optimal size in mind. "I don't think it's a question of how big you are. It's a question of how much can you afford for investments.""

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    1. Interesting the cost of capital is high, considering rates (and inflation sans food) are incredibly low. Could this actually be code for something else?

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    2. I think it was basically a morning bounce due to the good job numbers, followed by a flat day as people were gearing up for the long weekend.

      Will be interesting to see the monthly jobs report tomorrow and how the market reacts. Some saying we are in a "good news is bad for the market" environment.

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    3. Cost of capital is huge in the auto industry. And then when you look across the players in the industry there's a huge discrepancy from player to player. Take a look at the gross margins and net margins of some of the bigger players (in terms of net revenues):

      TM: http://www.gurufocus.com/financials.php?symbol=tm&Submit=Go
      VLKAY: http://www.gurufocus.com/financials/VLKAY
      GM: http://www.gurufocus.com/financials/GM
      F: http://www.gurufocus.com/financials/F
      FCAU: http://www.gurufocus.com/financials/FCAU
      NSANY: http://www.gurufocus.com/financials.php?symbol=nsany&Submit=Go

      The disparity suggest (at least to me) that there has to be significant spare capacity in some of these businesses. How does FCAU have gross margins of 14% vs GM's margins of 9-10% while FCAU has net margins of 0.4% vs 3% at GM? And the margins vary drastically across the board. That tells me that this entire industry is in dire need of consolidation to fill up those empty factories and spread out the overhead across larger companies.

      Or how about slashing costs / factories / brands?

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    4. They've been consokidating platforms and parts, etc.for a while now, so the next step is the mergers people are talking about. If they do merge, you'll see the same increase in margins and consistency we've seen jn the airlines.

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  10. NRG - Hmm, it's tough to spot who's benefiting from the switch to alternative energy. Is it the consumer?

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  11. Three recommendations for the weekend (and beyond):

    (a) 'The Red Road' on Netflix. http://www.imdb.com/title/tt2505072/
    (b) 'The Wire' on Amazon Prime. All five seasons available to Prime members. Season 2 filmed around the Baltimore docks. Probably the best of the 5, and despite references to Season 1, the second season stands on its own.
    (c) 'The Bridge' on Hulu. If you can put up with the occasional 'commercial break,' Season 1 is available for streaming at no charge. http://www.imdb.com/title/tt2406376/

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  12. I actually bailed on the rest of my LEVY today and moved that money into FCAU (probably stupidly). Of course, after hours FCAU got hit hard with a verdict in the death of a boy in a rear end accident in a Jeep:

    http://finance.yahoo.com/news/fiat-loses-150-million-verdict-234259942.html

    I'm not sure if it will have much of an impact as this is going to be appealed.

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  13. MATX - On a quiet tear. Certainly you guys noticed..

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  14. DB - Just sold Maher Terminal’s Fairview Container Terminal in Prince Rupert, British Colombia, for C$580 million ($457 million).

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    1. Continuing to address their capital issues. That's good, plus why is a German bank owning a Canadian port? Certainly not in their key compcompetence

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  15. 2nd- What is 'The Bridge' about?

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    1. You might want to pass on 'The Bridge' for now. I just discovered that Hulu only released the first 3 episodes for public viewing. The remaining episodes require starting a free trial, which then moves to 7.99/month.

      I found an even better series, 'Line of Duty.' A BBC production with two seasons available for public viewing. http://en.wikipedia.org/wiki/Line_of_Duty

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  16. Is this why friends don't suggest friends buy energy?

    http://www.eia.gov/naturalgas/weekly/archive/2015/04_02/img/201502-February-monthly.png

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