Luis Stuhlberger’s Green Fund marks the second negative return in its history in 2021

In a year of intense volatility for the prices of financial assets in the local market, the hedge fund Verde, owned by manager Luis Stuhlberger, ended 2021 with a negative return of 1.13%, against gains of 4.40% in the CDI in the same period. time course.

Having started activities in 1997, the only time the fund had closed a year in the red was in 2008, when it dropped 6.4%, in the wake of the subprime crisis in the US real estate market.

In the accumulated of the fund’s 25 years, the return delivered to investors, until last December, was 18,390%, against 2,325% for the CDI in the same interval.

In the management letter referring to the performance of the last 12 months, Verde’s managers acknowledge that the results — which left them “frustrated” — were largely due to losses in the Brazilian stock portfolio.

“During its entire history, the fund has gone through other difficult times for the stock market, and we were able to defend losses with hedge positions. [proteção] in interest and/or foreign exchange markets. This was our main management mistake in 2021: not being able to defend the huge deterioration of the Brazilian stock market”, say the experts.

The fund maintained an average long exposure on the Brazilian stock exchange around 27% last year, and had a loss in this portfolio of around 21% in the period. The Ibovespa, the main stock index in the local market, ended 2021 with a drop of 11.9%.

Verde’s managers also say that they were surprised by the government’s breaking of the spending ceiling at the end of last year, which took long-term interest rates in the country to levels above 12%, contracting a recession for 2022 and affecting the required discount rates for any risky asset.

“We did not believe in the implosion of the ceiling and in Brazil moving towards a real interest rate substantially above equilibrium levels.”

Despite recent losses, for 2022, the fund led by Stuhlberger continues with a relevant position, close to 27.5% of the portfolio (of which 23.5% in the local market), allocated in equities.

The fund also has positions that will benefit from an interest rate move in the US and Europe, with small long exposures to the Russian ruble and oil.

“The year 2022 begins with many uncertainties, whether in the external scenario, where we see the beginning of a crucial process of tightening monetary policy in the US; or in the internal scenario, where we have a presidential election and all the complexity that this involves, amid to a sharp downturn in the economy.”