JP MORGAN E UBS MANDARAM VENDER, NÓS ESTAMOS COMPRANDO

Episode Overview

• Analysts from Market Makers present a controversial new long position in Grupo Mateus (GMAT3), a dominant wholesale and retail grocery chain in Northeastern Brazil.
• The conversation breaks down why the stock has recently fallen approximately 30% due to an inventory accounting error and macroeconomic headwinds, and why the hosts view this as a mispricing.
• This episode serves as a case study in contrarian investing, teaching listeners how to evaluate companies undergoing a "crisis of credibility" versus a fundamental business failure.

Key Concepts

• The Three-Pillar Investment Thesis: The analysts base their conviction on a specific framework: 1) Honest, founder-led management that built the business from zero without excessive risk; 2) Strong competitive differentiators (high Return on Invested Capital and dominant market share); and 3) An attractive valuation relative to peers.
• The Inventory "Crisis": The stock's recent collapse was triggered by a 1 billion BRL inventory adjustment. While the market treated this as a severe governance failure, the analysts interpret it as a "process error" common in rapidly scaling companies. They argue the company is actually safer now because this error forced the implementation of rigorous new inventory controls.
• Valuation vs. Growth Perception: The current share price implies that the market believes future growth will destroy value (CAPEX spending yielding returns below the cost of capital). By trading at roughly 6x earnings compared to the sector average of 10-11x, the market has priced the stock for a disaster scenario, ignoring the company's historical efficiency.
• Macro Headwinds vs. Structural Flaws: The company is currently suffering from "trading down" (consumers buying cheaper brands), food deflation (lowering nominal revenue), and reduced government aid payments (Bolsa Família fraud checks). The analysts emphasize that these are cyclical, external factors that affect revenue numbers but do not reflect a deterioration of the core business operations.

Quotes

• At 2:54 - "Wilson Mateus, he is the Neymar of the Northeast. Where he arrives, he dominates... It's a business that started 10 years ago with 3 billion in revenue, and today is doing 36 billion." - Highlighting the importance of betting on the "jockey" (management) and their track record of execution in their specific geography.
• At 5:03 - "Today it is as if the market attributed negative value to the growth of the company... As if the market saw it and said: 'This company will not generate more value for shareholders, it will destroy capital.'" - Explaining the concept of implied expectations in valuation and identifying when the market is being overly pessimistic.
• At 7:35 - "When we see this drop in food inflation... sales will be lower. Not because the company will sell less volume, but because the nominal revenue is smaller... It is part of the business." - Clarifying the mechanics of retail revenue during deflationary periods; lower revenue doesn't always mean fewer customers or less market share.

Takeaways

• Differentiate between Credibility and Business Crises: When a stock drops significantly, assess whether the issue is a fixable process/credibility issue (like an inventory error) or a fatal flaw in the business model. The former often presents a buying opportunity.
• Contextualize Valuation against Capex: When analyzing a growth company, determine if the market is pricing the stock as if its future investments (Capex) will destroy value. If the company has a history of high returns (ROIC), this market pessimism suggests a deep discount.
• Look for "Regional Monopolies": In retail analysis, value depth over breadth. A company with 80%+ market share in specific regions (like Grupo Mateus in Maranhão) often has a stronger moat than a company with thin presence spread across an entire country.