A break for Brazil’s Petrobras?

Kenneth Rapoza – Forbes, 01/03/2013

Brazilian oil giant Petrobras (PBR) has been the ugly duckling of big oil companies. It’s high time it cleans up its act.

And, let’s be serious for a moment, Petrobras is a big oil company. It’s not Rosneft or ExxonMobil, but it’s a player. It discovered the biggest offshore oil find in years back in 2007, off the coasts of Rio de Janeiro and Espirito Santo states. But ever since that discovery, and ever since a massive share offering diluted shareholder value in 2009, this prime Brazilian investment has been nothing but a dud. Investors have punished the stock for the last two years. Shares are down over 40 percent since Jan. 1, 2010.

New management took time getting used to, and as an investment, Petrobras has been nothing but a let down. Considering it and mining major Vale account for a large portion of the BM&F Bovespa‘s Ibovespa index, Petrobras’s lackluster two years has been a drag on the broader equity market in Brazil too, and for holders of the popular iShares MSCI Brazil (EWZ) exchange traded fund. It’s the worst performer of the BRICs. EWZ is down 22 percent since the start of 2011 while the MSCI Emerging Markets index is down just 3.06 percent.

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