(Bloomberg) -- Luis Stuhlberger is reviving a bet he last made eight years ago to seek protection against declines in Brazilian stocks as traders question the government’s commitment to fixing a growing budget deficit.
The 70-year-old veteran investor has turned “slightly” bearish on local stocks, according to a note to clients. It’s the first time since 2016 that his Verde hedge fund holds a net short position on Brazil’s equity market, according to a person familiar with the matter.
“The shred of fiscal credibility that the current government had left was thrown away and economic policy finds itself unanchored,” the fund wrote in the investor note published Wednesday.
Investors have soured even more on Brazilian assets after they were left underwhelmed by President Luiz Inacio Lula da Silva’s announcement of a fiscal package. Traders were caught off guard by an income tax exemption that was tacked on the package and risks watering down its impact.
Stuhlberger gained notoriety in Brazil financial markets as the flagship fund at his Verde Asset Management minted gains of 26,000% since its inception in 1997. The fund rose 3.3% after fees in November, compared to a 0.8% gain for the CDI interbank benchmark rate over the same period.
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