Opinion – Marcos de Vasconcellos: A stock tripled in price this week: opportunity or trap?

Without mincing words: On the first working day of his third term as president, Lula had the worst reception that the financial market could give. By the numbers, investors were more distrustful with the return of the PT leader than with the beginning of Dilma Rousseff’s second term.

There was a more than 3% drop in the Ibovespa, the main stock exchange indicator, and a more than 1.4% rise in the dollar in a single day (see the comparison with other presidents here). As the week progressed, interviews and speeches served to provide more predictability about what to expect from the new government and, at the end of the week, the dollar was already cheaper than before the inauguration, while the Stock Exchange walked towards zero to zero.

I speak of the subject only to return to the mandatory rule of not despairing when adjusting your investments. And, in these first days of the year, one stock set the ultimate example of how rushing to surf waves, without understanding where they come from, can be dangerous for your money.

The construction company Gafisa –traditional, you should at least know the name– saw its shares (GFSA3) practically triple in price from Monday to Thursday. There was a 212% appreciation of the shares, which cost R$ 10.70, at 11:30 am on Monday, and were traded for R$ 33.52, at 4:30 pm on Thursday.

“Wow!”, thinks the investor, always looking for good opportunities. A good valuation, in the traditional logic of the market, means that other investors saw more possibilities of gain with the company’s shares.

Could it be the effect of the construction incentive promised by the new PT government? Or a possible improvement in the purchasing power of the population? The expectation of a drop in interest rates? None of that. These points would be reflected in other companies in the sector. But the Imob (a kind of Ibovespa in the real estate sector) rose only 3% in the period.

It is then necessary to take a look at the day-to-day activities of the company. There are no new results disclosed in the period, but the announcements to investors give the clue: approval of a capital increase; the convening of a general meeting; and the significant increase in the participation of an investment fund; and court decisions.

The meaning of this busy schedule becomes clear to anyone who knows the operation closely. Gafisa is one of the companies controlled by billionaire Nelson Tanure. He also officiates the game at Prio (formerly PetroRio) and, more recently, at Alliar. His strategy of taking over companies and investing in them comes back into the news from time to time. He fought an arm wrestling match with operator Oi some time ago.

Now, Tanure is in a new dispute, with another investor who likes to fight: the investment fund Esh Capital, managed by Vladimir Timerman, very active (and somewhat controversial) on Twitter. The fund bought several Gafisa shares recently and, with the increase in its stake, began to dispute changes in the company’s management.

With that, a judicial war ensued, with injunctions suspending and releasing the holding of meetings and the capital increase approved by the current administration.

The fund accuses current management of causing damage to the company and tried to bring forward a shareholders’ meeting to put pressure on management. The company defends itself and claims that the fund acts speculatively and with “doubtful” intentions.

To increase its voting power at the meeting, Esh has increased its stake in the company, buying more shares on the market. Sources close to the company even speculate that Tanure and his group are also buying shares in Gafisa, for the same reason.

In summary, with two giants buying the stock available in the market, prices exploded. But not by an organic movement of investors. And those who bought shares at the peak on Thursday have now lost more than 25% of their investment.

Gafisa’s case is one of those that gives money to a few, but has a great chance of taking it from many. Companies and funds are made up of people and, before making your investment decisions, it is good to know who your partners will be and what they want.