Verde is one of the top hedge funds in Brazil (And the world) as we recently profiled. ValueWalk ran a piece on the firm a few months ago which can be found here. The fund managed by Luis Stuhlberger has returned an incredibly impressive 29% CAGR after returns since inception in 1997. ValueWalk has obtained recent investor letters for December and January, which can be found below. Note: The text is only available in Portuguese so we used Google translate for the English – keep in mind when reading.
CSHG VERDE FIC FIM commentary for the month ended December 31, 2015.
The CSHG VERDE FIC FIM in December had gains on currency positions, especially real and the Chinese Renminbi, and also in the real interest position, and losses mainly in the book of global equities. We completed a volatile and difficult year 2015 with substantial gains in currencies and fixed income, while the book stock had a small loss, coming on the Brazilian side.
The month of December has brought several important events that will impact over 2016. In Brazil we had: (i) the exchange of the Minister of Finance, Nelson Barbosa taking over from Joaquim Levy; (Ii) the Federal Supreme Court regulating the impeachment rite, which helped reduce the actual likelihood of this; and (iii) the deepening of the credit crunch, reaching world-class companies, symbolized by a large transport concessionary pricing an issue of debentures to 124% of CDI (almost 18%, imagine how much they are paying smaller companies).
In the global context had (i) the first interest rate hike by the Federal Reserve; (Ii) the acceleration of the devaluation of the Chinese currency process; (Iii) signs that the Central Bank of Japan (BOJ) and the European Central Bank (ECB) are less able to loosen its policies than previously thought; and (iv) continuity of the oil price decline, reaching the lowest levels of the last decade.
[drizzle]The consequences of these events are already impacting asset prices in these early days of 2016.
The Fund is purchased at dollar against the Brazilian real, the Renminbi and the Euro; bought real interest in Brazil; holds positions (slightly smaller than the recent standard) in global equities; and the fall in the Brazilian market allows slowly build up positions in quality companies at attractive multiples.
CSHG VERDE FIC FIM January 2016 Commentary
CSHG VERDE FIC FIM commentary for the month ended January 31, 2016.
The year 2016 started quite turbulent, with the global scenario evolving in a complex manner. In this context, the CSHG VERDE FIC FIM got most of their gains in fixed income positions, benefiting from the fall in real interest; and relevant part of the losses came from long exposure in global equities.
The current debate markets can be summarized as follows: the world is heading for a recession or we’re seeing just a growth hiccup? There is a vicious circle through the collapse of commodities, tightening of global credit conditions, deflation, and industrial recession, which risks actually push the developed countries into recession. On the other hand, we are seeing perhaps the greatest transfer of wealth in history – the oil-producing countries to consumers around the world – and this process should enable sustained growth of consumption. If this resilience of consumption become clear over the next six months, it is highly likely that we are just going through a temporary growth hiccups, exacerbated by customary bipolar market trends. However, the resolution of this debate should still take a few months, which indicates more volatility and uncertainty ahead.
The uncertain global scenario would have exacerbated impact on price Brazilian assets, especially the exchange rate, but it is not what we are seeing until here. Its surprising that the US is one of the best coins performance in the world in 2016. We believe that this phenomenon is temporary, especially given the Brazilian inflation consistently higher that of peers, and we have taken advantage of the volatility to increase fund’s exposure in dollars.
CSHG VERDE FIC FIM – Summary Management
Multi-market strategy flagship launched in 1997, is one of the largest and oldest Brazilian hedge funds. It operates in the Brazilian and international stock market, fixed income and currencies under the management of Luis Stuhlberger.
Target Audience
Fund for the general public, subject to the minimum values of initial application, permanence and constant movement in the prospectus.
