A fund focused on global equities from the manager TT Investimentos, created in 2018 by the nephews of the former president of the BC (Central Bank), Arminio Fraga, has seen its equity crumble over the past few months.
According to data compiled by the financial data platforms TC Economatica and TradeMap, based on information from the CVM (Brazilian Securities and Exchange Commission), the TT Global Equities fund had a net worth of around R$9.8 million in September, against around R$73.8 million in December 2021, which corresponds to a decrease of approximately 86.7% in the period.
The available information indicates that the fund has only three shareholders in its base, one of them being Arminio Fraga, founder of the management company Gávea Investimentos and a columnist for Sheet.
On Friday (9), a letter attributed to Arthur Fraga Bahia, one of the partners of TT Investimentos, began circulating on social media, in which the manager makes a mea culpa about the losses recently suffered by the TT Global Equities fund.
The signatory claims to have set up a risky operation involving call and put options (a financial instrument through which the investor secures the right to buy or sell a certain asset in the future at a pre-established price) of the shares of the company Clarus CLAR US.
The manager says he has in-depth knowledge of the company, which is a manufacturer and distributor of equipment for outdoor activities, such as mountain climbing and snow skiing, according to information on the Clarus website.
In a scenario of a sharp drop in shares across the stock market, due to the beginning of the interest rate hike process by the Federal Reserve (US central bank) and the risk of a global slowdown, the company’s shares, traded on Nasdaq, accumulate depreciation of about 40% year-to-date through September 9, against the 14.6% drop in the US S&P 500 index.
Also according to the TT manager’s report, after a “leverage” (when the manager invests an amount above its equity) carried out by the fund, the fund’s custodian withdrew the financial guarantee it had offered to the operation (margin), due to the high concentration of the portfolio.
This forced the liquidation of the operation, which caused “irreparable losses”.
Companies such as Coinbase, Walt Disney and Meta (ex-Facebook) came to make up the fund’s portfolio over the last few months, but with an increasing concentration on Clarus, according to the most recent available data on allocation, referring to May 2021.
The text that circulates on the networks apologizes to investors for the error in the publication, and says that more than 95% of the equity and its partners, among them Arthur’s brother, Antonio Fraga Bahia, were invested in the fund.
Sought, the manager did not respond to the report until the afternoon of this Saturday (10).
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