COMO GANHAR DINHEIRO COM AÇÕES NO BRASIL (MESMO EM ANO DE ELEIÇÕES) | Second Level #29

Episode Overview

• This episode features an in-depth discussion with a portfolio manager from Ibiuna Investimentos, exploring how to navigate the volatile Brazilian equity market by blending macroeconomic analysis with bottom-up company research.
• The conversation challenges common misconceptions about "Short" strategies in Brazil, explaining how to use them for valuation arbitrage rather than just betting on company failure or fraud.
• Key themes include managing political risk in state-owned enterprises (like Petrobras), distinguishing signal from noise in news cycles, and the structural advantages of large multi-strategy platforms over small investment boutiques.
• The content is highly relevant for investors seeking to understand Long & Short strategies, risk management in emerging markets, and how to exploit market inefficiencies regarding dividends and political narratives.

Key Concepts

• Holistic Fundamentalism (The "Permeable Membrane"): A robust equity strategy cannot isolate a company from the economy. Successful management requires a fluid exchange between macro teams (who assess interest rates, FX, and GDP probabilities) and micro teams (who analyze company specifics). This integration allows investors to stress-test corporate theses against various economic scenarios rather than analyzing companies in a vacuum.

• Relative Value Short Selling: In the US, short selling is often associated with the "Big Short" style of betting on bankruptcy or fraud. In Brazil, the "Long & Short" approach is primarily a tool for valuation arbitrage. Managers buy a company with high upside (Long) and sell a competitor with limited upside or expensive valuation (Short). This captures the spread between the two assets and helps neutralize broad market risk.

• Risk-Return Asymmetry in State-Owned Enterprises (SOEs): Investing in politically sensitive companies (like Petrobras) requires a calculated approach to risk. The key is not to avoid political interference entirely, but to ensure the asset's valuation is discounted enough—and its cash generation high enough—to create a "margin of safety." If the cash flow yield effectively pays for the risk, the investment remains rational despite political noise.

• Signal vs. Noise in Political Volatility: A critical skill for investors is distinguishing between political rhetoric ("noise") and actual structural policy changes ("signal"). Markets often overreact to headlines. If the underlying corporate governance and economic fundamentals remain intact, these volatile reactions act as buying opportunities rather than signals to exit.

• The "Dividend Premium" Distortion: The market exhibits a behavioral bias where it overvalues companies that pay frequent, recurrent dividends (similar to monthly rent). Sophisticated investors can exploit this by calculating the true Net Present Value (NPV) of cash flows regardless of payout timing, often finding shorting opportunities in stocks that retail investors have bid up solely for their yield.

• Active Management of "Infinite Risk": While a short position theoretically carries infinite risk (since a stock can rise indefinitely), professional managers mitigate this through daily reassessment and discipline. A loss in a short position is treated with the same decision-making rigor as a loss in a long position. The theoretical risk is managed dynamically, treating it as volatility rather than an existential threat.

Quotes

• At 0:06:40 - "Stocks, the stock exchange, is an asset class like any other... credit, real estate funds, fixed income funds... What we have to do is a selection of which are these companies that you are going to invest in." - Demystifying the stock market by removing emotional baggage and framing it purely as an asset allocation tool.

• At 0:13:37 - "The company is not an entity loose in space, isolated from the world. It is part of the economy... It interacts with the economy, so the company affects the economy and is affected by the economy." - Establishing the core philosophy that micro-analysis cannot exist without macro-economic context.

• At 0:17:08 - "Is there a risk of political interference? Yes, there is... But that risk was more than remunerated by all the cash generation that we were seeing. So it was the risk-return... the return was much superior to the risk we were seeing." - Explaining the mathematical logic behind investing in risky state-owned enterprises when the price is right.

• At 0:27:00 - "Existe risco de interferência política? Sim, existe... Só que esse risco, ele era mais do que remunerado pela geração de caixa que a gente estava vendo. Então era o retorno-risco. O retorno era muito superior ao risco que a gente enxergava." - Reinforcing that high cash flow acts as a buffer against political volatility, making the risk acceptable.

• At 0:28:57 - "In the US... short selling is that vision that the company will break, that it is a fraud... Here in Brazil... a good part of the shorts we do has much more to do with valuation... buying Company A which has a much larger upside, and selling Company B which has a smaller upside." - Clarifying the difference between "Big Short" bets on failure versus "Relative Value" bets on price efficiency.

• At 0:30:35 - "Today the big point is separating what is signal from what is noise... The majority of events happening are still noise." - Providing a mental model for avoiding panic during volatile news cycles.

• At 0:31:18 - "A análise deveria ser a mesma. No Brasil... o short que nós fazemos tem muito mais a ver com o valuation — o quanto que aquela empresa está precificada no mercado de ações vis-à-vis o valor justo que a gente acha — do que a empresa quebrar ou fraude." - Emphasizing that the analysis for shorting a stock should be identical to buying one: determining fair value vs. market price.

• At 0:37:37 - "Se é uma coisa estrutural que mudou, seja numa posição comprada, seja numa posição vendida, a gente tem que ir lá e agir... a gente não pode esquecer: 1) a gente erra; 2) o cenário muda; 3) as empresas nem sempre são completamente transparentes." - Highlighting the discipline required to accept mistakes and react immediately to structural changes in both long and short positions.

• At 0:43:30 - "O mercado bonifica, ou ele tem uma visão muito mais... paga mais por empresas que pagam dividendo recorrente. A gente discorda. Se pagar dividendo tudo de uma vez só ou no tempo, a gente ajusta e vê qual é o valor presente." - Identifying a market inefficiency where investors overpay for dividend frequency, creating arbitrage opportunities.

• At 0:51:50 - "A resposta [se começaria uma boutique hoje] é não... Eu acho que tem muito valor você estar numa gestora multi-áreas... Eu sei que eu estou numa plataforma muito mais estável. Então eu tenho muito mais tranquilidade de fazer a gestão equilibrada sem estar me preocupando com a sustentabilidade do business." - Arguing that the modern asset management edge lies in large platforms that provide stability, rather than small independent boutiques.

Takeaways

• Balance Macro and Micro analysis: Do not categorize yourself strictly as a "macro" or "stock picking" investor. Utilize macro data to determine the probabilities of economic scenarios, and then select companies that can survive or thrive within those specific probabilities.

• Construct "Relative Value" trades: Instead of betting on market direction, look for paired opportunities within the same sector. Buy the undervalued company and short the overvalued competitor to capture the efficiency gap while hedging against sector-wide downturns.

• Calculate the "Political Buffer": When analyzing companies with political risk, quantify the cash generation and dividends. If the yield is high enough, it can pay for the volatility, transforming a "risky" political bet into a rational mathematical investment.

• Short based on Valuation, not just Insolvency: Expand your definition of short candidates to include "good companies" that are simply priced for perfection. A great company at an irrational price is a valid short opportunity.

• Exploit the Dividend Frequency Bias: Look for companies that are trading at a premium simply because they pay monthly dividends. Calculate the Net Present Value (NPV) of their cash flows; if the math doesn't support the premium, this is a potential short candidate.

• Curate your Information Diet: In an environment of infinite content, actively filter out "noise" (sensational headlines) and focus solely on "signal" (structural policy changes). Avoid getting lost in social media feeds to maintain the mental clarity required for objective analysis.