A new presidency in Brazil meant bad news for oil company Petrobras (NYSE:PBR) in Tuesday’s trading. This caused the stock to lose significant ground. Several of Brazil’s state-owned operations were about to go private as part of a list of state asset sales. Included on this list originally was Brazil’s entire postal service, as well as Petrobras. However, Brazil pulled the rug out from under Petrobras.
The company unexpectedly departed the list thanks to a last-minute move from new president Luiz Inacio Lula da Silva. The postal service also remained state-owned. Now, Petrobras remains a state-owned operation, with senator and former Petrobras officer Jean Paul Prates as the new head.
Many consider the move as a populist ploy, with the state-owned oil company better able to insulate customers from gas price shifts. Further, the company can also branch out into other forms of energy, like wind and solar. That’s a move some regard as overdue.
However, investors aren’t happy, as they’re left to wonder just how much their own profitability will suffer thanks to this measure. Investors aren’t the only ones unhappy, either; this “populist move” comes with around a $9.9 billion price tag as Lula made it clear that the previously-enacted fuel tax holiday would continue.
Meanwhile, hedge funds can’t get out of Petrobras fast enough. The current consensus among hedge funds is Very Negative, as they divested another 4.8 million shares just last quarter. More telling, this is part of a larger pattern; hedge funds have been selling Petrobras shares continually since June 2021.
