Petrobras Energia SA (PZE-N)

The chart's been up and down. Sure, there are massive oil reserves, but there are also political governance and corruption issues which turn him away.

This has a very, very leveraged balance sheet. A number of their bonds are coming due in the next 18 months. Because this is a very important entity to the Brazilian government, she doesn’t think there is going to be a default. There might be a painful refinancing. This tends to trade as a very highly levered higher beta call on oil prices. Have a lot of great assets, which they can always sell. Be cautious, because as a shareholder you come way behind all the bondholders.

Thinks oil will go sideways over the next few years due to supplies coming in from horizontal drilling. Their reserves will be hard to get out at current pricing. We may never need to go into the Atlantic ocean to drill those wells. Maybe sell into a relief rally next year.