In this article, we’ll be summarizing a bullish thesis posted on VIC regarding Patria Investments Ltd. (PAX) in late July when the stock was trading at $13.05. Currently, PAX stock is trading at $12.48, which shows that it has lost roughly 4.4% of its value since the publication of this thesis. Nonetheless, PAX stock is now trading at a more attractive forward PE ratio (non-GAAP) of 12.36, and the stock is trading at 5.76 times, forward sales estimates.
With a comprehensive platform covering private equity, infrastructure, credit, real estate, and public equities and a leading position as the largest alternative asset manager in Latin America, Patria Investments Ltd. (PAX) is presented as a compelling long-term investment. Since its 2021 IPO, the company has regularly exceeded initial projections and shown a healthy increase in fee-earning assets under management (AUM).
The thesis highlights Patria’s strategic advantage as a conduit for worldwide investors looking for exposure to Latin America. Though it boasts a sizable portion of the world GDP, the area is underrepresented in private equity allocations worldwide. Patria has a lengthy runway for expansion because to this structural underallocation as well as rising regional pension funds and a positive demographic picture.
Emphasizing strong returns on equity, Patria’s business strategy is asset-light and owner-operated. The management team has shown that it can expand the company strategically as well as naturally via calculated acquisitions. Its emphasis on early-stage investments in Latin America also sets it apart from international players, who may function as exit partners rather than direct rivals.
Notwithstanding these advantages, the stock has suffered headwinds from more general pessimistic attitude toward Brazilian stocks and macroeconomic doubts. These difficulties are noteworthy, but they also present a possibility as Patria sells at a large discount compared to its international counterparts. Catalysts for expansion include ongoing execution in rising AUM and fee-related earnings, better attitude toward inexpensive Brazilian shares, and the region’s rising appeal to international investors. Though Patria’s proven track record and robust governance protections for minority shareholders help to offset some of the risks—including possible macroeconomic turbulence in Brazil and difficulty maintaining performance across private equity funds.
Driven by its regional leadership, competent management, and considerable development potential in an underallocated sector, Patria presents overall a compelling investment case.
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Disclosure: None. This article was originally published at Insider Monkey.