Squadra Investimentos reduced its stake in Brazilian health insurer Hapvida Participações e Investimentos to 3.87% from 5.15% in July, according to a letter sent to shareholders on August 23 and reported by Reuters on August 25.
The investment firm described the position as the largest mistake in its history, noting that the holding has "scratched our performance history and enormously cost our capital and that of our unitholders." Squadra’s remaining exposure is now limited to 1% across dedicated funds, it said.
Hapvida’s shares fell 4.71% to R$6.06 in Tuesday trading, extending a year-to-date decline of about 57% and a monthly drop of roughly 44%. The company reported a 95.8% plunge in second-quarter net profit and a 44.3% decline in Ebitda for the period.
Squadra acknowledged earlier this year it had pushed Hapvida to restructure its board and replace its CEO, installing directors aligned with its own agenda. Despite those changes, the firm now views the investment as punitive due to the company’s leveraged position and deteriorating operations, compounded by debt maturities that limit the timeframe for turnaround efforts.
The firm highlighted "high opportunity costs," citing elevated benchmark interest rates and stronger prospective returns in other portfolio holdings. Squadra also suggested that Hapvida’s path to recovery hinges on divestments and operational simplification, with a renewed focus on its core medical assistance unit where competitive advantages are most evident.
If a more efficient capital allocation strategy were to fully incorporate the acquired units—including the Notre Dame Intermédica subsidiary—Squadra estimated Hapvida’s shares "could multiply several times over." However, it cautioned that no illusions should be entertained about a swift resolution, given the company’s current financial constraints.
