Making Hay Monday – June 23rd, 2025
Making Hay Monday
Petro… Bravo?
Hello, Subscribers!
Before I launch into today’s investment highlight, I thought I should describe some modifications my team and I have made, or will be making, to our publication process. Both relate to our attempt to please as broad a section of our subscribers as we possibly can.
The Haymaker readership is quite diverse. Some of you are highly sophisticated financial professionals; others are knowledgeable do-it-yourselfers; quite a few are clients of my former firm, Evergreen Gavekal, where I was Co-chief Investment Officer for many years; most of the rest of you are mildly interested in markets and economic trends, but are not motivated enough to become paying subscribers.
For whatever reason, possibly a lot of sharing of our full letters, the latter are the overwhelming majority of our readers. Frankly, this is a source of considerable frustration to the elderly Haymaker as this publication’s primary author. Accordingly, I ask you not to share the behind-the-paywall material without our permission. And we’d also greatly appreciate it if you would help us grow our paying subscriber list.
Increasing the subscriber population is as essential to a financial newsletter as new buds are to a healthy plant. Frankly, endorsements of Haymakereditions to your friends and family are the most effective way for this newsletter to survive and, hopefully, thrive. As the old saying goes, either you grow or you die.
Image sourced from Barnes & Noble – Publisher: Skyhorse Publishing
On the other hand, we are aware that some readers want the details, particularly when it comes to specific investment ideas. As a result, we’re reluctant to leave those out.
The other modification is that we’ll be eliminating our Charts of the Week. This is being done both to shorten our Making Hay Mondays as well as to recognize that, in recent months, we’ve been sending you a Daily which almost always includes a chart or relevant visual. If enough of you want us to continue running our Charts of the Week, we’ll listen to your wishes and likely reinstate them.
Now let’s get to the fun stuff…
“In the end, free cash flow is all that matters.” -Charlie Munger, Warren Buffett’s longtime partner.
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Petro… Bravo?
The investment equivalent of a baseball triple play is to find a security that is denominated in an undervalued currency, is trading at a deeply depressed price, and generates a husky cash flow. As you no doubt suspect, that’s what I’m showcasing for you today.
In prior Haymaker editions, I’ve repeatedly made a bullish case for Brazilian stocks and bonds. The Brazilian stock market is up 23% this year, at least based on the U.S.-traded ETF, EWZ. Ergo, it’s been a nice performer of late. However, its share price has melted from around $42 four years ago to a bit under $28 today. Part of that was due to a 12% drop in Brazil’s currency, the real, since June of 2021. Based on the famous Big Mac Index, the real is now 25% undervalued versus the U.S. dollar (USD). Thus, the first box of the triple play is checked…
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IMPORTANT DISCLOSURES
This material has been distributed solely for informational and educational purposes only and is not a solicitation or an offer to buy any security or to participate in any trading strategy. All material presented is compiled from sources believed to be reliable, but accuracy, adequacy, or completeness cannot be guaranteed, and David Hay makes no representation as to its accuracy, adequacy, or completeness.
The information herein is based on David Hay’s beliefs, as well as certain assumptions regarding future events based on information available to David Hay on a formal and informal basis as of the date of this publication. The material may include projections or other forward-looking statements regarding future events, targets or expectations. Past performance is no guarantee of future results. There is no guarantee that any opinions, forecasts, projections, risk assumptions, or commentary discussed herein will be realized or that an investment strategy will be successful. Actual experience may not reflect all of these opinions, forecasts, projections, risk assumptions, or commentary.
David Hay shall have no responsibility for: (i) determining that any opinion, forecast, projection, risk assumption, or commentary discussed herein is suitable for any particular reader; (ii) monitoring whether any opinion, forecast, projection, risk assumption, or commentary discussed herein continues to be suitable for any reader; or (iii) tailoring any opinion, forecast, projection, risk assumption, or commentary discussed herein to any particular reader’s investment objectives, guidelines, or restrictions. Receipt of this material does not, by itself, imply that David Hay has an advisory agreement, oral or otherwise, with any reader.
David Hay serves on the Investment Committee in his capacity as Co-Chief Investment Officer of Evergreen Gavekal (“Evergreen”), registered with the Securities and Exchange Commission as an investment adviser under the Investment Advisers Act of 1940. The registration of Evergreen in no way implies a certain level of skill or expertise or that the SEC has endorsed the firm or David Hay. Investment decisions for Evergreen clients are made by the Evergreen Investment Committee. Please note that while David Hay co-manages the investment program on behalf of Evergreen clients, this publication is not affiliated with Evergreen and do not necessarily reflect the views of the Investment Committee. The information herein reflects the personal views of David Hay as a seasoned investor in the financial markets and any recommendations noted may be materially different than the investment strategies that Evergreen manages on behalf of, or recommends to, its clients.
Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this material, will be profitable, equal any corresponding indicated performance level(s), or be suitable for your portfolio. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. All expressions of opinions are subject to change without notice. Investors should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed in this presentation.
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