a hand bag Brazil is still suffering, and at these levels it is cheap, says the new equity manager for one of the market’s largest and most traditional funds, green. Elmer Ferraz was on Episode 38 of the show Market makersWith presentation by Thiago Salomao and Renato Santiago.
On the programme, Ferraz says Brazil “specializes in missing great opportunities”.
“at the expense of Corona virus disease And the war in Ukraine, there was a movement of world production chains in favor of Brazil. We had an election ahead of us and all we needed was economic rationality and some pragmatism. We were supposed to be much better in absolute terms,” he says.
For him, there is an unbearable amount of noise. It is even to be expected, at the beginning of the government, that this noise would be made, but it began to cause much anxiety. Today, we can expect more spending, more inflation, lower productivity and lower growth,” he says.
From a manager’s perspective, though, Brazil is cheap. Assuming genuine interest on Brazil It is 6.5%, and frankly, I think this real interest rate is not sustainable in the long run for the country,” he says.
He remembers, for example, that the country is more adversarial than South America, which, as he put it, is “crazy.”
“You need to buy good, cheap things when they are cheap, and generally, you have good reasons, emotionally, inclined to allocate capital. At the very least, there are really good things, but in a difficult domestic and global scenario,” he explains.
According to the Oceans14 platform, the price is higher than the profit ibovespa It’s 4.91 runs, the lowest since 2003, when Lula took his first term.
Among the roles that green Look with emotion, there is a giant Paper and cellulose Susanoo (SUZB3). It is a low volatility commodity petroleum that it raw. The demand for pulp is almost like a clock,” he says.
He notes that the company is “dollarized” and “if the cash anchor blows off, the dollar becomes costly.” Moreover, paper has nothing to do with the local economy. But the worry is the risk of a global recession.
Ferraz also recalls that while the investors wanted the dividend, Susanoo made the choice to build the billionaire venture thickwith an internal rate of return of $2.
“The company has been looking at the long term, and they’ve moved forward. Right. They’ve generated more cash than the market expected and really increased the dividend, while reducing debt faster. It’s going to be 22% cash generation in dollar terms,” he adds.
Another invested company is Barrick goldone of the largest mining companies in the world gold From the world. The manager explains that the gold Works well when interest rates are low.
There is an expectation of maintaining and even lowering US interest rates. This is the best case scenario for gold. Gold has become a geopolitical hedge. If everything is going well, the gold is shredded, ”he sees.
In addition, he also claims that it is a company with close to zero debt, and that it is in the process of liquidation. “even if gold falls, it will be returned to the shareholder via dividends and buybacks,” he explains.
The other companies mentioned are Energissa (Angie 11) that it tropical (EQTL3), whose franchises expire in 2026, and turn (railway 3), “which has nothing to do with Brazilian GDP and presents significant asymmetry”.
“Brazil doesn’t even need to grow. Just the hype to die down. A company with low operational risk, high comfort, and a high margin of safety in a low-volatility business,” he says.
He also says that although the interest rate has hurt the company a lot, it looks like we have a downturn ahead of us.
“Agriculture is the only thing that never disappoints in Brazil. A turn, mainly transfers the flow of soybean and corn production to ports. Volume is growing at 7% annually, and that dynamic doesn’t look like it’s going to change,” he adds.
Finally, the manager reveals that he has a small, 100% protected exposure between them Itau (ITUB4) that it BTG (BPAC11). “In a time of economic slowdown, businesses that require leverage should be wary, no matter how attractive the pricing.”
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