Discover the strategies and insights of the small cap specialist at the event promoted by Market Makers (Image: Reproduction/iStock.com/syahrir maulana | Editing: Anna Zeferino)
Return of 590% against 272% for the CDI, 97% for the Ibovespa and 81% for the Small Caps index over the last 15 years: these are the numbers for AZ Quest Small Mid Caps FIC FIAfund managed by Welliam Wangone of the guests of the Small Caps Masters 2024.
On your dashboard 'Small caps off the radar: how to optimize the return on your stock portfolio' the manager shared his investment approach and the factors that contributed to accurate bets such as Embraer (EMBR3), Hapvida (HAPV3), Localiza (RENT3), Inter (INBR32) and many others throughout the history of the manager, which has been operating in the capital markets for over 20 years.
Balance between short and long term: Welliam Wang's investment philosophy
According to Wang, AZ Quest's focus is on the sustainability of investments, avoiding excessive risks in search of quick gains and highlighting the importance of sustainability and a long-term vision.
“We at Quest think a lot about perpetuity. We are here for the long term. Nobody is here to earn next month, next year and go home,” said Wang, reinforcing that his team avoids risky decisions, such as allocating all their capital in small caps. “We will never go all-in, like in a game of poker… Even though the potential return may be very high, the downside could lead me to a risky position in which I eventually break my fund.”
Wang explained that when analyzing companies to invest in, AZ Quest uses three main criteria:
1 – O return on investment (ROE) history reflects the company's ability to generate value over time, as long as the capital invested is sufficient to make a significant impact.
2 – A quality of managementas competent leadership can drive growth, as demonstrated by successful examples in the banking sector.
3 – And the pricing powerwhich is the ability to pass on costs to the consumer without losing competitiveness. This factor is considered crucial, as it indicates that the company has a solid market position and can adjust to economic challenges, ensuring its sustainability.
In addition to these criteria, Wang emphasized the importance of looking at financial metrics in an integrated way.
He highlighted that one should not analyze, for example, the return on invested capital (ROIC) separately, but together with the invested capital. “ROIC alone is not a metric by itself… you need to look at the combination with invested capital. The combination of the two is what generates the concept of EVA (Economic Value Added).“
Wang explained that the concept of EVA is fundamental to evaluating the true value that a company generates. This metric helps investors understand whether the company's investment decisions are being effective and whether it is on the right path to generating sustainable long-term results.
Another central piece of his philosophy is the discipline in managing investment theses. Wang presented the concept of “roadmap”which monitors each investment and allows the team to revisit positions whenever necessary.
According to him, the roadmap is a structured plan that defines expectations and goals for each asset acquired, allowing you to monitor whether the investment thesis is developing as expected. “We define what we expect to happen over time”explains Wang.
If the indicators do not align with the initial projections, the position is revisited and, if necessary, closed. This process avoids the mistake of “marrying paper”, ensuring that decisions are based on concrete data and not on emotional attachment to the investment, as stated:
“The main mistake managers make is when they marry their role. We define what we expect over time and, if any of the factors do not occur, we revisit the case and, eventually, reset the position.”
Wang also stressed the need for a balance between the short and long term: “Focus on the long term, but also the short term, because eventually you might not get there.”
For him, even with the structural focus on small caps, it is essential to monitor short-term movements to ensure that long-term theses remain valid.
Success stories and new theses: what's in AZ Quest's portfolio?
In his panel, Wang also brought up AZ Quest success stories. For those looking to identify opportunities in smaller stocks with great potential, these insights are essential to understand what distinguishes companies that deserve space in their portfolio.
Wang also revealed the new bets in the small cap segmentcommenting on the names that are part of the portfolio he commands. Among them, a company in the logistics sector with high potential for appreciation and an attractive profile for investors seeking both growth and consistent dividends.
When watching the complete transmissionyou will have access to an analysis of these companies and understand why they are on the manager's radar. Don't miss the opportunity to deepen your knowledge of the small cap market with one of the most experienced managers in the country.
Check out everything that happened at Small Caps Masters 2024
O Small Caps Masters 2024 was promoted by Market Makers in partnership with the Money Times and aimed to bring together the main investment minds in small caps in Brazil.
At the event, Wang joined Werner Roger from Trígono Capital and Giuliano Dedini from 4UM Investimentos to share decades of accumulated experience. These experts showed how they have been boosting their clients' wealth by investing in small caps, highlighting the importance of these actions to increase portfolio returns.
During the event, it was revealed exclusive strategies and the main trends of this type of investmenthelping investors to better understand the opportunities that the current market offers.
If you weren't able to watch the event live, don't worry. Market Makers is making available the three complete panels for you to watch and check out everything that happened in full. Just sign up to official page to guarantee access.
When you register, you will also receive the exclusive ebook “Market Titans”which brings together the tactics and secrets of the biggest small cap investors in Brazil, with insights from 7 market experts.
This is your opportunity to learn directly from leading small cap experts, maximizing the potential of your portfolio with tested and validated strategies. If you are looking for new ways to increase your returns, don't miss this chance.
Take advantage now and guarantee yours free access to learn from the greatest experts in Brazil. Don't miss this opportunity to expand your knowledge and improve your financial results.