By Rogerio Jelmayer
SÃO PAULO--Many big international investors have been selling
shares in Brazil's state-run oil company Petróleo Brasileiro SA, or
Petrobras, as the company faces the biggest crisis of its history
amid corruption allegations.
Investors including Soros Fund Management LLC, which invests for
billionaire investor George Soros and his family; BlackRock Fund
Advisors; and Fidelity Management Research Co., cut their stakes in
the Brazilian company in the fourth quarter, when the corruption
scandal gained force.
"Big international investors prefer to stay away from Petrobras
because the uncertainty surrounding the company is huge. So they've
opted to take a conservative path until they see a clearer scenario
for the company," said João Pedro Brugger, a portfolio manager at
Leme Investimentos, based in Florianopolis. Mr. Brugger said his
company owns shares in Petrobras as part of a portfolio matching
Brazil's Ibovespa stocks index.
Soros slashed its stake in Petrobras by 60% to 2 million of the
company's American depositary receipts at the end of the fourth
quarter, versus the third quarter of 2014, according to a filing
posted on the Securities and Exchange Commission's website.
BlackRock Fund Advisors, meanwhile, sold 8.28 million shares in
the oil company last quarter, according to FactSet, leaving it with
89.2 million shares at the end of 2014.
Fidelity Management cut its stake by 690,100 shares to 5.9
million shares, according to FactSet.
The firms didn't respond to interview requests regarding their
respective strategies.
Since early September, when damaging news reports about the
scandal started to come more frequently, the company's ADRs lost
nearly 70% of their value and its market capitalization shrank by
nearly $80 billion.
Even with the sharp drop in the share price in the past few
months, now isn't the time to go bargain hunting, according to
analysts.
"No investors are looking at Petrobras for the medium and long
term, even though the shares have fallen a lot. It's not a buying
opportunity because the company still has a lot of doubts to clear
up--they haven't even released an audited balance yet," said Alvaro
Bandeira, a director at the Órama Investimentos fund brokerage in
Rio de Janeiro.
Earlier this month, P etrobras named Aldemir Bendine--the former
head of state-controlled lender Banco do Brasil--as its new boss
after former Chief Executive Maria das Graças Silva Foster and five
other top executives resigned amid the investigation into
allegations of kickbacks and payments to company officials and
politicians. None of the departing executives have been implicated
in the alleged scandal.
Petrobras in January published its long-awaited third-quarter
results, but the numbers were unaudited and the company failed to
provide a figure for potential write-downs that might be generated
by the probe.
The company, which twice postponed the release of its
third-quarter results, said it is still working to assess the
financial damage from the alleged corruption, and is also still
evaluating alternatives to measure the potential size of any
write-downs.
Meanwhile, the company said it would cut investment and sell
assets because of the fall in oil prices and its huge debt.
Some investors have nevertheless adopted a neutral position and
are keeping their stakes in Petrobras for the time being.
Longtime emerging markets investor Mark Mobius, the executive
chairman of Templeton Emerging Markets Group, has said he remains
committed to Latin America's largest economy despite its current
struggles with slow growth and high inflation.
Templeton has about $1.6 billion invested in Brazil, and Mr.
Mobius said recently at a news conference that although he was
"surprised and blindsided" by the apparent extent of the alleged
corruption at Petrobras, the fund will maintain its approximately
$100 million investment in the company.
Write to Rogerio Jelmayer at rogerio.jelmayer@wsj.com
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