Brazil’s stock market is crashing. Time to start digging through the wreckage.
Paulo Espinosa, lead portfolio manager at Seafarer Capital Partners in the Bay Area says that rumors of yet another impeachment in Brazil is a buying opportunity.
“For me, this is music to my ears,” he says about today’s 17% sell off in the iShares MSCI Brazil (EWZ 31,83 -0,59 -1,82%) ETF at the opening bell. The VanEck Brazil Small Cap (BRF 16,41 -0,24 -1,45%) fell 14.3% on the news that the country’s president was caught soliciting hush money for a congressman not to testify against him in the country’s worst-ever political scandal.
Espinosa is not a country allocator. He is a bottom’s up fund manager, looking for a minimum rate of return of around 10% in his Seafarer Overseas Value Fund (SIVLX 13,87 -0,06 -0,43%) and beating the MSCI Emerging Markets in the $10 billion Seafarer Overseas Growth and Income Fund (SIGIX 12,55 -0,04 -0,32%). The income comes from dividends, though the fund can invest in bonds. It currently does not have any core bond holdings.
“In Brazil right now we are looking closely at Itau (ITUB 6,77 -0,18 -2,59%) and Bradesco (BBD 2,73 -0,10 -3,53%),” he says. “They are always expensive. If they come down, this is an opportunity.”
Espinosa says he is not a fan of state-controlled oil firm Petrobras (PBR 17,39 +0,16 +0,93%). Despite better management at the company, it is mired in a corruption scandal that can pull the rug out from under the stock fairly quickly. “I’m willing to take a hit on the opportunity cost by not investing in it. Can it double in price? Absolutely,” he says. “This sell-off in Brazil is really an opportunity for value investors to buy the gems.” Brazil Is Crashing. Buy it!
Brazil’s stock market is crashing. Time to start digging through the wreckage.
Paulo Espinosa, lead portfolio manager at Seafarer Capital Partners in the Bay Area says that rumors of yet another impeachment in Brazil is a buying opportunity.
“For me, this is music to my ears,” he says about today’s 17% sell off in the iShares MSCI Brazil (EWZ 31,83 -0,59 -1,82%) ETF at the opening bell. The VanEck Brazil Small Cap (BRF 16,41 -0,24 -1,45%) fell 14.3% on the news that the country’s president was caught soliciting hush money for a congressman not to testify against him in the country’s worst-ever political scandal.
Espinosa is not a country allocator. He is a bottom’s up fund manager, looking for a minimum rate of return of around 10% in his Seafarer Overseas Value Fund (SIVLX 13,87 -0,06 -0,43%) and beating the MSCI Emerging Markets in the $10 billion Seafarer Overseas Growth and Income Fund (SIGIX 12,55 -0,04 -0,32%). The income comes from dividends, though the fund can invest in bonds. It currently does not have any core bond holdings.
“In Brazil right now we are looking closely at Itau (ITUB 6,77 -0,18 -2,59%) and Bradesco (BBD 2,73 -0,10 -3,53%),” he says. “They are always expensive. If they come down, this is an opportunity.”
Espinosa says he is not a fan of state-controlled oil firm Petrobras (PBR 17,39 +0,16 +0,93%). Despite better management at the company, it is mired in a corruption scandal that can pull the rug out from under the stock fairly quickly. “I’m willing to take a hit on the opportunity cost by not investing in it. Can it double in price? Absolutely,” he says. “This sell-off in Brazil is really an opportunity for value investors to buy the gems.”