The 2014 Latin America Research Team: Financials/Nonbanks, No. 1: Victor Schabbel & team

Victor Schabbel & team Credit Suisse First-place appearances: 6

Total appearances: 13

Team debut: 1993

It’s three years in a row at the top of this lineup forVictor Schabbeland his Credit Suisse squad — and the firm’s sixth No. 1 finish since 2004. Schabbel’s team has five analysts stationed in São Paulo and one in Mexico City, who together report on eight Latin American nonbanking financials shares. The sector outperformed the region’s broad market by 17.3 percentage points year to date through late July, climbing 24.7 percent. It “is seen as a more defensive play, with resilient growth no matter the economic environment, strong cash flows and high payout,” says Schabbel. Although valuations are much richer than they were six to 12 months ago, he and his colleagues believe that select names will continue to be perceived as safe harbors, given current market uncertainties. Accordingly, “we expect the sector to continue to do well, mainly on a relative basis,” he notes. One projected outperformer is BB Seguridade Participações, Banco do Brasil’s insurance unit. The researchers’ top pick over the short-to-medium term “has more to leverage on existing cross-selling opportunities in Banco do Brasil’s client base,” the 29-year-old crew chief states, “and that should fuel bottom-line growth in 2014 and 2015.” They also credit the insurance giant’s solid growth outlook, resilient product line and robust cash flow, which they believe will boost stock performance and sustain its ongoing rerating process. Investors looking at longer-term opportunities are advised to consider BM&F Bovespa. “The Brazilian exchange is trading at a discount to the average for the sector — 16.8 times price-earnings for 2015 versus 20 times — and is an interesting play for those trying to leverage on potentially better market conditions, stronger-than-expected macroeconomic growth and more-active capital markets,” Schabbel says.