NCH Capital Inc., which got its start investing in Russian private equity and stocks in the 1990s, is seeking as much as 1.5 billion reais ($644 million) as it wagers Brazil’s shares are poised for a rebound.
James Gulbrandsen, NCH’s portfolio manager in the Latin American country, is opening his Maracana fund to outside investors as it focuses on financial and services firms including Itausa-Investimentos Itau SA, Itau Unibanco Holding SA’s controlling shareholder, Cielo SA, BB Seguridade Participacoes SA and Linx SA, while avoiding natural resources and industrial companies with large capital requirements.
The fund has lost 6.6 percent in the past six months, less than the 15 percent decline posted by the Ibovespa stock gauge, according to data compiled by Bloomberg. The decision to actively market a stock fund that currently only holds partner capital comes after the benchmark index touched a five-year low on March 14. NCH manages about 100 million reais of partner capital in a group of funds in Brazil, he said.
“We’re hugely contrarian,” Gulbrandsen said. “I’m the lone American bull in Brazil. With this decline in the market, we view this as just simply an exceptional moment. We’re tickled to have our own money invested in this market right now.”
Itausa is the Brazilian equity funds’ biggest holding, according to Gulbrandsen, who said the lender is “well managed” and historically trades at about three times book value. Its price-to-book ratio is currently 1.4 times, data compiled by Bloomberg show. Credit-card payment processor Cielo and insurer BB Seguridade will also continue to grow fast with a low cost of capital, Gulbrandsen said.
The Ibovespa advanced 1.5 percent. Itausa gained 3.3 percent at 8.5 reais. Cielo rose 0.7 percent to 70.25 reais. BB Seguridade fell 0.5 percent at 23.71 reais.