Petroleo Bras Sa Petro (PBR-N)

Despite trading at 6x PE, this has run up too much.

The CEO was replaced by the government. It has a good sized resource base so there is upside in spite of the political risk.

He's worried about PBR, because Chile just nationalized all its lithium businesses.

Given its yield and growth rate, you'd buy this, but PBR is in Brazil and that matters. Can't trust it at all.

She is light in oil, because the US shale producers have come back a lot faster in terms of production. That is more than offsetting whatever OPEC is doing on the cutting side. This company is very inexpensive, and has great assets. Management has laid out a plan to divest non-core assets, pay down some debt and right size their balance sheet. If you have a long-term time horizon, this is a good risk/reward. There is some near-term noise around Brazil, which will be a bit of a headwind.

You can’t really talk about this without talking about Brazilian politics. This company has very, very extensive resources. Unfortunately, they also have a lot of debt. A very levered play on oil prices, and a small move in oil will result in a big move in this company.

(A Top Pick Sept 26/15. Down 130.15%.) He closed this off about a month after he had recommended it, because oil started to ramp up. The company had an extremely high debt load and oil prices looked under pressure. Also, there was a corruption scandal going on. The company has slashed their CapX to the bone and were able to keep their free cash flow on side. The story has improved materially.