Ricardo Cavanagh & team Itaú BBA
The buy side says: “They have great access to industry and government officials.”
Itaú BBA’s three-member crew rockets from runner-up to claim its first appearance in the winner’s circle — a spot that is familiar to leader Ricardo Cavanagh, who guided the Raymond James Latin America team to No. 1 in 2009. The Buenos Aires–based analysts “know their way around and have access to chief executives and chief financial officers,” observes one buy-side enthusiast. Argentina is a macro story, notes Cavanagh. With an official inflation rate of 9.9 percent — the actual rate is closer to 25 percent, the 44-year-old team leader insists — sovereign risk that is regarded as very high by foreign investors (as evidenced by a spread of 1,200 basis points on five-year credit default swaps) and this year’s partial renationalization of Buenos Aires–based oil and gas producer Yacimientos Petrolíferos Fiscales, all eyes are on the populist government of Cristina Fernández de Kirchner. Business leaders would like the administration to remove controls over foreign exchange, launch tighter monetary policies to fight inflation, and reduce subsidies for energy and utilities consumption. “Assuming policies change, long-term all equities have a phenomenal upside,” Cavanagh says. “Stocks like YPF are at rock-bottom prices and can’t go any lower.” Another potential winner: Grupo Financiero Galicia, Argentina’s largest domestically owned private bank. The American depositary receipts of the Buenos Aires–based firm were trading at $4.49 in mid-July — far below their 52-week high of $14.67. “For the bargain hunter who is not faint of heart and is willing to take a ride on a roller coaster, these stocks could have tremendous long-term value,” Cavanagh declares. — Paul Sweeney
