Americanas's 77% Collapse Deals Blow to Brazil Equity Funds
(Bloomberg) -- The rout in shares of Americanas SA, the Brazilian retailer that counts billionaire Jorge Paulo Lemann as a top backer, is leaving a trail of losses at some local equity funds. Most…
(Bloomberg) -- The rout in shares of Americanas SA, the Brazilian retailer that counts billionaire Jorge Paulo Lemann as a top backer, is leaving a trail of losses at some local equity funds.
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A fund run by São Paulo-based asset manager Moat Capital fell 6.8% after fees last Thursday, leading losses among 578 local equity funds that manage over 100 million reais ($19.5 million), according to data compiled by Bloomberg.
Americanas, which Moat says accounted for about 8% of the fund's total assets, sank 77% that day after finding 20 billion reais in accounting 'inconsistencies.' The stock, which traded at 12 before the announcement, is now hovering around 2 reais a piece.
Moat scrapped all its Americanas shares and will do 'everything within its reach to guarantee and protect' rights related to losses while it was a minority holder, the fund said in a note Tuesday.
The plunge also took a toll on the Bradesco FIA Small GBS Investimento no Exterior fund, which is managed by Banco Bradesco SA's asset management unit, and Elizabetha FIC FIA, run by Tempo Capital, which fell 3.5% and 2.7%, respectively. Both held Americanas shares as of October and September, Bloomberg data show.
The losses added to the woes for Brazilian equity funds, which have seen net outflows of more than 3 billion reais this year through Jan. 11. That's after record withdrawals of 70 billion reais last year, according to Anbima, the country's capital markets association.
On the opposite side, the AZ Quest Top Long Biased fund rose 2.8% after fees last Thursday, leading gains among peers. The gains were fueled by bearish wagers against Americanas, which it increased following the announcement, according to a person familiar with the matter who asked not to be identified because the information isn't public.
Short interest on Americanas reached 12% of free float, near the highest recorded in data going back one year, according to data from financial analytics firm S3 Partners.
AZ Quest, Tempo Capital and Bradesco Asset Management didn't respond to messages seeking comment.
Americanas posted the sharpest one-day decline for any company that's currently on the 89-member benchmark Ibovespa equity index in at least two decades, Bloomberg data show. The Rio de Janeiro-based retailer has started a legal battle with creditors, keeping pressure on the stock. Bonds have also sank.
Americanas Bonds Plunge 25 Cents Amid Legal Fight, Downgrades
JPMorgan Chase & Co., which downgraded the stock to underweight from neutral in November citing the company's high leverage, said a 'Chapter 11 scenario' seems the most likely outcome at the moment.
--With assistance from Ricardo Strulovici Wolfrid and Sebastian Krieger.
(Adds comments from Moat Capital in fourth paragraph.)
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