Inter & Co could easily double if Bolsonaro delivers lower interest rates. It trades at just 1.4x 2027 book value, assuming 15% book growth, and targets 30% ROE by 2029, having already lifted ROE from 5% in 2023 to 16%. x.com 

The market is not bullish enough on Brazilian digital banks Nu and Inter & Co, which grow fast despite high rates and could do far better if rates fall. Nu grows 40% a year and Inter 25% with Brazil's Selic at 13.75%, near its highest since 2020, yet they trade at 12x and 8x 2027 earnings, and Inter at 1.5x tangible book even after a 20% jump. Nu already earns a 30% ROE and Inter 16% and climbing; a return toward the 7.25% 30-year average rate would lift both growth and returns. x.com 

Inter & Co's newer cohorts do not mature at the same rates as older ones despite higher starting ARPACs, putting it at risk of serious trouble in the next credit cycle. Its leverage is much higher than Nubank's, yet its risk-adjusted returns are 5-6% against Nubank's 10-12%. Inter's ROE is below the 16%+ cost of capital for Brazilian fintech banks, leaving it unclear whether it can earn above that hurdle over time. x.com 

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.com 

Brazil's election result could start fixing Inter's real problem, profitability, by lowering long-term rates, which in Brazil are driven mainly by fiscal policy. Cheaper loans and funding and customers better able to keep up with payments could lower cost of risk over time. Inter's ROE barely clears investors' required return, so the market has refused to pay for its growth. At around $6 it traded at 7.8x this year's earnings and 6.1x next year's. Nothing is decided until the 25 October runoff. … Show more

Inter & Co is hard to justify owning when Nu Holdings exists. Nu has better metrics across the board and just as much, if not more, future growth opportunity. Inter also doesn't disclose enough, leaving its cheaper valuation as the only reason to buy it. x.com 

Inter & Co looks practically free near its book value, offering huge upside with assets worth as much as the whole company. Shares trade just 40 cents above $4.69 book value per share. The rise in nonperforming loans from about 4.6% to 5% is not a sign of doom but a choice to enter payroll lending, where the loan book grew 12-fold to $2.5B; those loans carry higher default rates but much higher profitability. x.com  x.com  x.com 

MercadoLibre is worth owning for 20 years because its marketplace, payments, credit and advertising reinforce one another, with a long reinvestment runway in underpenetrated Latin American e-commerce and digital finance. Quarterly revenue grew 50% despite its scale, making about 40x earnings very reasonable for its quality. A deep management bench under CEO Ariel Szarfsztejn reduces founder dependence. Risks include credit underwriting, competition from Sea and Amazon, currencies and regulation. … Show more

MercadoLibre's business results should begin inflecting as credit portfolio growth slows now that the book has reached scale. An excellent outcome in Brazil improves the economic backdrop, and the stock sat at the technical bottom of its consolidation wedge. The economic backdrop, forward results and technicals all look very bullish. x.com  x.com 

XP Inc. is an average company trading too richly. It sits at roughly the same valuation as US peers such as Morgan Stanley and Raymond James, which it doesn't deserve given Brazil's higher discount rates. A hard rally on the day makes sense, but the valuation does not. x.com