Brazil Value Talks: Thalis Saint'Yves
Multiplied Invested Capital by 9,500x in 17 Years
Today we are starting a new section here in our space, where I will interview Brazilian investors that I admire.
I am pleased to start with Thalis Saint'Yves!
Thalis currently manages his own stock portfolio in Brazil.
In 17 years, from 2007 to 2023, Thalis' portfolio yielded an incredible 952,046.06%, that is, it multiplied the invested capital by 9,521x!
This is equivalent to an average return of 71.41% p.a.! Fantastic!
Annual Return:
2007: +404.05% // 2008: +13.38%
2009: +140.45% // 2010: +191.25%
2011: +54.18% // 2012: +72.98%
2013: +72.18% // 2014: +54.29%
2015: +63.62% // 2016: +126.38%
2017: +67.78% // 2018: +13.54%
2019: +36.47% // 2020: +46.26%
2021: +53.36% // 2022: +16.87%
2023: +33.02%
TOTAL: 952,046.06%
It’s an absurdly high profitability!
In this same period, Ibovespa returned a paltry 195.20%.
It is a value generating machine.
BS: Thalis, could you tell us a little about yourself?
TS: Dude, a little about me.... I'm a Nuclear Physicist by training, I did my master's degree at the National Nuclear Energy Commission, but my real passion was the financial market. I've always liked companies, the environment, negotiations, behind the scenes, etc., so year after year I went deeper and dedicated myself more and more...
When I started, 18 years ago, I started like everyone else, without understanding anything and without having any capital. I was in college and saw the market as a way to get paid. Things worked out year after year and I managed, during my journey, to make gains in every year since I invested. This really makes a difference because compound interest is brutal over 17 years of accumulation. The values grew and I invested 100% of what I had in the market.
In 2014, I started to diversify and created a rule in which every year half of the gain in the market I would have to withdraw to invest in companies outside the stock market, or in real estate projects or anything else. This, in a way, gives me security that my diversification is not on the stock market, but in assets outside of it.
BS: What is your strategy for making money on the stock market?
TS: I usually say that I don't have one strategy, but rather several and I use the one that best suits what I need at the moment. The first goal above all is not to lose money, the second is to see how much I can earn in each situation.
As I said, I don't have one way to make gains in the market, but several, because the market changes very quickly and we have to be able to adapt to changes quickly. I changed the way I operated several times depending on the market. When I started, I did it one way, I would say that every 3 years the market completely changes the way it operates. I'm not prejudiced against anything. One thing is certain: I believe I have already bought and/or sold practically all the shares on the market, from penny stocks to blue chips.
Based on my profile, I look for distortions in the market, whether in terms of valuation or events (for example, delisting takeover bid, spin-off, extraordinary dividends, bonus, conversion of preferred stock into ordinary stockm conversion of debt into equity, sale of assets , agreement with creditors, operational turnaround, block trade, etc.), whether in shares, FIIs, fiagros. I think there are opportunities in all markets. Normally, microcaps and small caps hold the biggest opportunities in both short trades and positions due to people's lack of knowledge and that is where we come into opportunities.
BS: What is your process for finding a new purchasing opportunity? What filters do you use?
TS: To filter opportunities, I believe the first item is to be aware of all Relevant Facts and Notices to the Market released (I see them on Rad CVM), especially companies that are not as covered as I mentioned above. Furthermore, looking at the flow is extremely important, as any larger volume traded already affects the price of the paper).
From there, a day trade or short-term operation can be carried out, which has generally been very successful (I have already gained 100% in 1 day, in a short squeeze). In addition, this will provide you with information about the company that can draw attention to a more detailed investigation of its fundamentals.
Furthermore, I like to routinely see quotes and graphs of dozens of stocks that I monitor to try to understand any momentary flow (days) that could generate an opportunity. I monitor more closely companies that I understand are cheap or have high potential for appreciation, talking to the company, other shareholders and reading updated company information.
BS: How do you value a share: DCF, Multiples, implied IRR, a mix of the previous ones, …?
TS: I don't particularly like DCF because it is very sensitive to any variable. I joke by saying: how much do you want me to give? Change a line here and give the value. Complicated...
I prefer a more projected multiple according to the estimates I make for each share, so I have an idea of how far it can go depending on the multiples. Of course, each stock and each sector has a better metric and multiple to consider and a mix of them also generates interesting data. The ones I use most are: EV/EBIT or EV/EBITDA together with ROIC and ROE, P/VP, with each sector having a more plausible metric.
