Continuing our call from yesterday, Petroleo Brasileiro Petrobras (PBR, quote) is seeing tremendous short covering follow through.
A stock that remains guilty until proven innocent has at least many wondering whether the government has reached a point of pragmatic sanity in terms of how they address the cash flow needs.
Hard to accept that this is anything more than a “trade” despite deep value on a standard multiple play.
Value traps in state oil and gas companies should be also accepted to be the norm until proven otherwise (see Gazprom, SNP). In fact, after a move that is outsized even for PBR, may be time to take some profits off the table.