THE Petrobras (PETR4) experienced turbulent days for much of 2022, changing command four times as the president Jair Bolsonaro pressured the company to reduce prices of fuels.
Faced with this and the possible return of a leftist government in the elections next month, some investors were wary of the company’s shares.
But out of seven local fund managers who spoke to the Reuters in recent weeks, five said they maintain or are increasing their positions within days of the presidential election.
This cautious optimism shows how many investors are reconciling with the former president. Luiz Inacio Lula da Silvawhich leads polls of voting intentions, even in the case of state-owned companies whose results suffered in PT administrations, marked by Operation Car wash.
This, in part, stems from the bet that Lula is unlikely to repeat the political excesses of his 2003-2010 term and that of his successor. Dilma Rousseff in 2011-2016, when Petrobras became synonymous with mismanagement and corruption.
But it also reflects the frustration of some investors with Bolsonaro’s right-wing government, which took over in 2019 promising orthodox policies and possible privatization – but ended up adopting a strategy of pressure on the company’s management and on its fuel pricing policy.
Those actions have weighed on the company’s share prices since he took office, and as a result, some investors see little difference to Lula’s more overtly interventionist approach.
“There was no serious discussion about the privatization of Petrobras. Lula will put pressure on fuel prices, but Bolsonaro has done the same,” said James Gulbrandsen, investment director for Latin America at NCH Capital in Rio de Janeiro. “What is the difference? I don’t see a big problem.”
Despite the chaotic flow of news this year, Petrobras shares have shown strong appreciation so far, with its preferred shares up 63% in the year on the São Paulo stock exchange and outperforming the main global oil companies, as well as the Ibovespa, which advanced about 7%.
And several investors believe that the stock still has room to appreciate even more.
“Petrobras shares are very cheap,” said the partner of an asset in São Paulo, with around 20 billion reais in assets under management. “It is reasonable to expect some changes (if Lula wins). But a setback to what was the previous PT government is not expected. And even this setback is already more than priced into the stock price.”
in standby mode
Under the Lula and Dilma administrations, Petrobras heavily subsidized fuel prices at the pump, incurring billions of dollars in losses due to policies that the former PT president has hinted he may resume.
While Bolsonaro has repeatedly fired Petrobras presidents when fuel prices have risen, the company has operated, at least formally, under a technical pricing policy during his tenure, in which Petrobras follows the global move to set its prices domestically.
“Attractive ‘valuation’ endorses some position in the action regardless of who emerges victorious in the presidential election. Still, this valuation does not justify increasing the position given the risk linked to the election, which is “very high”, said another manager.
“One of the factors of concern are Lula’s signals, such as that he will change the company’s pricing policy.”
In a report to clients in June, Bradesco BBI analysts Vincente Falanga and Gustavo Sadka argued that risks related to Petrobras still had an upward bias.
But in a new report this week, the same analysts included among their scenarios one they consider even more pessimistic, in which they believe that a Petrobras under Lula could embark on expensive acquisitions of former state-owned companies such as Eletrobras and fuel distributor Vibra. Energy.
This scenario, according to analysts, would be harmful to Petrobras shareholders.
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