Gerdau SA

“Gerdau is a regional commodity steel producer whose ROIC has collapsed from 32% to sub-4% as Chinese overcapacity structurally repriced its core markets, management accelerated capex into the trough making incremental capital value-dilutive, and the Johannpeter family's dual-class voting structure leaves minority shareholders entirely disenfranchised. At 0.80x book and 8x forward EV/EBITDA the stock prices in a full cyclical recovery, offering no margin of safety against the real risk of sustained Chinese dumping permanently anchoring margins below breakeven. This is not a compounder; it is a cyclical commodity business with impaired governance — capital is far better deployed elsewhere.”