market folly

At Invest For Kids Chicago yesterday, Sam Zell of Equity Group Investments gave a presentation on Brazil as a unique investment opportunity.

Be sure to check out all notes from Invest For Kids Chicago where numerous high profile hedge fund managers shared their latest investment ideas.


Brazil as a Compelling Investment

Zell focused on how globalization has been a part of everyone's vocabulary and that GDP in emerging markets is closing the gap. The demographics in Japan, Eastern Europe, Russia and Italy are poor. Brazil on the other hand has 25% middle class rising to 2/3rds middle class. The country has 180 million people with growth of 5 to 6%. They're self-sufficient in food, energy, water and has the scale to grow further.

Brazil also has an educated workforce and "free agent managements." The country has pent up demand as they're expanding housing and helping people enter the middle class. $60 billion of foreign capital went into Brazil, a "drop of water." Consequently, there's inflation and interest rates are high. People seek high returns with a willingness to pay. Zell says it "feels like the US in the 1950's."

Zell concludes that Brazil is full of unique investment opportunities with a focus on service and an aspirational and growing middle class. While Zell did not specifically mention it, we thought we'd point out the exchange traded fund many choose to invest in Brazil is via EWZ. Earlier this year, we highlighted how Xerion Fund's Dan Arbess had been investing in oil companies in Brazil.

You can view full notes from Invest For Kids Chicago here.