Brazil Hedge-Fund Icon Scoops Up Vale Shares After Dam Disaster

(Bloomberg) -- One of Brazil’s most revered hedge-fund managers is seeing a buy opportunity in Vale SA’s record plunge.

Rogerio Xavier, who helps manage 19 billion reais ($5 billion) in assets at the helm of the SPX Nimitz funds, said he started building up his position in shares of the world’s largest iron ore producer after a fatal accident at a dam owned by the company. The breach, which has so far killed 84 people and left over 270 missing, caused a 25 percent plunge on shares on Monday, wiping more than 72 billion reais from Vale’s market share and prompting analysts’ downgrades and warnings from ratings firms.

“Vale’s drop is an opportunity," he said on the sidelines of a Credit Suisse event in Sao Paulo, adding that the plunge was “exaggerated.”

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For Xavier, Vale’s stock was already trading at discounted levels compared to foreign peers before the accident, which makes it even more attractive. He says the impact of the accident on the company’s earnings should be small.

To contact the reporters on this story: Felipe Marques in Sao Paulo at fmarques10@bloomberg.net;Vinícius Andrade in São Paulo at vandrade3@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Julia Leite, Giulia Camillo

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