The Event-Driven strategy involves positions in relative value and in absolute value situations which aim to capture significant pricing discrepancies in securities (mainly Brazilian listed equities). In general, the objective is to produce returns from specific risk, while market and sector risks are mitigated. The strategy involves long and short positions..
The Event-Driven strategy involves the analysis of economic sectors and the identification of the key performance variables for each sector. Subsequently, reasonable scenarios for such variables are tested, with the resulting price impact in the security being confronted with the corresponding probability of the scenario. In situations where comparable companies are priced materially differently for certain scenarios, the strategy enters relative value positions. In more extreme situations of mispricing, the strategy may employ absolute value positions.
In general, the resulting portfolio has a low net exposure, which leads to low expected correlation to market indices.