Gustavo Ballvé on June 27th, 2012
Capital goods, Corporate Governance, Energy, Food for thought, Home, Industries, Portfolio Management, Risk management, Signal or Noise

Not even oil is sacred in Brazil, it seems. In Petrobras it’s mostly about government intervention, in OGX – down a whopping 27% today – it’s mostly about terrible expectations management. I’ve heard Eike Batista speak here in Brazil and abroad, and the twin role of main shareholder and “chief booster” of all the “X” companies in his stable doesn’t appear adequate. He can be, to put it very mildly, over-optimistic sometimes. Last Friday Forbes had a story about his recent woes, and that was before today.

This post is by no means an evaluation of either stocks’ prospects and attractiveness as investments, neither now after the drop or before it. The only point is that there’s maybe a lesson here about optimistic expectations: taking with lots of salt not only what emanates from the companies, but also how much you can really know about factors such as political risk, a certain local amateurism in expectations management and so on.

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