Emerging market giants offer mispriced compounding
The guest presented a bullish case for select large-cap emerging market equities, particularly in Brazil, due to low valuations and high dividend yields.
The argument
He highlighted Itau Unibanco trading at 7-8x earnings with a 7% dividend yield and consistent historical ROE, and Petrobras trading at 6x earnings with a 12% dividend yield at $75 oil.
The thesis, stress-tested
✓ What validates it
- ✓Petrobras maintaining dividend payouts at or above expectations
- ✓Itau Unibanco reporting sustained return on equity above 15%
▸ Risks discussed
- ▸Political risk in Brazil affecting state-owned enterprises like Petrobras
- ▸Fluctuations in global oil prices impacting Petrobras's cash generation
Hear it yourself
"You get a dividend in mail check. Problem is sometimes it didn't come in. So how do you match? That's how I started tracking these things. I started trading in high school. Classic punting, basically. Not much thought, but trading. How'd you go from that to learning what these things were behind the pieces of paper? In college, I got heavily engaged. Ended up doing my undergrad and grad fairly quickly. I was 20 when I'd done my masters. I was very busy trading in college. You had to go physically to a broker. I remember everybody was maybe 55, 60."
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