Petrobras Hedge Fund

Petrobras, Brazil’s state-owned oil giant, missed out on production marks in the first quarter, but that hasn’t kept hedge funds from making some big bets on the business’ stock price.

Petroleo Brasileiro SA’s oil output fell 3.5 percent in the first quarter from the same time a year ago, according to Brazil’s oil regulator ANP, which attributed the fall to a number of set up and unanticipated halts in production.

In a statement, the regulator affirmed the production decreases were because of upkeep work and other interruptions in January and February at platforms and FPSO systems owned by Petrobras, as the firm is known.

Petrobras has been carrying the weight of decreasing production levels for the past several quarters, and the pattern is likely to extend into this earnings season, as well.

Petrobras’ divestment program

While the company’s divestment program has actually improved its financials to some extent, it has impacted the development of the firm, which may limit total upstream revenues.

Petrobras is continuing its plan of upgrading its $26.9 billion divestment program, announced last year as part of the company’s 2019-2023 financial investment strategy, consisting of the late March statement that Petrobras will offer 100% stakes in 8 refineries totaling 1.1 million b/d of capacity. Castello Branco, who took control of the company in early January, has pledged to shed assets rapidly, backing up the pledge by closing more than $10 billion worth of deals about a month ahead of the executive’s self-imposed, end-May due date.

Indeed, Petrobras is undertaking initiatives to trim its utilize metrics, yet the company’s significant debt of around $70 billion and associated interest payment commitments will weigh on the firm’s upcoming profits.

Brazil’s top hedge fund ups its stake

Brazil’s best-performing hedge fund, XP Asset Management, has been buying up noteworthy amounts of shares of state-controlled oil giant Petrobras. Joao Braga and Marcos Peixoto, who handle US$ 1.3 billion (5 billion reais) at XP Asset Management, have increased their stake in Petrobras, making it the most prominent holding of their XP Long Biased fund even as the oil producer’s climb has exceeded the benchmark.

Joao Braga explained, “The stock is cheap,” adding “Management is good, the company is deleveraging and there are the asset sales, which will be good for the company.”

Petrobras’ stock price has fallen since the beginning of May, but it’s closing in on buying territory, at least for some speculators.

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