🗞 The Only Venezuela Post You Need

WHILE YOU POUR THE JOE… ☕️

This isn’t an altcoin or an AI stock; this is one of the biggest banks in Venezuela.

Up 1,800% over the past 12 months alone. 🔥 

The United States carried out a strike on Venezuelan soil this weekend, successfully snatching dictator Nicolas Maduro and his wife, who are now under American custody in the Southern District of New York.

Venezuela has long been synonymous with oil, so of course, Trump’s comments this weekend will have everyone scrambling to figure out what is actually going to happen in energy markets.

But,

That’s not all, there are now some implications in China’s Taiwan invasion interests, as well as a few opportunities you and I can take advantage of.

This is a once-in-a-generation type of opportunity, sort of like the Russian debt crisis or even the opening of Asian markets a few decades back.

Here’s how we take advantage of it all. 🫰 

Speaking of generational opportunities, let’s get on with today’s email 📧…

WORLD CHESS
51st State?

Venezuelan debt is starting to rally, from roughly 8 cents on the dollar to 35 cents.

In other words, traders and investors feel more confident about the now lower default odds this country carries.

And there’s a major reason for this:

• The United States will “run” Venezuela, for now.

I’m thinking this could quickly become a Puerto Rico case, making Venezuela a fully fletched American state.

Or, more realistically

The situation could turn to the Panama Canal scenario, where American occupation remains during the leadership transition. This latter oucome also ensures the United States can secure its interests in Venezuela.

And that’s exactly what Trump has stated in recent remarks.

Part of “running” Venezuela means rebuilding the country’s energy infrastructure, which operates at only 5% of its pre-Chavez capacity.

This is going to take a few billion dollars ($100 billion by some estimates), and a couple of years at least.

Now, this is exactly how the shift can affect markets: ⬇️ 

Oil Bulls & Bears

There are a few things being priced into oil right now:

• Global recession scenario, confirmed by the ratios presented in this newsletter

• OPEC+ production hikes all through 2025 and some are scheduled for 2026

• China’s infrastructure ramp slowdown

With Venezuela holding the world’s largest recorded oil reserves, traders are concerned that this will further depress oil prices. 📉 

Yes and no.

Before all this oil can be injected into the overall supply, it needs to be pumped, and that’s where the infrastructure investment (and its effects) need to be in place.

But,

As we all know, markets are forward-looking and will probably attempt to price this in before it even becomes a remote possibility.

Then comes the second aspect of this theme: identifying who benefits. 👀 

The big US oil firms are first in line, since they are now exposed to potential compensation from selling Venezuelan oil to the Chinese at discounted prices.

Not to mention,

They could be reimbursed in other ways as they begin to invest billions into Venezuela’s infrastructure.

As these will now be the ones selling Venezuelan oil to global markets, surely we can justify the reason behind their forward P/E premiums.

Now for the real money makers ⬇️ 

While the supply injection MAY hurt oil prices in the short to medium term, the next logical step comes through two industries:

• Drilling

• Refining

Venezuela’s oil is the heaviest and most sour in the entire world, making American drilling and refining equipment the best prepared to handle this injection task.

So,

It doesn’t matter where the price of oil goes; these guys have a huge task ahead of them, and likely profits that will be just as big. 💵 

Some names I am interested in, due to their premiums, which are also justified, just as the Banco Mercantil price action is:

• PBF Energy (PBF)

• Transocean (RIG)

• Helmerich & Payne (HP)

One of these is trading at 50% off its NAV, carrying over 75% upside potential from where it trades today. 📈 

The premium it carries over peers can be explained by the recent Venezuelan situation, as well as a multi-million dollar insurance payout, allowing them to carry out their expansion plans.

This new capacity will be needed as Venezuela’s oil comes into the market.

The entire deal, plus a financial & valuation model, is in the hands of my Deal Room members.

And, with this 7 Day Free trial, it can be yours too ⬇️ 

Dollarization & The IMF

Venezuela is not the first country in Latin America to be influenced by America.

Argentina’s reform under Javier Milei had a few key steps, which I hope Venezuela will follow in the coming months.

This is dollarizing the entire economy, stabilizing the financial sector, and building up from there.

That’s extremely bullish for banks like Santander (SAN), and we have seen the effects through its price action in 2025.

Here’s what needs to happen for a second round of AI-like rallies in banks through Venezuela:

• The IMF will need to pass a law allowing Venezuelan financial markets to open back up

• Sanction removal can let banks be more exposed to underwriting and FX cash conversion processes

Assuming this all takes place, a few banks could be first in line to undertake this gigantic task:

There are a couple of initial names I want to mention in this scenario:

• Citigroup

• Bando Do Brasil

My reasoning is that these trade at significant premiums to the small peer group, and their forward EPS growth seems to be small compared to what it could be should these banks get involved in Venezuelan operations.

Citigroup has an extensive LATAM business, so arguably, they could be the most prepared.

In Brazil, Banco do Brasil could be a massive intermediary between Citigroup and Venezuela. 🤝 

And we like intermediaries in such a high-risk situation like this one.

Of course, a proper deep-dive on these themes will be discussed in future releases. For now, stay tuned and make sure you grab a 7 Day Free Trial to my Deal Room.

It’s about to get hot in there.

To your success,

G 🫰