Tito Avila of LIS Capital presented his in-depth investment thesis on Unipar Carbocloro (Brazil: UNIP3)at Best Ideas 2018.
Unipar Carbocloro is a chemical holding company. When Tito and Mathias first came across the company, the “scenery” was not favorable. The company had a historically poor relationship with the market. It was involved in a process to take the company private, creating a misalignment of interests between the controlling shareholder and the minority shareholders. The company was largely ignored and discredited. A less obvious element was the decent business model – a cash-cow producer of chlorine and caustic soda with a quasi-monopolistic position in the southeastern Brazilian market. Add to that an accretive bargain-priced acquisition of a PVC producer in a verticalization movement. While the stock has appreciated considerably since the delisting attempt failed, it recently continued to trade at a comfortable margin of safety, as several sources of additional cash flows are beginning to be unlocked.
About the instructor:
Tito Avila is one of the founding partners at LIS Capital, a value investment firm based in Brazil that seeks investments in companies with a strong risk/return proposition. Previously, Tito worked at Orbe Investimentos. Tito graduated in Economics at FEA-USP.
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