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Cheap and profitable. And abandoned.

Episode

The extreme

There is a comfortable belief in the market: that a company's numbers, given enough time, speak for it. June 2026 went by without confirming it. Day after day, the financials ceded ground against the index — twelve straight sessions in the June 17 reading, on a day when nearly the whole relative landscape was giving way and only the utilities and the brick funds held; no block, though, fell with that constancy. It is not the size of the decline that makes the episode; it is its patience. A retreat without haste, without pause and without fanfare, crossing the month like someone clocking in for a shift. In numbers: the sector's ratio against the index pulled away from its historical averages — a striking detachment for a block that usually moves glued to the IBOV.

What happened next

The days that followed brought no truce: in the week ended June 26, the archive recorded fifteen sessions of retreat in the last fifteen. What changed was the backdrop — and it changed against the easy explanation. Aggregate flow, instead of following the decline, went the other way: the Perene Risk Index nearly doubled in the week, from 47.8 to 88, and closed June at 81.7, up from 41.9 at the start of the month — declared risk appetite. Mood did not follow: the Ânima Index ended the month at 23.2, deep pessimism — but the gloom belonged to the whole market, and the retreat was choosing a single sector. The Selic, at 14.25% a year at the close, weighed on everything; what weighs on everything does not separate one block from the rest. Capital was re-accepting risk in the aggregate; the financials kept ceding.

What did not happen

The explanation did not come from where it usually comes. Not from the books: in the twelfth straight session of retreat, the average ROE of the banks on the panel still stood at 24.5%, with a 7% dividend yield — profitability and payout where they had always been. Not from price: the IBOV's median P/E sat at 10.6, and 63.5% of stable stocks traded below fair value; everything the handbook says to look for was published, visible. Not from abroad: the external environment remained in moderate risk aversion, with no relevant systemic stress. And the episode did not end: at the close, the month's record notes the sector narrowing the distance against the index, still far below its own average. Deceleration, yes; normalization, no.

The honest verdict

What June left in the archive is a patient counterexample: a month in which published quality did not buy relative share. The honest reading records and stops — the why stays open, and forcing a cause would be writing what the source does not say. Cheap and profitable are adjectives of the stock; abandoned is a fact of the month. The archive keeps all three, side by side, dated — and leaves to the months ahead the work June did not do.

Continue reading: The financials leave the table — November 2017 · The banks leave the stage, with no heir — June 2024 · The single bet on banks — August 2014 →

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Read also: The financials leave the table in November 2017 — and the command that never settled · The banks leave the stage, with no heir — the exit that became a year-long decline · The single bet on banks — and the extreme that did not hold

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