BOLSA BRASILEIRA: ARMADILHA OU OPORTUNIDADE ÚNICA? | Market Makers #392
Speakers
João Braga
— Partner, Encore Asset Management
Christian Keleti
— CEO/Co-CIO, AlphaKey
Summary
In this special open-doors M3Club session, Thiago Salomão and Matheus Soares host Christian Keleti (AlphaKey) and João Braga (Encore) for a deep debate on whether the Brazilian stock market is a trap or a unique opportunity. The guests build a case that equities are at historically extreme undervaluation, with record-low investor positioning and a powerful foreign flow cycle forming, and they pitch several specific deeply mispriced stocks, including SmartFit, Track&Field, Allos, ISA Cteep, Vitru, SBF, Ecorodovias and the drugstore sector. The conversation also covers governance risks, crowding in consensus names, and ends with the announcement that the M3Club community will permanently close to new members.
- Broad Brazilian equity call: valuations at multi-crisis lows, institutional underweight, massive fixed-income pool poised to rotate.
- SmartFit: dominant low-cost gym with TotalPass aggregator, 30% earnings growth, stock crushed to 9x earnings by forced selling.
- Track&Field: asset-light franchise with aligned model, wellness tailwind, 8x forward earnings and no debt.
- Allos: top allocator Rafael Sales generating 14% dividend yield with hidden value in out-of-home media (Hellow) and potential FII.
- ISA Cteep: defensive utility with 10% dividend yield and a potential 25-30% claim win against the state.
- Vitru: cheapest education stock, strong free cash flow, management opening to shareholder-friendly policies.
- SBF: retailer at 4x earnings after a strong quarter, massive operational leverage.
- Drugstores: GLP-1 patent expirations will flood the market with cheap generics, exploding the addressable base; Raia, Pague Menos and Panvel trade at crisis multiples.
- Ecorodovias: on watch for a 20% real IRR opportunity once leverage and political risks clear.
- Governance alert: increasing number of companies are disregarding minority shareholders, requiring careful stock selection.
- M3Club permanently closing: new memberships end 31 July, reflecting a commitment to quality over scale.
Ideas
Brazil stocks severely undervalued, extreme underweight
The Brazilian stock market is pricing in extreme pessimism, trading cheaper than during the COVID panic, the 2015-16 recession and the 2009 financial crisis. Institutional and retail positioning is at all-time lows, with local pension funds, allocators and individuals holding almost no equities. Meanwhile, the stock of money in fixed income (M4/CDI) exploded and a modest rotation of just a few percent would have a massive impact on market cap. On top of that, a third wave of dedicated foreign fund flows is forming, with global investors doing deep due diligence to re-enter Brazil after years of underweight. The combination of rock-bottom valuations, widespread under-allocation and an incoming cycle of foreign demand creates a highly asymmetric opportunity that will eventually become obvious.
10% yield plus claim upside
ISA Cteep (ISAE4) is a defensive electric transmission utility trading at a dividend yield of ~10% and benefiting from an under-owned, under-followed situation. The company has an ongoing claim against the São Paulo state tax authority (Cfaz) that, if successful, could deliver a one-off gain equivalent to 25-30% of the market cap. Because the stock is held by very few investors, there is no redemption-driven selling pressure, making it a calm position with a solid carry and a potential large upside catalyst.
Dominant gym with 30% growth at 9x
SmartFit is a dominant low-cost high-value gym operator with a unique execution-driven model that replicates across Latin America. Its proprietary TotalPass aggregator platform acts as an 'iFood for gyms', growing at a blistering pace and improving bargaining power versus other networks. The company has no debt, returns on invested capital well above the cost of capital, and is increasing margins while opening 300+ units per year in a massive addressable market. Despite earnings growing 40% since the IPO, the stock has been compressed by forced selling (fund closures, redemptions), now trading at the lowest multiple in its history (9x forward earnings) when in a normal market it would command 18-20x. A turnaround in sentiment or a foreign buyer could quickly re-rate the stock.
