Is the Brazil bubble bursting and bringing Keppel and Sembcorp along?

There is plenty of bad news coming out of Brazil and this will impact Singapore's rigbuilders Keppel Corp and Sembcorp Marine. The national oil company Petrobras is being caught in an ongoing corruption probe that has seen its CEO resign and international suppliers such as Keppel and Sembcorp implicated. Sete Brasil, formed by a group of Brazilian companies to run the offshore rigs working in Brasil has difficulty obtaining financing. As a result, Sembcorp and other rig and shipbuilders have not received payment. 

If Petrobras and Sete Brasil do not sort their issues out in time, it will mean earnings downgrade for the two Singapore stock exchange heavyweights. Sembcorp is much more exposed to the rumble in the Brazilian jungle. Half its net order book comprises drillships ordered by Sete Brasil. Both Singapore rigbuilders have also invested in setting up a yard in Brazil to meet the country's local content requirement.

Show me where the money will go, not where it has gone

The following is an abridged version of what Teh Hooi Ling wrote on her "show me the money" column. I have read her earlier article on the use of the Piotroski F-score and I think that beginners who can try to come up with such a scoring matrix, will make a positive step in improving their investing process.

Most of the companies that she has listed out as a result of using the F-score, are all very big companies. This will end up neglecting to include small cap stocks that have the potential for supernormal returns, volatility notwithstanding. That said, it is possible while during portfolio construction to use a separate screen altogether when allocating money for small caps. To be sure, Teh has written on how to select small cap stocks before.

In search of good long candidates (Link here)