Mark Mobius Calls Petrobras IPO "Abomination", Says We Are Entering "IPO Bubble"
Ironically the only sane call on the now openly deranged market action comes from an long-term institutional establishmentarian in the face of none other than Templeton's Mark Mobius. His brief and spot on assessment : "The entire Petrobras issue is an abomination and a terrible violation of shareholder rights. We may be entering an IPO bubble. It means that people are just not looking at the values and irrationally buying these things." Oh shut up Mark, who cares about values... Yet perhaps someone can channel a little Mobius on CNBC so he can quell some of the overly exuberant lunacy that is spewing forth from the now leaderless TV station, which nonetheless does nothing to change the autopilot "ponzi propaganda" mode.
For those who may be unfamiliar with the specific structure of the Petrobras IPO, here are some details via Bloomberg:
Petrobras, based in Rio de Janeiro, sold 2.4 billion common
shares for 29.65 reais each and priced 1.87 billion preferred
stock at 26.30 reais a piece in the world’s biggest share sale,
according to a statement late yesterday. The stock fell 1.3
percent in Sao Paulo trading at 2:39 p.m. New York time. The oil company is spending about $224 billion over the next five years to boost production to 5.38 million barrels a day by tapping deposits trapped under a layer of salt beneath the ocean floor. As part of the sale, Petrobras issued about $42.5 billion of stock to Brazil’s government in exchange for the rights to develop 5 billion barrels of oil reserves.
“The whole idea of the government not putting any cash in and setting a price on these reserves that’s questionable at best is unfair,” Mobius said.
And the thing that pisses Mobius more than anything is that same rigged purchasing that is occurring each and every day in Europe, and which only Mad Money clowns swallow hook, line and sinker:
“They can claim that Brazilians are well-subscribed and so
on, but in reality in order to make sure this thing take off the
government is making sure its organizations” invest in the
deal, said Mobius. “The question is: Who were the buyers?”
At least we know in Europe the buyer is the same entity that will soon be completely insolvent, but it is relegated to that continent. Hopefully in Petrobras' case it is not US taxpayer that will be forced to foot that specific IPO.
But it appears Mad Money is not the only dumb "money" out there. There is always BlackRock:
Will Landers, who oversees about $8 billion in Latin American stocks at BlackRock Inc., says that whether investors disagree with the terms of the deal or not, it’s positive for Brazil’s stock market.
“The fact that Petrobras was able to raise the largest equity offering ever done in the world, 10 days before a presidential election shows how far this market has come,” Landers said in an e-mail. “I continue to be very positive on the Brazilian stock market, and removing this huge overhang from the market has to be seen as positive.”
And that pretty much summarizes all you need to know about the schism on Wall Street. Also, for those curious why the Bovespa is dropping, why Petrobras shares are falling in Brazil, and why Brazil is now intervening almost daily in the FX market, here is a recap straight from the horse's mouth.
h/t London Dude Trader