About

Is an independent fund management firm focused exclusively on public equities, with a fundamentalist approach.

About Nebraska

We develop “built to last” relationships with our clients through our Principles of Interest Alignment, which assure that our management fees are below market averages, that our remuneration comes mostly from performance fees, with high water mark, and that all partners must reinvest at least 70% of what we make with performance fees in the same portfolio as the clients’ (with no redemptions allowed). Moreover, partners are not allowed to have other investments besides fixed income for eventualities.

On the investment side, we are extremely focused on high quality companies, with potential of high returns, and that we know in depth. As we are disciplined about these points, one of our main differentials (from our Brazilian peers) comes about: we invest in U.S. stocks, besides Brazilian ones, as we believe that the likelihood of finding companies that meet our criteria is higher in the U.S. market than in Brazil. Holding true to our circle of competences, we often find opportunities in the U.S. amid companies barely known by Brazilian investors. Moreover, this strategy gives us the chance to exploit occasional dislocations between the two markets. Recognizing that the U.S. market is more dynamic that the Brazilian one, we will usually have a more diversified portfolio in the former. With this differential we add returns to the fund, besides reducing risk. (We don’t run currency risks in these investments.)

Inspired by Warren Buffett’s and Charlie Munger’s principles, Nebraska’s partners are low-profile professionals, highly focused and disciplined to guarantee the best investment decisions. 

Team

Rafael Sá

Degree in Business Administration from PUCRS, postgraduate in Economy and Finance from UFRGS, and courses on Value Investing at Columbia University and Richard Ivey (Canada). Rafael was President of IEE – Institute for Entrepreneurial Studies (located in Porto Alegre/Brazil), where he was also a board member for eight years. Originally a businessman in the health sector, Rafael owns a health clinic that sells monthly plans in Porto Alegre.

“I got interested in investments as I realized I did not like the routine of executive, although I liked a lot being a partner and taking care of strategy. After meeting Leonardo at IEE and Warren Buffett’s letters, we decided to start what is now Nebraska.” 

Leonardo Fração

Degree in Civil Engineering from UFRGS. Associate with the Institute for Entrepreneurial Studies – IEE since 2003, where he went from director to president between 2007 and 2010.

“Observing my families’ difficulty in finding providers of financial services that were really aligned with our interests incentivized me to launch Nebraska, along with Rafael in 2007”.

In parallel, in 2016, he became President of the non-profit “Culture Institute Forestry”, which is focused on improving quality of life and fostering prosperity in Brazil.

Bruno Otavio Claudino

Degree in Industrial Engineering from UFRGS and FEUP in Portugal, investment manager from CVM and certified on CPA-20, CFG, CGA e CGE from ANBIMA. Was associate with the Institute for Entrepreneurial Studies – IEE for 5 years and was CFO on IL – Instituto Liberdade.

“I came from a family that owns a company in the fertilizer business and I have always been interested in the financial area; since a teenager, already took care of the family’s financial structures. In 2008 I joined Nebraska Capital as an intern in the operations  and became a partner over the years. ”

Principles of interest alignment

Our principles of interest alignment are a strong differential. They represent our commitment to compound capital over the long run, aligned with clients who share our investment philosophy.

  • Our management fee is below the average in Brazil for public equity funds, as it is structure to cover fixed costs only, and falls as the fund grows.
  • Nebraska is in fact only remunerated with performance fees (of 25% above the CDI benchmark in the case of our initial fund Nebraska-FIA), always with high-water mark.
  • Nebraska’s partners must reinvest at least 70% of what we make with performance fees in the same portfolio as the clients’ (with no redemptions allowed) and are prohibited from holding any other financial assets (apart from fixed income for emergencies).

Investment philosophy and process

Our investment philosophy has been developed over the years, supported by the ideas and teachings of Warren Buffett and Charlie Munger. We look at companies behind stocks and view the stock market as just a mean towards our goal: to be partners of high quality companies and managers, providing our clients with returns above their opportunity cost.

Our investment process has two striking characteristics: focus and discipline. We focus our time and attention on a list of companies, organized by sectors that are in our circle of competence. We follow these businesses methodically and further group them into those in which we are shareholders, the ones that we may come to invest in, those that we are still studying, and the many others we follow for being either competitors or similar to those of the first three groups.

The discipline comes when deciding, especially to allocate capital, when we look for an entry point that opens an horizon of high returns, besides a good margin of safety, which can come either in the form of a discounted stock price, or when we see a company we believe can deliver results much above current ones, with that not yet well priced by the market. Once the investment is done, we follow the company very closely, and truly behave long term owners.

The fact that we have a portfolio that was built over the years gives us the necessary tranquility to profoundly analyze any new idea, as well as to have a very high bar for them, avoiding unnecessary mistakes.

To close, we highlight that the investment process is that same for U.S. companies as for Brazilian ones. Since 2012, we have invested a lot of time and efforts to develop the capacity to allocate capital in the U.S. Nowadays we have a nice list of American companies that we have been following methodically for years, besides an ample network with executives and fund managers in the U.S. Recognizing and respecting the obvious disadvantages, we believe that we have some advantages for being Brazilians investing in the U.S., amid then: (1) we are very used to economic crises and always deeply consider their potential impacts on our investees; (2) we are case-hardened on governance problems and, thus, we have a trained eye for these risks (we tend to select companies in which control is more defined than usual, as well as controllers we admire, something that has delivered good results so far); and (3) we live in a developing economy that is an important market  and source growth for American businesses.