Time to Sell Petrobras (PBR) Shares, Courtesy of Parsimony Limited

Parsimony Limited advised its members to buy PBR shares back in 2008 and 2010, and it brokered this trade for its confident clientele. The stock was selling for an average of $6.5 – $8.5 back then, and investors made handsome profits. Five years later, in 2015, PBR shares have fallen to single digits.

Now, Parsimony Limited is advising its members to ditch its current shares in the giant oil company. Here is a brief explanation why.

About Petroleo Brasileiro (Petrobras)

Petróleo Brasileiro S.A. (more commonly referred to as Petrobras) is one of the largest oil companies in South America, and it is notable on the global stage. It was also once the world’s fourth-largest company.

Petrobras is based in Brazil, and the Brazilian government owns about 37% of the shares and has 50% voting rights. The company has a market capitalization of about $60 billion, but its stock is on a downward trend.

Petrobras registered decent performance between 2006 and 2012, but its shares fell to single-digit prices more recently, in 2015. This has been blamed on several factors, including runaway corruption totaling billions of dollars. Investigators uncovered a massive corruption ring in which more than $800 million changed hands last year, in 2014. The scandal involved more than 30 of the company’s executives, more than 54 politicians, and third-party players in other government agencies and private companies.

Petrobras is still engulfed in corruption scandals and investigations, and the extent of the rot is still unknown. This has caused political intervention, which amounts to political interference; The President recently fired the company’s CEO, along with multiple senior executives. The government has also been pulling strings behind the scenes, considering the politicians involved in the corruption scandals.

On a Downward Spiral

The corruption surrounding Petrobras has caused outrage in Brazil. The company’s international image has also been tainted, resulting in its stock price tumbling. Unfortunately, this trend is expected to continue for the foreseeable future.

Petrobras is still under investigation, and the government is expected to assert greater control over its affairs. More top executives are anticiptated to leave the company, and a massive restructuring is currently underway. It will be some time before the company is stable again, and its performance is expected to be shaky until then.

Petrobras is also facing stiff competition internationally. It may also be negatively affected if the United States becomes energy-independent, as touted by some presidential candidates. What’s more, the current political atmosphere has already started involving the company, as corruption is one of the campaigns’ main subjects.

Selling is the Best Option Now

Petrobras is in one of the worst situations for a publicly-listed company. It is involved in runaway corruption, and the government is dictating its actions. It is difficult to tell what will come next, but there is a high likelihood that it will be just as bad as the present – or worse.

What Parsimony Limited Has to Say

PBR shares were profitable back in 2008 and 2010, when Parsimony Limited first advised and brokered massive buys of the stock on behalf of its clients, acting as the principal on the transactions. Anticipating an extreme downfall of the company and the stock with it, Parsimony Limited executed massive sales of PBR, protecting their member’s portfolio from Petrobras’s undoing. Sadly, Petrobas’s ruin is not expected to change soon, as the company will likely be engaged in more destabilizing scandals.

Parsimony Limited is an advisor and broker, acting as the execution arm of Global Custodian Solutions, a leader in personalized custodian solutions for the most discerning of investors.

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About the author

Jimmy Rustling

Born at an early age, Jimmy Rustling has found solace and comfort knowing that his humble actions have made this multiverse a better place for every man, woman and child ever known to exist. Dr. Jimmy Rustling has won many awards for excellence in writing including fourteen Peabody awards and a handful of Pulitzer Prizes. When Jimmies are not being Rustled the kind Dr. enjoys being an amazing husband to his beautiful, soulmate; Anastasia, a Russian mail order bride of almost 2 months. Dr. Rustling also spends 12-15 hours each day teaching their adopted 8-year-old Syrian refugee daughter how to read and write.