When you don’t lose money
every other option
is a good one
– Charlie Munger
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01.
Lapin Capital is an Investment Club, which, through value investing, seeks a concentrated portfolio that is uncorrelated with the stock market
(i) diligent analysis;
(ii) proximity to the companies we invest in;
(iii) long-term horizon
02.
In 2019, Julio Coelho created Lapin with the aim of seeking opportunities in poorly priced companies on the stock exchange
These opportunities arise due to the fact that most investment funds do not monitor or do not have in-depth knowledge of companies with low liquidity or low market value.
Seeking to invest in these opportunities, we created a vehicle with a contrarian strategy to find investment opportunities where large funds are not looking.
Thus, the club was created, covering a universe unlike that which large funds and investors usually cover.
Special sits: we evaluate spin-offs, companies with hidden assets, as well as merger arbitrage and corporate event arbitrage, including preferred vs. common share arbitrage and holding company vs. subsidiary arbitrage.
Companies undergoing capital allocation shifts: investment opportunities in companies that are divesting business units or changing their capital allocation strategy to free up cash to be returned to shareholders (through working capital reduction or increased leverage).
Compounders with long-term compounding potential: buying at a discount companies that are able to deliver high returns on invested capital over long investment horizons.
03.
Investment
process
Through a diligent investment process, Lapin Capital seeks asymmetric investment opportunities
(i) Coverage universe
We closely monitor all companies within our coverage universe, including mainly small caps and special sits companies of all sizes
(ii) Selection of best opportunities
Within our coverage universe, we define the best investment opportunities, basing our analysis on asset quality, valuation and capital return opportunities for shareholders
(iii) Deep dive in the company
Within the selected opportunities, we carry out an in-depth analysis of the companies, including sector analysis and company financial modeling
(iv) Proximity to the company
After carrying out an in-depth analysis of the company, we approached the company’s management to understand how they intend to direct the company into the future
Portfolio construction
- Company is included in short-list of companies that qualify for investment
- Monitoring the Lapin team and starting a “secondary” position
- Deep dive in the company and follow-up
- Companies that qualify as the best investment opportunities, with asymmetric opportunities for results and predictability of outcomes become core positions
04.
Performance
Robust and uncorrelated performance, with upside capture above the index, and negative downside capture. That is, on average, when Ibovespa rose, Lapin rose more, and when Ibovespa fell, Lapin rose!
Performance
Robust annualized return of 21,39% p.a. over the last 5 years, reaching a total return of 227,64%.
Robust performance exceeding our objective of 20% per year.
Capture indices showing that on average the portfolio rises a little more when the Ibovespa rises and rises a lot when the Ibovespa falls.
| Lapin | Ibovespa | |
|---|---|---|
| Accumulated Return | 227,64% | 38,56% |
| Annualized Return | 21,39% | 5,47% |
| Sharpe Ratio | 0.5854 | -0.1438 |
| Sortino Index | 0.9976 | -0.2155 |
| Upside Capture | 121% | - |
| Downside Capture | -461% | - |
