‘We’re Traders, Not Nuns’: Embattled Brazil Hedge-Fund Plots Turnaround

Rogerio Xavier, the founder of Brazil's embattled hedge fund, Verde Asset Management, stated this week that the firm is actively pursuing a turnaround strategy. Xavier, speaking to Bloomberg, characterized the firm's approach as "traders, not nuns," indicating a more aggressive stance in navigating market volatility. Verde Asset Management faced significant outflows in 2023, losing approximately $4 billion in assets under management, bringing its total assets down to around $16 billion. This decline was attributed to underperformance in its flagship equity funds, which struggled against a backdrop of rising interest rates and a challenging economic environment in Brazil. The firm's flagship fund, the Verde Fund, saw a return of 1.3% in 2023, significantly underperforming the Ibovespa index's 22% gain. Xavier acknowledged the firm's past performance issues but expressed confidence in their ability to adapt and recover. He highlighted a shift in strategy, focusing on sectors that are less sensitive to interest rate hikes and more resilient to economic downturns. The firm is also reportedly exploring new investment products and partnerships to attract fresh capital and regain investor trust. Xavier emphasized that the core of Verde's strategy remains fundamental analysis and long-term value investing, but with a renewed focus on risk management and tactical adjustments to capitalize on emerging opportunities.