Summary Petrobras’ common stock is currently trading at a significant premium to the preferred shares. The premium is approximately one standard deviation above the 5-year average value. I expect some mean reversion, especially in light of the abandonment of the privatization plan. ayo888 The Brazilian oil kingpin – Petrobras has had the spread between its common (NYSE: PBR ) and preferred (NYSE: PBR.A ) shares widen lately with the premium of the former on the latter surpassing one standard deviation above the 5-year average. Now that the company was pulled from the privatization list, I see no justification of significant premium of the common over the preferred shares, so some mean reversion should follow, opening up a potential arbitrage opportunity. The idea could be played out by going long the preferred shares and selling the common stock. Last I covered Petrobras in November. Ownership structure Petrobras has a dual class ownership structure with 7.4M common shares and 5.6M preferred shares. While the majority of the PBR.A shares are owned by private investors (retail and institutional), the Brazilian government holds 50.3% of the common shares, which ensures that it has control over the entity as the preferred stock has no […]
K&X Design and Investment Technology, LLC
Invest The Invisible Impact
K&X Design and Investment Technology, LLC
Invest The Invisible Impact
