Shares of Hapvida Participacoes e Investimentos SA are set to close at the lowest on record after one of Brazil’s top equity funds managers and several sell-side analysts ditched their rosier view for the health-care provider.
(Bloomberg) — Shares of Hapvida Participacoes e Investimentos SA are set to close at the lowest on record after one of Brazil’s top equity funds managers and several sell-side analysts ditched their rosier view for the health-care provider.
Dynamo Administracao de Recursos Ltda, the Rio de Janeiro-based asset manager whose Cougar fund has annualized returns of about 21% in the past 26 years, said it decided to fully exit its investment in Hapvida, according to a copy of a note to clients reviewed by Bloomberg News.
The stock fell as much as 12% to 4.14 reais in Sao Paulo, the worst performer in Brazil’s benchmark stock index.
Analysts from Bank of America Corp. and Banco Bradesco BBI downgraded the stock to neutral from buy-equivalent ratings citing expectations of pressure on profit margins. JPMorgan Chase & Co. did the same last week.
Dynamo said it believed the acquisition of Intermedica, first announced in 2021, “could be virtuous” for Hapvida, according to the letter. Still, “dysfunctionalities” in the integration coupled with the worsening of the business’s economics and an increase in competition “frustrated our expectations,” the fund said in a note sent to clients on Friday. It used part of the proceeds to buy shares in hospital operator Rede D’Or Sao Luiz SA
“Competition remains fierce” and Hapvida’s medical-loss ratio will likely improve at a slower pace, BofA’s Fred Mendes wrote in a report dated Jan. 9.
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