Model Portfolio

Here I will track all the portfolio movements, so any change or recommendation can be audited and monitored.

Some notes:

1. The portfolio will be built as opportunities and conditions come up.

2. It is a long-only absolute return strategy. Pure equities fundamental investing.

3. Returns will be calculated in USD.

4. Any changes going forward will consider liquidity and prices on that given day.

5. I’m considering a US$100 million portfolio size, as I believe this size gives the flexibility to participate across companies of different sizes. I don’t believe in asset gathering, and naturally, size has a material impact on performance.

I will be sharing my thoughts on the names through time.

Some key points for this update:

• Brazil is currently where I see most of the value.

• It seems participants are near or close to the point of maximum pessimism.

  • Indiscriminate selling across names

  • People make up any reason to hate on the market and sell-side analysts have adjusted their narratives and inputs to justify current prices.

  • Level of redemptions. A lot of inexperienced managers were able to raise money during the hype and have had material underperformance.

  • A lot of investors that were drinking Kool-Aid got burned in good stories /poor valuations & fundamentals.

• Fixed Income is really attractive at the moment, why bother with stocks when Long Term rates are yielding 10%. I would highlight the interest rate structure in Brazil which is basically flat starting the 2-year node.

• One of the fundamental differences between this market and the one we saw around 2015, and that the market is largely ignoring, is the level of leverage in companies, which is materially lower this time.

Holding cash may seem uncomfortable, but making stupid mistakes is far worse.