Brazil's hedge funds break through
| Levi (left) and Alperowitch: focus is primarily on small caps, which are often mispriced |
Since its inception in 1993, Fama Investimentos has focused solely on Brazilian equities, primarily small-cap and mid-cap companies. A value investor, the firm relies entirely on fundamental analysis and places a lot of emphasis on equity research.
The firm runs both long only and absolute return funds for local and international investors. The offshore Brazil fund was originally established in October 2000 but it was only open to a couple of private investors for the first five years. Then last February it was opened to all accounts.
The fund is broken into three classes: valor class; equity value class and equity market neutral class. All are designed for international investors. The first two classes invest in Brazilian small-cap and mid-cap stocks, the difference being that the valor class is not hedged against devaluations of the Brazilian real, while the equity value class is. The equity market neutral class involves buying shares and shorting Bovespa index futures contracts, so neutralizing the Brazilian stock market risk.