BTG's Share Plateau Spurs Speculation Bank Is Major Stock Buyer

  • Shares trade near 15 reais for more than five hours Tuesday
  • `They’ll defend the price tooth and nail,' trader says

Grupo BTG Pactual SA shares plateaued near 15 reais for more than five hours Tuesday amid speculation that the bank was stepping in to support the stock and stem a plunge sparked by the arrest of billionaire founder Andre Esteves.

The shares tumbled 15 percent Tuesday in Sao Paulo, capping a 52 percent loss since Esteves was jailed Nov. 25. While trading volume was more than four times the average of the past three months, the shares stabilized a few hours after the open, signaling to some traders that BTG was buying its own stock.

BTG’s brokerage, which also trades on behalf of clients, accounted for about 61 percent of buy orders for the stock Tuesday, 13 times the percentage of the second-biggest buyer, according to data compiled by Bloomberg. The brokerage handled just 20 percent of sell orders Tuesday, compared with 47 percent during the first 10 months of the year.

BTG "is the only one interested in buying," Ari Santos, a trader at brokerage H.Commcor, said from Sao Paulo. "I can’t imagine anyone else buying this many shares right now. They’ll defend the price tooth and nail."

BTG announced on Nov. 25, the day Esteves was arrested, that its board had approved a buyback of 23 million shares over 18 months. On Dec. 1, the lender said it asked securities regulator CVM for permission to buy a stake bigger than the 10 percent allowed by law and hasn’t received an answer, a BTG press official said. He declined to comment further.

BTG’s brokerage is usually among the top traders of its own stock, accounting for about 50 percent of gross volume in the third quarter.

"Someone is locking in this price," Raphael Figueredo, an analyst at brokerage Clear Corretora, said from Sao Paulo. "Since this is being done through BTG’s brokerage, it could be BTG itself. Looks a little like a tender offer."

Esteves, who has denied wrongdoing through his lawyers, is accused of trying to interfere with testimony from a former Petroleo Brasileiro SA executive in a sweeping corruption probe that has upended the country’s politics and businesses.

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