The Class Brazil Equity Value posted a positive result of 0.41% in June, compared to a 2.27% negative return on the Bovespa Index. Year to date, the fund accumulates a positive return of 5.84% compared to a negative return of 3.90% for the Bovespa Index.
Our position on Itaúsa PN was one of the positive highlights of the month.
Itaúsa shares rose along with its peers on the back of Monthly Credit Report that presented improvement for the second month in a row for short term delinquencies, from 6.6% in April to 6.3% in May. Moreover the maintenance of strong growth on credit portfolios – 20.4% growth yoy in May for the sector – reassured Brazilian financial sector’s solid fundamentals.
Another positive highlight of the month was our position on Taesa .
The company announced the acquisition of Abengoa for R$ 1.1 Billion. The transaction was well received by the market mainly due to its low valuation – around 7.4x EV/EBITDA – and high level of synergy gains to be extracted from the acquired assets. The transaction helped to reduce market fears of Cemig, Taesa’s controlling company, making acquisitions that do not necessarily add value to stockholders.
The negative highlight of the month was our position on Klabin PN .
The stock’s fall in June was led by weak expectations for second quarter results as well as selling pressure from BNDES, which kept reducing its stake on the company. We believe the company still presents good outlook for the mid-term, but the poor performance of its peers Suzano PN and Fibria ON can weigh on Klabin’s performance on the short-term. The stock fell in June, but it still outperforms by far the Bovespa Index on a year-to-date basis, thus we choose to switch our position on the company to BR Properties ON .