The 2014 Latin America Research Team: Financials/Banks, No. 2: Marcelo Telles & team

Marcelo Telles & team Credit Suisse First-place appearances: 4

Total appearances: 13

Team debut: 1993 Marcelo Telles and his Credit Suisse colleagues advance from third place to second, thanks in part to their shunning of the herd. “Marcelo is very insightful and has no fear of taking a stand, especially against consensus,” one fund manager observes. “His contrarian bullish call on Brazilian banks and negative view on Mexico are clear examples, which have paid off big.” The three analysts monitor 17 stocks in this sector from their offices in Mexico and Brazil. Although Latin America’s banking shares rose 16.4 percent in 2014 through late July, compared with the broad market’s 7.4 percent rise, the gains were not uniformly distributed. “Performance varied significantly among the different markets, so choosing the right market was key in a LatAm banks portfolio,” says Telles. Brazil’s stocks jumped 22 percent, while Mexico’s were flat. Colombian and Peruvian banks were among the strong performers, and Chilean shares lagged. The researchers expect that trend to continue through year end. “We continue to believe the market is overpaying for growth in Mexico — not to mention still overly optimistic earnings expectations — so banks in Peru and Colombia offer a much better risk-reward proposition,” Telles reports. “Brazilian banks are not a bargain but remain attractive. However, we prefer to play through private sector banks, as volatility should remain high ahead of presidential elections” in October. Their favorite names are commercial banks Credicorp of Peru and Bancolombia of Colombia. Regarding Credicorp, they “see a better margin environment from the ongoing dedollarization process, better cost control and a still positive macroenvironment, with at least 4 percent [gross domestic product] growth,” he explains. “Why overpay for high expectations in Mexico when you can buy reality cheap in Peru?” For Bancolombia they forecast “better margins on the back of lower valuation losses and the continuation of the monetary tightening cycle, not to mention a more positive macroeconomic environment with accelerating growth,” says Telles, whose fans eagerly sing his praise. The researcher is “skilled, persuasive, intelligent and convincing,” another backer insists.

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