GLP-1 patent expiry boosts drugstores
The Brazilian drugstore sector is facing a generational opportunity: patents on blockbuster GLP-1 drugs (Ozempic, Wegovy, Mounjaro) are expiring, and a flood of generic versions will drive the price from R$1,600 to R$400 or less. This will explode the addressable market from a few million consumers to tens of millions, more than compensating any near-term margin compression. The market, however, is myopically focused on the initial price decline and has crushed the stocks: Raia Drogasil fell from 25x to 15x earnings, Pague Menos has been hammered, and Panvel trades at 8x earnings. These are high-ROIC companies trading at crisis multiples, presenting a deep value entry point.
Franchise model, wellness, 8x earnings
Track&Field is an asset-light sports apparel franchise with a rare alignment model: the franchisor only charges a small markup (15%) over cost and earns royalties on sell-out, so it never pushes unwanted inventory onto franchisees—avoiding the 'sell-in' trap that ruined other brands. The wellness tailwind from GLP-1 weight-loss drugs will bring millions of new people into gyms, creating a structural demand boost for fitness clothing. The company also runs an ecosystem of events, sells high-margin supplements and coffee inside stores, and uses a small-box format with extraordinary sales per square meter. It has no debt, generates strong free cash flow, and trades at an absurd ~8x forward earnings with 25-30% annual earnings growth. The market wrongly treats it as a generic retailer, ignoring its quality and growth.
Retailer at 4x earnings, strong quarter
SBF (Grupo SBF) is one of the most absurdly cheap retailers on the exchange, trading at only 4x earnings after a strong recent quarter that suggests the next result will be extremely robust. The market remains fixated on one-off fears (Copa do Mundo comparison, tax on low-value imports) while ignoring the operational improvement. At this valuation, the stock offers a wide margin of safety and significant upside if the company continues to deliver.
14% dividend yield, hidden ad assets
Allos (formerly Aliansce Sonae) is led by Rafael Sales, one of the best capital allocators in Brazil, who arbitraged the BR Malls portfolio brilliantly and is now recycling capital to create a powerful recurring revenue engine. Hidden inside Allos is Hellow, an out-of-home media business that is winning major contracts for digital screens in airports and shopping malls, giving the company a high-margin advertising subsidiary that is not reflected in the stock. Additionally, Sales is structuring a real estate investment trust (FII) for a slice of the shopping center portfolio, which would generate perpetual management fees. The company is paying a dividend equivalent to ~14% yield, and even without multiple expansion the return from dividends alone is extraordinary. At 10x FFO, the shares are deeply mispriced versus global mall operators.
20% real IRR but high leverage
Ecorodovias is a leveraged toll-road company that currently offers a compelling 20% real internal rate of return based on conservative assumptions, mainly because the stock was crushed by political and macro fears. The business has regulated cash flows and a hard-asset nature that, unlike cyclical firms, does not become more leveraged in a downturn. However, the high debt level and sensitivity to Brazil's economic cycle keep it as a small watch position. The speaker would consider increasing exposure once there is clearer visibility on the political and interest-rate environment.
Cheapest education stock, free cash flow
Vitru (Vitra Educação) is the cheapest education company listed on the Brazilian stock exchange, trading at extremely depressed multiples of price-to-free-cash-flow. The management is actively engaging with investors to build a shareholder-friendly capital allocation policy, including potential dividend payments—a rare attitude in the Brazilian small-cap space. The stock is ignored because of its size, creating a significant mispricing for those willing to take a position.
Up Next
This Market Makers video, published July 28, 2026, features João Braga, Christian Keleti discussing BOVA11.SA, ISAE4.SA, SMFT3.SA, RADL3.SA, PGMN3.SA, PNVL3.SA, TFCO4.SA, SBFG3.SA, ALOS3.SA, ECOR3.SA, VTRU. 9 trade ideas extracted by AI with direction and confidence scoring.
Speakers: João Braga, Christian Keleti · Tickers: BOVA11.SA, ISAE4.SA, SMFT3.SA, RADL3.SA, PGMN3.SA, PNVL3.SA, TFCO4.SA, SBFG3.SA, ALOS3.SA, ECOR3.SA, VTRU