BTG Pactual updates its October small-cap portfolio, replacing OceanPact and Inter with Dexco and Banco Pine, citing turnaround and momentum potentials respectively, as it aims to capitalise on undervaluation and growth in Brazil’s niche markets.
BTG Pactual has reshuffled its small-cap portfolio for October, removing OceanPact and Inter and replacing them with Dexco and Banco Pine, both given a 10% weighting in the 10-stock basket. According to the bank’s latest note, the new additions reflect a mix of turnaround potential at Dexco and momentum in Banco Pine’s private payroll-linked lending business. The report, published on 1 October, puts the upside for Dexco at 20% and for Banco Pine at 44%.
The changes leave the rest of the portfolio intact, including Cosan, Smart Fit, Sanepar, Orizon, 3tentos, Tenda, Bemobi and Panvel. BTG said 3tentos carries the strongest estimated appreciation in the group, at 155%, followed by Cosan at 102%. In a separate summary of the same model portfolio, the bank also highlighted valuation levels that it sees as attractive, with Banco Pine and Tenda trading on comparatively low earnings multiples for 2026.
BTG’s case for Banco Pine rests on what it describes as the bank’s lead position in the emerging private-sector consignado market, a form of payroll-deducted lending that is still developing in Brazil. The analysts said Pine has become the main winner in that niche within BTG’s coverage universe, supported by a dedicated team of more than 300 people. They also said both loan origination and lending spreads have continued to improve, which is feeding through to profitability.
Dexco, meanwhile, has been added as a restructuring play. BTG said the company has been adjusting production capacity, cutting costs and selling non-core assets, including forestry operations, as part of a broader effort to strengthen returns and reduce leverage. The bank said net debt to Ebitda has fallen from a peak of 3.5 times to 2.7 times and it expects further improvement. It also sees a solid third quarter for the wood division and further progress in the Deca unit, while lower interest rates could help both consumer demand and the cost of debt linked to Brazil’s CDI benchmark.
The report did not spell out why OceanPact and Inter were dropped. But it was more confident about some of the names that stayed. BTG kept Tenda in the line-up despite a drop of about 18% in September, arguing that the market’s reaction had been excessive because profit forecasts had not been materially cut. The bank also said recent weakness at 3tentos reflected soft industrial margins in the second quarter, but it sees little sign of structural damage and expects recent investments in soy crushing, biodiesel and corn ethanol to support higher volumes and earnings.
Performance has been mixed. BTG’s small-cap portfolio fell 0.3% in September, lagging the 5% rise in the Ibovespa and the 5.2% gain in the small-cap index. For the year to the end of September, the portfolio was down 7.8%, compared with a 15.6% advance for the Ibovespa and a 1.6% decline in the small-cap benchmark. That gap helps explain why the bank is leaning on recovery stories and valuation support as it seeks to recover ground in October.
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