Sunday, August 17, 2008

Soros and Petrobras

Billionaire George Soros is increasing his holdings in the commodities and mining areas.

In accord with this general move, he has purchased an $811 million stake in the Brazilian state controlled oil company Patrobras (more formally known as Petroleo Brasileiro SA).

The general move toward commodities is one in which Soros and the entities he controls have a lot of company. The usual "herd of independent minds" is thundering across that plain.

The move into Petrobras in particular may have been catalyzed by that company's announcement in November of the discovery of a rich new oil field.

Bloomberg is quoting Ricardo Kobayashi, an equity fund manager with UBS Pactual SA, in Rio de Janiero. "Petrobras has something that other oil companies don't have: oil -- lots of it and they're going to find more. If you can buy now and hang on, if you have the staying power, it's great."

But you might need a lot of patience, and deep pockets (although not necessarily pockets of Sorosian depth!) to have that staying power, because things are and will likely for some time remain rocky for Petrobras.

Its price on Brazil's stock exchange peaked at above 50 Reals back in the spring and has fallen to below 33 Reals since.

The contention of bullish and bearish influences upon Patrobras may be a fascinating saga in the making.

No comments: