As the first quarter of 2025 enters its final few weeks, an interesting shift has unfolded: the benchmark S&P 500 is trailing behind several foreign and emerging markets, including several leading Latin American companies. This unexpected twist has flung open the doors of opportunity for savvy investors hungry to tap into the potential of foreign companies, especially those trading at traditionally discounted valuations and poised for potential growth.  Enter Nu Holdings Ltd. NYSE: NU, a leading fintech tit ...

Few can question the fact that the proposed Trump tariffs have rattled investors. Such levies increase the cost of doing business. Hence, with the uncertainty surrounding when tariffs will be implemented or how much they will cost businesses and consumers, most stocks have fallen in recent trading sessions.Fortunately for investors, 74% of the world's economic activity takes place outside of the U.S. This allows investors to sidestep the tariff wars by investing internationally. To that end, one digital ban ...

Core Viewpoint - Nu Holdings is positioned as a rapidly growing fintech company in Latin America, particularly in Brazil, with significant revenue growth and user adoption, despite current stock drawdowns [2][5][11] Company Overview - Nu Holdings operates a mobile banking platform, Nu Bank, which has become widely adopted in Brazil, serving over half of the adult population [4][3] - The company has expanded its services to include bank accounts, credit cards, investing, personal loans, and insurance, contributing to its rapid growth [4] Financial Performance - In the fourth quarter of 2024, Nu Holdings reported revenue of $3 billion, marking a 50% year-over-year increase from $636 million in the same quarter of 2021 [5] - The company is generating close to $10 billion in annual revenue from the Brazilian market alone [5] User Growth and Market Expansion - Nu Holdings has a user base approaching saturation in Brazil, but revenue growth is expected to continue due to increased usage among existing customers [6][7] - The company has successfully entered the Mexican and Colombian markets, with 10 million and 2.5 million users respectively, and plans to expand further in Latin America [8] Profitability and Future Outlook - Net income for Nu Holdings reached nearly $2 billion in 2024, a significant turnaround from previous losses [10] - Projections suggest that net income could exceed $5 billion in the coming years, leading to a lower price-to-earnings ratio and indicating a potentially undervalued stock [11]

Core Viewpoint - Nu Holdings, a Latin American fintech company, is experiencing significant growth and presents a potential investment opportunity despite recent stock market drawdowns [1][2]. Company Overview - Nu Holdings is the parent company of Nubank, a digital bank that originated in Brazil and has rapidly gained market share, with approximately 58% of Brazil's adult population using its services, equating to around 100 million users [4]. - The company has expanded its operations into Mexico and Colombia, with user bases exceeding 10 million in Mexico and 2.5 million in Colombia, indicating strong adoption in these markets [6]. Financial Performance - Since 2020, Nubank's monthly revenue per active customer has increased at an annual rate of 33%, contributing to a revenue surge from $609 million to $9.5 billion, representing over a tenfold increase in just a few years [5]. - The company is projected to grow its revenue from $11.5 billion to approximately $35 billion over the next five years, reflecting a strong growth trajectory [9]. - Net income has improved from negative figures a few years ago to nearly $2 billion in 2024, with expectations that it could reach $8 billion in five years as the company scales in new markets [10]. Market Opportunity - Latin America presents a substantial market opportunity for Nu Holdings, with a total population of around 650 million and significant growth potential in countries like Peru, Argentina, and Chile [8]. - The company aims to expand its presence in Central and South America over the next decade, building on its success in Brazil, Mexico, and Colombia [7]. Valuation Insights - Currently, Nu Holdings has a market capitalization of approximately $50 billion, with a price-to-earnings (P/E) ratio of 25 based on 2024 earnings, which may not appear cheap [11]. - If net income reaches $8 billion in five years, the P/E ratio could drop to around 6, suggesting that the stock may be undervalued relative to its growth potential [12].

Core Viewpoint - Nu Holdings experienced a 19% decline in stock value in February following a strong fourth-quarter earnings report, primarily due to negative sentiment regarding new growth plans and the economic situation in Brazil [1] Group 1: Company Growth and Performance - Nu Holdings is an all-digital bank based in Brazil, rapidly growing by adding millions of customers each quarter, which drives revenue growth and profitability [2] - In the fourth quarter, Nu added 4.5 million customers, bringing the total to 114.2 million across Brazil, Mexico, and Colombia, with 58% of Brazil's adult population as members [3] - 95% of members use their accounts monthly, and 61% of monthly active members consider Nu their primary bank account, with significant growth in Mexico and Colombia [4] - Net income rose from $361 million to $553 million year-over-year, with revenue increasing by 50% on a currency-neutral basis, and average revenue per active user (ARPAC) increased by 23% [5] Group 2: Future Plans and Market Sentiment - Management plans to invest heavily in the business in 2025, aiming to expand beyond traditional banking, while also anticipating macroeconomic challenges in Brazil [6] - The company has outlined a "3-act story" for its growth strategy, having completed Act 1 (developing its banking business), with Act 2 focused on expanding beyond financial services, and Act 3 aimed at becoming a global digital bank [6] - Despite the risks associated with young companies, Nu's stock is considered cheap at a forward one-year price-to-earnings (P/E) ratio of 13, presenting a potential long-term investment opportunity [7]

Core Viewpoint - Nu Holdings presents a unique buying opportunity for investors as it is currently trading at a discount despite its proven growth trajectory [1] Company Overview - Nu Holdings was founded in 2013 by a former venture capitalist who identified a significant market opportunity in Latin America, where traditional banking was dominated by a few large incumbents, leading to low innovation and high fees [2] - The company offers low-cost financial services through a smartphone app, eliminating the need for physical branches, which accelerates customer acquisition and reduces operating costs [3] Growth Strategy - Since its inception, Nu has grown its customer base from zero to over 100 million, with more than half of Brazilian adults now using its services [4] - The company has successfully expanded into Mexico and Colombia, with a large untapped market in Latin America still available for growth [4] Financial Performance - Nu achieved profitability in 2023, with profits scaling impressively, leading to shares trading at 29 times earnings, which is lower than the S&P 500 average [7] - On a forward price-to-earnings basis, Nu is trading at under 21 times earnings, indicating strong profit growth despite a decline in revenue growth [8] Future Outlook - Upcoming quarterly results are expected on May 13, and if profit growth continues, a rerating of Nu's valuation may occur, making shares an attractive buy before this date [9]

Core Insights - Great companies rarely go on sale, especially those with rapid growth rates, but short-term corrections can provide investment opportunities [1] - Nu Holdings operates in Latin America, primarily in Colombia, Brazil, and Mexico, and has been recognized for its innovative approach to banking [2][4] Company Overview - Nu Holdings was founded by David Vélez, a former Sequoia Capital employee, who identified significant growth opportunities in the underdeveloped financial sectors of Latin America [3][5] - The company aims to disrupt traditional banking by utilizing a smartphone app, allowing for lower costs and faster service delivery compared to traditional banks [6] Market Penetration and Growth - Nu has rapidly gained market share, with over half of Brazilian adults now as customers, growing its total customer base from nearly zero in 2013 to over 100 million today [7] - Latin America has a population of over 650 million, indicating a substantial growth runway for Nu despite recent slowing growth rates [8] Valuation and Investment Potential - Following a recent pullback, Nu shares are trading at approximately 28 times earnings, which is cheaper than the S&P 500, with expected double-digit earnings growth this year [9] - On a forward basis, shares are trading at just 20 times expected earnings for the next year, making it an attractive investment opportunity [10]

Core Viewpoint - Nu Holdings Ltd.'s shares dropped 18.9% following disappointing fourth-quarter results, raising questions about whether this decline represents an overreaction and a potential buying opportunity [1] Financial Performance - NU's fourth-quarter earnings were $0.12 per share, meeting Wall Street expectations, but revenues of $2.99 billion fell short of the $3.17 billion forecast [1] - The net interest margin (NIM) decreased by 70 basis points sequentially in the fourth quarter, attributed to FX volatility and increased funding costs in Colombia and Mexico [2] - Year-over-year, NIM increased by 57%, but this growth was lower than the previous quarters' YoY increases of 63%, 77%, and 93% [2] Operational Efficiency - Despite the decline in NIM, NU's efficiency ratio improved to 29.9%, up 150 basis points sequentially and over 610 basis points from the previous year, highlighting the advantages of its digital business model [3] Customer Growth - NU's revenues grew by 58% YoY to $11.51 billion on an FX-neutral basis, driven by an increase in its customer base, which reached 114.2 million globally, a 22% increase YoY [4] - NU is now the third-largest financial institution in Brazil, with over 10 million customers in Mexico and 2.5 million in Colombia, reinforcing its position in the digital financial services market [4] Risk Management - The 15-90 non-performing loan (NPL) ratio decreased by 30 basis points to 4.1% in the fourth quarter, indicating a lower risk profile and more secure lending practices [5] Investment Outlook - Despite the recent share price decline, factors such as improved efficiency, expansion in Latin America, and a favorable loan environment suggest potential for future growth [6] - NU's return on equity (ROE) stands at 30.4%, significantly higher than the industry average of 3.6%, indicating robust profitability [6] - New investors may consider the current dip as an opportunity to buy shares at a discounted price, while risk-averse investors might prefer a cautious approach due to currency fluctuations impacting financial statements [8]

Core Viewpoint - Nu Holdings experienced a significant stock decline of 19% on February 21, 2025, dropping to $10.80 despite reporting strong earnings, which reinforces confidence in the long-term prospects of this Latin American fintech company [1] Company Summary - Nu Holdings is identified as a major player in the Latin American fintech sector, indicating its potential for growth and investment opportunities [1] Financial Performance - The earnings report from Nu Holdings was described as "pretty good," suggesting that the company's financial health remains robust despite the stock price drop [1]

Investment Strategy - The company employs a contrarian investment style, focusing on high-risk, illiquid options and shares [1] - The investment portfolio is split approximately 50%-50% between shares and call options, with a typical investment timeframe of 3-24 months [1] - The company targets stocks that have recently experienced sell-offs due to non-recurrent events, particularly when insiders are buying shares at lower prices [1] Screening and Analysis - Fundamental analysis is utilized to assess the health of companies, including their leverage and financial ratios compared to sector and industry averages [1] - Professional background checks are conducted on insiders who purchase shares after sell-offs to ensure credibility [1] - Technical analysis is employed to optimize entry and exit points, using multicolor lines for support and resistance levels on weekly charts [1]