O MAIOR BULL MARKET DA HISTÓRIA ESTÁ CHEGANDO? | Second Level #22

Episode Overview

• The discussion opens by contrasting old-school "greed is good" investing with the modern necessity of sophisticated, proactive risk management, using a financial tool called Credit Guide as an example.
• It analyzes the recent performance of the Brazilian market, arguing that it was driven by external factors like US monetary policy rather than internal improvements, and highlights the major challenge posed by Brazil's extremely high real interest rates.
• The conversation details a major, painful restructuring of the Brazilian asset management industry, triggered by legislative changes that eliminated tax benefits and exposed widespread underperformance.
• The guest shares his personal experience of navigating a corporate crisis during the pandemic, which led to a significant team restructuring and ultimately resulted in substantial long-term growth for his firm.
• The episode concludes with current investment insights, identifying undervalued small and mid-cap stocks as a key opportunity, and shares a broader management philosophy on building resilient teams and dealing with toxic high-performers.

Key Concepts

• Risk-Adjusted Returns: The podcast introduces the idea that true investment power lies not in chasing high yields ("spread alto") but in understanding the associated probability of loss. The focus should be on risk-adjusted spreads.
• External Influence on Brazilian Markets: A central theme is that Brazil's recent market performance was heavily influenced by external factors, particularly former US President Trump's policies (weak dollar, low rates), rather than domestic fundamentals.
• The Challenge of High Interest Rates: Brazil's high real interest rates (over 10%) create a difficult environment for asset managers, as risk-free government bonds offer a compelling alternative that makes it hard to justify riskier investments.
• Industry-Wide Asset Management Restructuring: A major legislative change eliminating tax deferrals for exclusive funds (the "come-cotas") triggered a massive shake-up, forcing underperforming multi-market funds to face redemptions and driving a necessary professionalization of the industry.
• Crisis as a Catalyst for Growth: The guest's firm used the 2020 COVID-19 crisis as an opportunity to identify a lack of team cohesion, execute a difficult but necessary restructuring, and ultimately achieve significant growth in the following years.
• Current Investment Opportunities: The most attractive asset class identified is stocks, specifically small and mid-caps, which are seen as being heavily discounted and offering significant upside potential.
• Management Philosophy on Team Dynamics: The discussion covers the importance of team cycles, the natural ambition of managers to raise capital, and the critical danger of retaining high-performing individuals who have poor values, as they will inevitably create conflict.

Quotes

• At 0:05 - "O verdadeiro poder reside em conhecer o risco que você está correndo." - The speaker emphasizes that understanding risk is more crucial than just chasing high spreads.
• At 0:33 - "o Credit Guide avisa antes da manchete." - A trader explains a key benefit of the tool, which is its ability to provide early warnings about market shifts.
• At 19:53 - "O melhor amigo do Lula, né, dizem que o camisa 10 é o Eduardo Bolsonaro, mas não pode esquecer do centroavante, né? O craque do time é o Trump." - Using a soccer analogy to argue that Donald Trump's policies were highly beneficial for the Brazilian economy.
• At 20:48 - "É 10,5% de juro real, isso não existe no mundo, no mundo civilizado, não tem isso." - Highlighting the extreme level of Brazil's real interest rates, making it a major challenge for attracting investment to risk assets.
• At 22:18 - "Pra que que eu preciso correr risco se eu tenho 10% pra começar?" - Summarizing the core dilemma for investors and the challenge for fund managers when government bonds offer such high, safe returns.
• At 23:17 - "[A mudança na legislação] vinha mascarando a ineficiência dos multimercados." - Arguing that the previous tax structure for exclusive funds hid the poor performance of many multi-market funds.
• At 45:01 - "a entrada da Ázimut foi fundamental para trazer para a empresa... um olhar de longo prazo." - Walter Maciel on how the partnership with Azimut provided stability and a long-term strategic vision for the company.
• At 46:27 - "[A crise] desnudou que o grupo não estava coeso, não estava unido e não estava enxergando o futuro da mesma maneira." - He explains that the stress of the 2020 crisis revealed fundamental disagreements and a lack of alignment within the executive team.
• At 49:30 - "A gente saiu de R$16 bi para quase R$40 bi hoje, 5 anos depois, no pior momento de mercado." - He highlights the company's substantial growth following the major team restructuring, which he sees as a validation of the tough decisions made.
• At 50:09 - "Qual que você daria mais overweight hoje?" "Ações. Principalmente small e mid caps." - When asked about the best investment opportunity, Maciel is direct, pointing to stocks, with a special focus on small and mid-sized companies.
• At 51:02 - "Se recusar a morrer... Em qualquer situação, profissional, pessoal... é sempre querer mais, sempre ter um compromisso de estar presente." - Maciel shares his core personal and professional philosophy of resilience and constant effort.
• At 57:39 - "O perfil mais perigoso é o cara que dá muito resultado e tem maus valores. Porque esse cara... mais cedo ou mais tarde, você vai ter um duelo ao meio-dia." - He identifies the most dangerous type of employee: someone who performs well but has a toxic character, which will inevitably lead to conflict.

Takeaways

• Prioritize risk management over chasing yields; true performance comes from understanding the risk-adjusted return of an asset.
• Acknowledge the significant impact of global macroeconomic trends, especially US policy, on the Brazilian market's performance.
• When evaluating investment funds, look beyond historical returns to see if performance was inflated by past tax advantages that no longer exist.
• Use periods of crisis as an opportunity to assess team alignment and make difficult organizational changes that can foster long-term strength and growth.
• Consider overweighting allocations to undervalued Brazilian small and mid-cap stocks, as they may present a significant investment opportunity.
• In management, never tolerate a team member with poor values, even if they are a high-performer, as their negative cultural impact will eventually outweigh their results.
• For investors in Brazil, the high real interest rate on government bonds provides a powerful, low-risk benchmark that any alternative investment must convincingly outperform.