RIO DE JANEIRO, BRAZIL – On Ash Wednesday, February 26th, the day Brazilian companies lost R$290.2 billion (US$72.6 billion) in market value on the São Paulo Stock Exchange, the B3, 80-year-old investor Luiz Barsi gleefully rubbed his hands and went shopping.
Nicknamed the “King of the Stock Exchange”, and president of the São Paulo State Economic Council (CORENCON-SP), Barzi spent the day searching for what he calls “opportunities” and, at the end of the trading session, he had invested more than R$10 million in approximately one million shares in companies such as Itausa, Braskem, and Cielo – “bargains”, according to him, who believes they will survive the worldwide coronavirus outbreak.
“You can’t forget that the stock market is not about risk, it’s about opportunities. And when opportunities arise, you must buy,” he said.
With more than R$2 billion invested in shares on the São Paulo Stock Exchange, he developed 46 years ago what he called the Social Security Portfolio, which consists of buying shares that pay good dividends to shareholders, regardless of their stock price. Generally, companies that are good dividend payers are in an advanced stage of growth, requiring less investment to finance their expansion.
Barsi’s portfolio includes a dozen companies, which he has kept for years, some for over three decades. “I don’t invest in stock market shares. I buy shares in companies with good projects. I like traditional companies and I only buy shares when prices are dropping, never when they’re rising”. According to him, days like Wednesday are a kind of Black Friday for the financial market. “I’m loving the drop in stocks.” Read below the main excerpts of the interview with InfoMoney.
The drop in the Stock Exchange, driven by the fear of the coronavirus, does it worry you?
I’m not worried. This is another one of the one million and 100 thousand crises I’ve seen since I bought my first share on the stock market. As economist Mário Henrique Simonsen said, the crises last more or less as long as a pregnancy, nine months. This one will not take nine months, it is just another horror that has taken hold of the world. Of course, this affects economic agents as a whole. But companies that are good will continue working, paying their dividends to us, the investors, and in the long run, everything will be settled.
At this very moment, all stocks are down in the B3…
It’s a good time to buy. Today (on Friday) I bought more than one million shares. You can’t forget that the stock market is not about risk, it’s about opportunity. And when opportunities arise, you must buy. The opportunity arises even with a sharp drop like this one we are witnessing.
What stocks did you buy?
The ones that are great (laughs). They’re stocks that make no sense not to buy. For instance, Itausa: what motivates it to drop like this? I bought it. I bought Cielo for R$6.80. As for Braskem, there are indications that it will migrate to the New Market. That’s good, but it’s dropping today. The company is solid. I bought Braskem too.
And what shares wouldn’t you buy at this moment?
Oh, I’m not going to buy Vale, I’m not going to buy Petrobras, those companies that are in the commodities market. I bought Vale when it was at R$10 and I sold it when it reached R$40. I pushed commodities to others, who must also have been happy because it reached R$50. But it was an opportunity. Regarding Petrobras, do you know who must have been happy? The people at BNDES, for sure.
They sold millions and millions of Petrobras shares for R$30 each, look at what a wonderful deal it was (BNDES sold 735 million Petrobras shares in early February, raising R$22.6 billion). Today they wouldn’t get that at all. But, look, look at the opportunities. I will not buy these shares now, but that does not mean that the companies will turn to dust because they will not. That’ll pass.
And on the political stage, does the video shared by the President of the Republic, Jair Bolsonaro, who calls for an action against the National Congress in March, does it worry you?
I’ll tell you something. We are a ‘democracy’, a corporatist democracy, we have countless little dictators in Brazil.
Could this affect the reforms that need to be passed and the state companies on the Stock Exchange?
Yes, it could. But I don’t think it’s time to buy state companies’ shares. I, for one, like Banco do Brasil (Bank of Brazil), but I am not in love with it. Banco do Brasil has reduced the bonuses for shareholders to a maximum, it no longer rewards investors as it did. For me to move into a state-owned company, it must justify its price very well in terms of return. And today they are not like that. There are better things out there.
Source: InfoMoney