SHEL - Petrobras: Repeating Past Mistakes I Don't Recommend Buying Shares

2024-04-15 04:44:45 ET

Summary

• Petrobras is the largest company in Latin America and is still reaping good results due to its old divestment strategy and focus on core business. However, the strategy changed completely.
• The new management's plans for increased investments and the abandonment of the international price parity policy raise skepticism about the company's long-term results.
• Despite attractive valuation and strong fundamentals, the uncertain actions of the new management and potential political interference pose risks to the investment thesis.

Investment Thesis

I recommend holding Petrobras ( PBR ) shares. The company is the largest in market cap in Latin America, and is still reaping the benefits of its strategy of divestment of non-strategic assets and focus on core business. As a result, Petrobras continues to generate a lot of cash. However, the current management of the Workers' Party plans to carry out a new (and, I believe, dangerous) cycle of investments....

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