PBR.A has been running, beating the Brazilian stock market ETF, EWZ. Have a smaller position that I would have liked, waiting for a pullback to load up more. Up 40%+ though so no complaints.
Next quarterly earnings are on Aug 3, and Oct 31. Could be opportunities around then.
The similar Colombian company EC is doing ok, up 10%ish since I got in, but not as flamboyantly as PBR. At the size I would like though, so not adding more.
4 days before earnings, PBR announced that they will reduce dividends from 60% of FCF to 45% of FCF, and that they will increase share buybacks (image 1). That’s a 25% reduction in dividends, but with dividend yields at ~40% currently, I don’t know that anyone would mind too much. I suspect market was expecting a much higher cut.
If price does fall - and it might as price action looks like a double top sitting on the 20SMA (image 2) - I’ll take the opportunity to load up some more. This is a loooong term hold for me, and with a generally bullish oil scenario and Brazil expected to start cutting rates soon, a temporary pullback would seem like a gift.
No options though - straight up commons. As there is some amount of volatility with Brazilian stocks, not least because of the rial.
PBR goes ex-dividend on Tues. Dividend amount is $0.44 (at current exchange rates), so we should see a drop to close to $12 on Tue or after. Will add more to my position if price goes sub $12; position is up ~30% since March.
Noteworthy recent developments:
PBR and EC are both overextended at the moment because of how oil prices have risen. Though they certainly did not fall as much when oil retraced. Missed the last retrace, will try to get some more at the next retrace.
For now, PBR.A up 59%, EC up 31%. (All commons, no options.)
An update since it’s been 3 months since. As we can see, the noted overextension corrected itself as both PBR and EC came back down to their trendlines, and then continued the bullish move up. This is despite crude oil remaining quite flat. Both have major developments in the pipeline, especially offshore. I think they are approaching fair value now though, more because of emerging market risk than anything fundamental, so won’t be adding any more for now.
I keep forgetting to buy shares. apparently they plan to lower the dividend payout so I might check the price after to see if it comes down a bit
PBR showing some weakness after their CEO noted that they will be more cautious with dividends (whatever that means specifically…) as they move to renewable energy.
I’ll be looking to top up more if it has a healthy pullback to the trendline near the 100SMA; it’s hovering on the 50SMA now. Currently up 69.5% over a year.
