Parsimony Limited, as an execution arm of Global Custodian Solutions (GCS) recently advised and brokered over $200 million in buys of Petrobras stock, acting as principal on the transactions on behalf of its clients. Given the ongoing success of Petrobras in the rapidly growing South American market and an expanding global presence, Parsimony Limited considers PBR stock an undervalued asset and expects to realize outstanding returns for its investors and the members of GCS.
Founded in 1953 as a government-owned legal monopoly in Brazil, Petrobras has since become one of the world leaders in petroleum extraction, processing, and production. Although their operations and distribution are centered in Brazil, the company operates and controls significant holdings in a number of other countries. Reflecting a forward-thinking approach and a goal of expansion, last year in August of 2009, Petrobras acquired ExxonMobil’s Esso branded assets in Chile for approximately $400 million. Most notably, the company recently offered $70 billion in shares–the largest offering in its history–to fund exploration of new oil fields to meet the rapidly growing demand of the South American market.
Petrobras also presents a unique asset among comparably capitalized energy businesses, being as it is 54% state-owned (with an additional 10% being owned by two other state entities). As such, its stock offerings are a limited asset, and business decisions are made with a significant duty of care, as the success of the company stands to impact the entire economy of Brazil. In conjunction with the stock’s historical performance and the exploding demand for petroleum products in the South American market, Parsimony Limited felt there was a strong case to make a heavy buy of the stock on behalf of its members.
Limited Opportunity; Limitless Potential
Possibly the single biggest contributing factor to this decision was the literal availability of the stock. As mentioned, with Petrobras being a state-owned entity, their business is structured differently from various other competitors. With only 36% of the company being publicly held (the Brazilian government’s stake of 54% and an additional 10% owned by the Brazilian Development Bank and Sovereign Wealth Fund), opportunities to own this stock are extremely limited. This means that the unprecedented public offering of $70 billion in common stock was an opportunity that Parsimony Limited could not pass up. In fact, it may represent the only opportunity this decade for the public to access shares in a company that is extremely well-positioned to be one of the top oil producers in the world. As Petrobras continues to expand its global presence, invest in new technologies, and add more and better offshore drilling rigs, Parsimony Limited is confident that this investment will secure outstanding returns for its members in years to come.
About Parsimony Limited
Parsimony Limited is an investment advisory and brokerage firm operating out of the Channel Islands in the United Kingdom. Known worldwide for our expertise in direct client advisement and portfolio management, our mission is to seek out high-potential assets with limited downside risk. As a broker and advisor, Parsimony not only guides its members towards the investments that will suit their strategy and goals, but also serves as the broker for these transactions, acting as the principal on these trades on their clients’ behalf. Parsimony Limited works closely with their affiliate Global Custodian Solutions, a worldwide leader in progressive custodial solutions. Global Custodian Solutions serves a clientele of the most discerning investors with unique financial interests, ones who demand the utmost care and attention to their portfolios.
