3 SINAIS DE QUE A BOLSA BRASILEIRA PODE ESTAR PERTO DA VIRADA

Summary

João Braga and Cristian Keleti argue the Brazilian equity market presents one of its most asymmetric opportunities in years, with valuations cheaper than during COVID, extreme under-allocation by local investors, and specific stocks like Smartfit and Track&Field offering cheap growth and high dividends. They highlight the massive cash pile in fixed income and a shrinking free float, suggesting even a small rotation could drive a strong rally.

• Brazilian stocks trade at 5-6x earnings, cheaper than 2009, 2016, and 2020 lows.
• Pension funds, individuals, and private banks have historic low equity allocations.
• M4 money supply grew by 5 trillion reais, mostly parked in fixed income; a 3% rotation could lift the market 20%.
• Ibovespa is concentrated among 8 companies; many attractive opportunities lie outside the index.
• Smartfit is a high-conviction holding with zero index weight, held at 12% by Braga.
• Track&Field combines 25% ROIC, store expansion, and double-digit dividend yields.
• Companies are largely debt-free with low valuations, though governance remains a concern.