Turbulence shakes Fiagros and shares devalue up to 12%; What to do now?

Turbulence shakes Fiagros and shares devalue up to 12%; What to do now?
Turbulence shakes Fiagros and shares devalue up to 12%; What to do now?
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After becoming popular with individuals, investment funds in agro-industrial production chains (Fiagros) are experiencing their first stress since their creation in 2021, which has had a direct impact on the shares of products traded on the stock exchange in recent months, with drops that reached 12%.

Survey carried out by Economatica at the request of InfoMoney points out that 11 of the 27 Fiagros listed on the stock exchange showed negative share profitability over the course of a month until last Thursday (28). Some of the biggest declines were seen in funds that had some default problem in their portfolio, such as the SFI Investimentos product (IAGR11), which accumulated losses of around 12% in the last month, or the Next Cap product (NCRA11), which fell by almost 5% in the period.

However, the turbulence, which is faced by the sector as a whole, also ended up penalizing products that do not have, at least for now, known cases of default affecting portfolios, according to the latest management reports. The funds Leste Fiagro Imobiliário (LSAG11), High Fiagro (HGAG11) and BB Crédito Fiagro (BBGO11) are in this situation.

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See below the list of the five biggest drops in Fiagros shares in the last month:

Names of the Fiagros Return in the last month (02/28 to 03/28) Return in the year until 03/28
SFI Inve do Agro-Fiagro-Imob-Unica (IAGR11) -11.61 3.50
East FI In Production Chains-Class Un (LSAG11) -8.40 -2.91
High – Fiagro FII-1a Issue (HGAG11) -7.49 -8.15
Nch Rec do Agro – Fiagro Imob-Unica (NCRA11) -4.77 -7.34
BB FI of Cr-Unica (BBGO11) -1.66 1.67
Source: Economatica

Are falls justified?

In the BB fund, the presence of securities from companies that are going through a more delicate situation at the moment, such as AgroGalaxy, Fiabril and Futura Agro, may draw investor attention. Despite this, the manager argues, in a report, that she does not see any “credit challenges” and adds that companies are experiencing “specific” challenges and that they are in the adjustment phase to improve their financial profile.

The concentration of a large portion of the portfolio in a single asset, or the allocation within a single segment within agribusiness that is going through a more turbulent period, such as resales, are also some of the reasons that may be weighing on the products.

“Fiagros are new and don’t have as much liquidity. We see that the market penalizes, in general, because it is a new investment and because it is still experimenting with the product”, assesses Leonardo Garcia, real estate fund and Fiagros analyst at TRIX.

Is it worth getting rid of Fiagros now?

For Garcia, the most negative movement is the result of the sale of shares by individual investors and the exit of some institutional investors, who may be migrating to other types of assets, with lower risk.

To exit a listed Fiagro, the investor needs to sell the product’s share in secondary, but exiting in times of lower prices and stress does not tend to be a good strategy, as explains Guilherme Sharovsky, investment banker from Bloxs Capital Partners.

“It’s better to hold on. I would recommend selling if there is systemic risk in the capital markets. I’m not seeing the Fiagros industry as a whole deteriorating. We have few defaulting papers, which correspond to a small percentage of the total”, argues the Bloxs specialist.

There are those who see that the moment of greatest turbulence can also generate opportunities, as long as the investor understands the risks involved. This is because the movement of selling shares resulted in some funds having values ​​that were significantly discounted in relation to the price considered fair.

Sharovsky draws attention, for example, to some Fiagros with assets that had some type of default and that could be opportunities due to discounts, such as Galapagos Recebiveis do Agronegócio Fiagro (GCRA11), Valora CRA Fiagro (VGIA11), SFI Investimentos do Agronegócio ( IAGR11) and Vectis Datagro Crédito Agronegócio Fiagro (VCRA11).

The Bloxs specialist highlights that the guarantees of the defaulted Agribusiness Receivables Certificates (CRAs) in the four cases are more than sufficient to cover the debts, and that the assets in question are outside of possible judicial recoveries — even though the process to recover credits may be delayed.

Felipe Ribeiro, director of alternative investments at Clube FII, also argues that this is not a time for “panic” but rather for checking possible opportunities. However, he highlights that Caution must be taken before carrying out new applications. According to him, discounts can hide some pitfalls, such as possible defaults that the investor is not aware of, or greater exposure to a more delicate segment. To avoid problems, the expert’s tip is to always give preference to more diversified funds, which do not have a high concentration in any type of credit, crop or sector.

Furthermore, it is necessary to assess whether the investor will be able to take a certain risk when allocating in a Fiagro. “The rates are usually higher than those of FIIs [fundos imobiliários], then a higher risk is expected. It is important to see if the asset makes sense for the person”, warns Garcia, from TRIX. For him, anyone located in Fiagros should also prepare for a more volatile semester, with possible new requests for judicial recovery from agribusiness companies and new renegotiations due to the drop in interest rates.

The article is in Portuguese

Tags: Turbulence shakes Fiagros shares devalue

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