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Bill Gross says invest in Brazil for its oil, but George Soros sold Petrobras: who is right? (PBR)

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Bill Gross is bullish on Brazil due to its oil, while George Soros has been selling Petroleo Brasilia ( PBR , quote ), the Brazilian petroleum and natural gas company.

As detailed on www.emergingmoney.com in the article, " Bill Gross: buy Asia and Brazil, not "Euroland" as the growth dries up ," the head of the investment firm PIMCO advises investing in Brazil due to "its agricultural breadbasket and its oil." However, in a recent 13F filing, it was disclosed that legendary investor George Soros has been selling his stake in Petrobras.

PBR is down almost 3% for the week, more than 7% for the month, almost 12% for the quarter, 25% for the last six months and 32% for 2011. At these levels, it pays a strong dividend of 5.15% supported by a modest payout ratio of under 30%. The company is profitable, with a profit margin of over 18%.

Naturally, as the state-run oil company, Petroleo Brasileiro is limited in its ability to raise domestic prices or enhance its profitability in other ways. But George Soros certainly knew that before he bought at a much higher price earlier in the year. Bill Gross is aware of these considerations, too. Meanwhile, PBR just announced a major strike in the Campos Basin, so state ownership is at least translating into favorable exploration opportunities. PBR is now trading around $25.45, while the mean analyst target price for Petroleo Brasileiro over the next year is $43.68. Who wins? Soros dumped his shares before the big run-up in oil in October and Gross wrote his article much more recently...with the benefit of hindsight.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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