BS: How do you like to build your stock portfolio, considering the number of companies, sectors and concentration?
TS: I have no rules for building a portfolio. A metric that I really like most of the time is cash from 20% to 40%, on average 30%, because, as I said, I do a lot of short-term operations with events, etc., and for that you need to have cash for opportunities like this This cashier ends up being very well paid.
My long-term allocation on average is something like 60% to 80% of the invested capital. As mentioned before, my investment is 100% variable income. The cash remains temporarily in fixed income until it is allocated. Given these allocation percentages, I have no limits. I generally like to have a few companies, maximum 4 or 5, very concentrated.
As for allocation limits by asset or sectors, I don't have any. I can be 100% allocated to a thesis, or 10%. A lot depends on the conviction in the numbers and the potential return.
Another important point is that I rarely use leverage. I think this comforts me and leaves me without pressure for quick results.
Allocation to certain microcap companies becomes difficult with increasing equity. What was once easily achieved becomes more difficult to enter and exit. so again we have to change asset strategy and allocation method.
Profitability also becomes much more difficult after 8 figures, so it is very common for all of us to have colossal returns at the beginning and as our assets increase, this return tends to adjust. To give you an idea, in many years I made 100-200%, but now I know that it is not that simple due to the difficulty of allocation and opportunities. Nowadays I'm very happy beating CDI and Ibovespa, and I've always managed to beat these indices over the past 17 years, which helps me take the psychological pressure off.
Very important: I've never had a beating that changed the course of things. I believe that what got me this far was consistency. Consistency over long periods helps the portfolio a lot.
BS: How often do you like to rebalance your portfolio?
TS: Every day I see and decide to maintain, increase or reduce a position. I like to take into account the upside/downside it has. I have no limits on whether I can balance it or not. If it makes sense to keep it, I keep it, but in swing periods we have a lot of information that can lead to leaving a position completely or setting up another due to changes in perspectives. I believe that this is the main trigger for rebalancing. Also rebalancing when a short-term opportunity arises, this leads me to adjust positions.
BS: How long on average do you hold a position in your portfolio?
TS: Honestly, we are in Brazil and here things tend not to happen as in theory, so I don't like the long term in Brazil. For me, the long term here is 2 to a maximum of 3 years... I have never had, nor will I have any stock for longer than that period. Things here are very unstable and change every moment.
Out there I started investing last year (uranium, crypto and I recently started buying properties at auction in the USA together with a cousin) and it may be that I have a different horizon, but here the long term is very short.....
BS: Do you believe that graphical analysis, together with fundamental analysis, can help with the buying and selling points of shares?
TS: Absolutely, I do exactly that. I look at graphs a lot to see entry and exit points, accumulation, breakout, etc., a very simple technical analysis.... I also like to follow the flow of players, see entry, exit, etc.. Over time, we even know who it is. who in the book due to the modus operandi. I believe that this information helps entry into assets selected by fundamentals or for any other operation.
In my priority rule, the fundamentals come first, so if I think it makes sense that it's cheap, I'll buy it even with a horrible graph, pointing downwards. I'm the type that prefers to pay cheaply and see it fall rather than pay higher and see it rise....
BS: What are your favorite sectors on the Stock Exchange? And the ones you avoid? Why?
TS: I don’t have a favorite sector. Anyone who has opportunities to generate me alpha in certain periods. I have a bit of a temper tantrum and I don't like being assigned to aviation, for example. I find the operation of companies with various problems and colossal debts very complicated, so in these cases I prefer not to monitor so much...
BS: Do you use derivatives? What is your strategy?
TS: Yes, I use it as a way of remunerating capital. Option is only used to be sold, so whether it is selling a put to enter or generate a premium or a call to exit the paper or pay by gaining theta.
In terms of expiration, I like the best possible time-theta ratio, normally short term of 1 month or 2. In terms of strike, it depends on the role of the moment, the chart and the context. If I want to be exercised, I play within the money. If I just want to earn a little extra, I look for the safest option that will give a good return. This varies, but I would say in this case 10-15-20% depending on volatility. I made great gains on put recently with BHIA selling with a strike 10% below.
BS: Which Brazilian stock has the greatest upside potential (or best risk/return) in your portfolio today? Could you briefly explain the case?