Why Are Stocks of Brazilian Companies Struggling Today?

The $24.99 billion mining company, Vale SA (ADR) (NYSE:VALE), has one of the biggest iron ore expansion projects underway in the Para region of Brazil. However, given Goldman Sachs’ sullen forecast of iron ore prices on the heels of low demand, stronger greenback and the largest miners, including Rio Tinto plc (ADR) (NYSE:RIO) and BHP Billiton Limited (ADR) (NYSE:BHP), escalating production guidance for 2016, has put Vale SA (ADR) (NYSE:VALE) in a tight spot as shown by the 6% fall in its stock price today.

A total of 22 investors, among over 700 that we track, were long Vale on June 30 as compared to 23 at the end of March, however, the value of their holdings increased to $303.46 million from $242.56 million and represented only 1% of the company. The stock price rose by a little over 3% during this period. Richard Gerson and Navroz D. Udwadia’s Falcon Edge Capital heads this list of investors with 17.48 million shares valued at $88.28 million reported in its latest 13F.

The recent surge of  Petroleo Brasileiro SA – Petrobras (ADR) (NYSE:PBR)‘s stock met a hiccup today as it was downgraded by Barclays to ‘Equal Weight’ from  ‘Overweight’, while the price target was lowered to $6.5 from $11. The stock slid by more than 5% in early trading, but had gained some ground in early afternoon.

The popularity of the Brazilian energy giant among hedge funds fell in the second quarter as only 31 held stocks in the company at the end of June as opposed to 35 at the end of March. The aggregate value of holdings held by the funds we track amounted to $760.56 million, equal to 1.30% of the company at the end of June.  Doug Silverman and Alexander Klabin‘s Senator Investment Group tops this list with 20 million shares.

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