Financials

Report by Galliano's Financials Research

Itausa SA has acquired a 10.3% stake in toll road company CCR in a diversification move away from its core financial holdings which still account for 90%+. Itausa’s stated NAV discount is over 26%, and Victor Galliano believes this discount is under-estimated. Itausa’s indirect XP stake adds to the NAV, implying a discount of close to 28%. Reinvesting the proceeds of disposals in CCR makes good diversification sense; aside from the historically high NAV discount, Itausa has an attractive LTM dividend yield of over 5%.

Financials

Report by Galliano's Financials Research

Victor Galliano believes that the NAV is underestimated - separate from Itausa’s stake in XP, Itau Unibanco, which is Itausa’s core holding with a 37.2% stake, has a direct 9.96% XP stake. Adding its indirect XP stake share to Itausa’s NAV implies a sizeable discount of 27%. Since December 2008, only on 11% of the month end datapoints has Itausa’s discount exceeded 25%. This historically big NAV discount presents a buying opportunity.