Event held by Market Makers discusses opportunities and challenges for the small caps market (Image: Reproduction/Market Makers)
The 2024 edition of Small Caps Mastersevent held by Market Makersinterviewed three big names in the Brazilian market on Tuesday (24):
- Welliam Wang, da AZ Quest;
- Werner Roger, da Trine; e
- Giuliano Dedini, from 4UM Investments.
The full event is now available online (click here to watch in full)and aimed to discuss the opportunities and challenges in the small caps market, throughout the 3 panels of conversations with managers who have in-depth knowledge of the topic.
Below, you can see the best moments of the conversation with Giuliano Dedinifund manager 4UM Small Caps FIAwhich delivered 460% return against 335% for the CDI, 108% for the Ibovespa and 144% for the Small Caps index in the last 16 years*.
Following in the footsteps of the 'Wizard of Omaha'
Dedini opened the conversation by talking about the origins of her manager, 4UM Investimentos. Born within a bank, with the aim of managing the own resources of some partners, 4UM operates in Curitibaoutside the Rio-São Paulo axis.
What, for some, may seem like a disadvantage, is seen as a positive point for Dedini. “The distance is good to avoid noise”says the manager, also highlighting that investing in small caps requires thinking outside the box.
Therefore, it makes sense to distance yourself from the country's financial hubs, “avoid being in that same environment, where everyone is buying the same 'fashionable shares', sometimes”, comments Dedini.
Thiago Salomão, one of the panel hosts, recalls that the situation is similar to one of the biggest success stories in the global financial market – Warren Buffettalso created its success far from the big financial center of Wall Street.
And the “formula” that worked for the Wizard of Omaha also seems to be working for Giuliano Dedini – currently, 4UM is one of the largest independent managers in the south of the country.
Another meeting point between 4UM's philosophy and the positioning of Berkshire Hathaway, Warren Buffett's manager, is the long-term thinking.
Dedini says that much of 4UM’s DNA is focused on the management of proprietary capital and pension funds, with a focus on legal entities – that is, investments that are naturally more “time-consuming”
“I can easily go through the day without seeing a share price. We like to buy good businesses that in the long term will give us good returns“, comments the manager.
Hence the importance of investing in small caps, says Dedini. “This is where we believe there are more opportunities for good deals at cheap prices.” After all, it makes sense that the big bargains are in more unknown markets, as is the case with small caps.
“It takes time, but the Brazilian market offers opportunities”
Dedini also highlights the importance of being ready to capture good profit opportunities. Currently, the 4UM small cap fund seeks to maintain 6 to 10 names in the portfolio, in addition to a value between 10% and 30% of net equity in cash.
“We maintain liquidity to basically help with an unexpected redemption, and this also prepares us to buy more shares at some point. The Brazilian market offers opportunities. It takes time, but sometimes there are tremendous opportunities.”says Dedini.
Sensitivity to detect opportunities
The conversation also touched on an important point: What characterizes a good company to invest in?
Dedini listed some points: a good company must be profitablehave a executive body trustworthy and competitive advantages to prepare for difficulties.
The manager also recommends looking at current profits with caution – bad results do not always mean that it is not worth investing in a company. It is necessary to be sensitive to analyze the situation and “identify what a good company is and identify when it is a good time”, in Dedini's words.
“(You need to do) enough research to be able to see the 'broken wall' and understand that it is part of an investment, of capex. Sometimes you look at four numbers and say: profit fell, EBITDA rose, revenue x… and you already draw a conclusion: this company is doing well. And, honestly, nowadays even a robot can do that, right?”, comments the manager.
Unlock your access to the full dashboard
This coverage gave a “taste” of what the conversation between Thiago Salomão, Matheus Soares and Giuliano Dedini was like – but the insights don’t stop there.
Even if you didn't get your ticket to watch the panel live, you can still watch the recording of this and the other panels in full.
Simply click on the link below and fill in your details to unlock access to the full event:
*(last update: 09/07/2024)