Say No To Trading
Public Markets Investor, Opportunistic Buying & Cost-Basis Management
MercadoLibre already covers Latin American consumer-finance exposure, so there's no need to own Nu, which is even harder to truly understand. Nu is all finance under foreign laws and culture, very difficult for a US investor to grasp, and MercadoLibre's business segments are hard enough. Given the disadvantage in analyzing international stocks, it is better to own only what can be truly understood. x.comÂ
MercadoLibre already covers the fintech exposure Nu offers, so there has never been a need to own Nu. As @DrewCohenMoney notes, Mercado Libre shoppers can apply for a credit card at checkout and use it on that purchase, one way the e-commerce platform acquires customers for Mercado Pago. x.comÂ
Nu and MercadoLibre's biggest secular-growth advantage is resilience to electoral and macro shocks. Nu hit 139 million customers and $1 billion quarterly net income through Brazil's recession, impeachment and pandemic. MercadoLibre survived the dot-com crash and devaluations; Mercado Pago has nearly 78 million monthly users and credit growth above 90% year on year. With regional e-commerce growing 15%-20% annually, their value through 2027 depends on adoption and delinquencies, not one election. … Show more
Latin American equities' sell-off looks overdone as long as the underlying businesses keep growing and fundamentals remain intact. Under that condition, the drop is market noise, and MercadoLibre and Nu Holdings could offer attractive opportunities amid the panic. x.comÂ
MercadoLibre's collapsing margins and earnings make its 45-times-earnings valuation look like a value trap. It faces intense competition, and less of its revenue reaches the bottom line; falling earnings make the stock more expensive even as its price falls. Nu Holdings trades at 17 times earnings and Inter & Co at 7 times, with both growing revenue and earnings robustly. Selling MercadoLibre to build positions in companies with better fundamentals is under consideration. x.com x.com x.com x.comÂ
Today's fundamentals and long growth runways make Nu Holdings and MercadoLibre among the market's most compelling and mispriced opportunities for patient capital. Their short-term outlook shifts mostly with FX volatility and fiscal and monetary policy uncertainty. x.comÂ
Nu Holdings and MercadoLibre should benefit from business-friendly policies, which will only strengthen the moats both companies already had. x.comÂ
Nu Holdings' US entry targets people from Latin America now living there, rather than direct competition with SoFi or Robinhood; entering the US matters much more than Brazil's election. After Lula's reelection, Nu opened down 21% and was testing its yearly lows. This dip is likely a great long-term buy. x.com x.com x.comÂ
The election news is more bark than bite for Nu Holdings, MercadoLibre, StoneCo and PagSeguro. Funds and institutions seem to have been caught off guard and need to unwind positioning; the four should recover nicely over the next few weeks or months. x.comÂ
MercadoLibre and Nu Holdings are two of the most attractive buying opportunities in the market, trading at their lowest valuations while Stanley Druckenmiller says he is long Brazil, alongside South Korea and Japan. x.comÂ
South American political unpredictability keeps investors from rewarding MercadoLibre's excellent fundamentals. Today's selloff illustrates that risk, despite the strength of the business. x.com x.comÂ
MercadoLibre and Nu Holdings have massive runways and have thrived across political backdrops, so they do not need tax cuts or deregulation to keep winning. Both have performed extremely well in Brazil under Lula since 2023, even in a fragile macro backdrop. The election-driven selloff left these cream-of-the-crop businesses at lower multiples, and more near-term selloffs are possible. x.com x.com x.com x.comÂ
