“We believe that the market is not properly factoring in their growth of production and what that means for their cost structure and ultimately cash flow as we move into 2015. The stock is trading at a significant discount to the global peer group and a significant discount to our view of fair value. We believe there are two main drivers for the mispricing. First, there is investor fatigue from the disappointing speed of the ramp up of their production over the last few years. Second, they continue to generate losses from the fuel pricing subsidies that Petrobas is required to provide to domestic Brazilian consumers. We feel that both of these issues will be addressed over the near to medium-term and present an excellent opportunity.”
Adams Hill Capital didn’t disclose any positions in Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) at the end of the second quarter. They may have bought these shares in Brazil. There are several high profile investors with large positions in Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) though. Billionaires Rob Citrone, Howard Marks, George Soros, Israel Englander, Stanley Druckenmiller, and Ray Dalio had bullish positions in the stock at the end of Q2.
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