Bad-Boy Brazilian Banker’s Steady Partner Keeps Uneasy Investors Calm

  • Opportunity is now biggest independent Brazil equity fund
  • Total assets have almost tripled since Dantas’s 2008 arrest

In the shadow of Brazil’s bad-boy banker, Dorio Ferman has toiled for years.

The portfolio manager’s long-time business partner, billionaire Daniel Dantas, may be the better-known of the two, but behind the scenes the low-profile Ferman has played a key role in helping to keep their Opportunity investment firm growing through both good times and bad. Like the time the pair was thrown in jail. Or the time Dantas feuded publicly with Citigroup Inc. Or during the mammoth recession that has wiped out more than 7 percent of Brazil’s gross domestic product since 2015.

Opportunity is now the largest Brazilian equity fund not owned by a major bank, with 32.3 billion reais ($10 billion) in assets. That the portfolio has almost tripled in size since 2008 -- the year of Dantas’ brief arrests on racketeering charges, which were later dropped -- is a testament to Ferman’s acumen for calming investors in the face of chaos, fellow managers say.

“If it hadn’t been for Ferman, they wouldn’t have kept and then increased the money under management,” said Bernardo Rodarte, who oversees 1 billion reais ($315 million) in assets at Sita Corretora in Belo Horizonte, Brazil.

Opportunity’s oldest stock fund, Logica Master FIA, which has 1.9 billion reais in assets, has returned an average of 23 percent per year in dollars since its inception in 1986. But it’s disappointed in recent years. The fund’s 13 percent gain in reais this year falls short of the 20 percent rally that the Ibovespa stock index has posted. Ferman said he underestimated just how bad the recession would be.

"For those of us who are in for the long run, making calculated mistakes is part of it," Ferman said. "But Brazil is now on the right path, and we will recover."

Market Volatility

In a meeting in his office in downtown Rio de Janeiro in October, the 72-year-old Ferman comes off as comfortable with market volatility -- and maybe even thrives on it. One of his picks at the moment is JBS SA, the Brazilian meatpacker whose controlling shareholders are embroiled in a corruption scandal after they confessed to bribing government officials to obtain the loans that fueled a decade-long $20 billion acquisition spree.

“Any good opportunity brings risks," Ferman said. "There are no gains without risks, though they must be very well calculated."

In May, as the scandal reached a fever pitch and JBS shares lost almost half their value in under two weeks, Ferman swooped in to buy. He’d been waiting for just such an opportunity. When choosing what to invest in, Ferman always follows the same pattern: He studies a company closely, sets a price in his head that he thinks is fair and then waits for the right moment.

When asked about the scandal at JBS, Ferman shrugs it off. Of course, he’s had a front-row seat to controversy himself during his 23-year partnership with Dantas.

Ferman, the son of a jeweler and Ukrainian immigrant in Northeast Brazil, met Dantas in Rio de Janeiro in the late 1970s while studying for his master’s degree in economics. In 1994, the two formed Opportunity Asset Management, which entered the national spotlight with a giant telecom acquisition a few years later, part of a wave of privatizations of state-owned companies that swept across the Latin American nation.

Natural Partnership

The high-profile Dantas and studious Ferman were a natural fit as partners. Dantas, in an emailed response to questions, recounted a time years ago when the duo poured over balance sheets late into the night and suddenly heard fireworks outside their office windows. They marveled for a few moments, wondering what it might be, then realized it was New Year’s Eve and the clock had struck midnight.

In 2008, Dantas was arrested twice and held for a few nights on accusations he tried to bribe a police officer to keep his name out of an investigation into alleged misappropriation of public funds, corruption and money laundering. Ferman himself also did a short stint in jail as part of the probe. The case was later annulled. Dantas said in the email that the investigation was a ruse to help Opportunity’s competitors.

These days, Dantas is investing big in cattle. Industry insiders say Opportunity owns more ranch land -- about 500,000 hectares -- than any other company in Brazil and is considering reviving an initial offering for the business, Bloomberg reported in June.

Opportunity is also buying consumer stocks again -- including retailer Cia. Hering and mall operator BR Malls Participacoes -- as Brazil’s economy emerges from its two-year recession. Latin America’s largest economy grew 0.3 percent in the second quarter and is expected to expand 2.5 percent next year.

“I’m very optimistic," Ferman said. “It’s basically a matter of picking your sectors. The companies that survived are already in a strong position to surf the good times we are expecting."

— With assistance by Jonathan Mark Majoni, and Aline Oyamada

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