12/2/24 - $nu - Bot $12, load closer to $10 if/when (LONG)
12/2/24 :: VROCKSTAR :: 
NU
Bot $12, load closer to $10 if/when
- is one of the three stonks in latam that i've commented in the past is worth keeping a v close eye on b/c of the growth rates and tremendous product. the others are
MELI and 
DLO (the latter of which worked out nicely and we made a good exit earlier this year from the lows, but it took a minute).
- back to Nubank:
1/ brazil in earlier innings of economic funeral, but what's new this happens every so often and those battle tested growers tend to come out of these events eating massive share, Nu will be one of these
2/ timing is always the tricky thing. you want to take calculated risk, but unlike the US stonks, you have clear geo/ FX and therefore adverse flows risk to consider. invest in emerging mkts and you need to have a tolerance/ knowledge of currency risk, minimally. i'm not going to downplay that here, but only to flag this needs to be something you consider if/when considering a stake in nu. the counter point is they're growing bananas outside of Brazil as well and likely take over pretty much over every other latam country similar to Meli. IMO, there's no competition for the growth engine they can export into latam.
3/ let's math and use two approaches... PE and ROE -> book value
a1. PE: let's imagine the 62c next year (in USD) is 50c - only a 15% growth. the reason you'd look at this is b/c most investors r going to be focused here, so you stand the chance of risk-evaluating what others see and making a call (similar to support and resistance vs. some esoteric TA you've developed). in this vein, what would you pay for a 15% EPS grower (ignoring all other factors of what this biz is and only considering it's a bank in Latam)? maybe 10-12x? def sub 1x PEG. b/c it's brazil, brazil is currently fukt. so you put a "depressed multiple" on a depressed EPS. at call it 50c and 10x - you're at $5 bucks. sick downside from the $12 it closed at today. so that's probably *worst* case, from today's POV. let's call that -60%. diddy slip and slide party pain.
a.2: PE: but this isn't some "new kid on the block". a lot of Nu investors are smart int'l types that are going to look beyond trough '25, even today, including papi warren B. so if we assume we pick up from 15% toward 20% the following year and go 50c -> 60c, you'd probably start to consider at that point at least a PEG of 1x given growth would extend to the following yrs as well. at 20x on 60c you're at $12 for year-end '26. and let's give it a 15% discount (Ke brazil finger in air - but likely in the ballpark) and you get to $10 and change for the 12M view e.g. YE25, which is the bogey we're all looking at today given we're already done w/ '24. so that's 20% downside.
combining a.1 and a.2 above... i'd likely weight a.2 as being perhaps a 70% and a.1 as 30% given the logic described, investor base and this isn't some going concern issue. also i'm being mega conservative w/ my EPS estimates as well. if you haven't noticed, they keep ripping the cover off the ball on EPS. so combined that's -60%*30% + -20%*70% = 33% downside more or less or a $8 stonk.
b: ROE thinking. 25% ROEs (probably expanding) and growing book at probably ~11/SHR for the next 2 yrs combined gets you to a book of $5. when you consider this likely continues to grow nearly 15-20% a year... and we could be conservative and say it's 10% a year (cut it more than in half)... at a 15% Ke you get:
Price = BookVal * (ROE - g)/(Ke - g) then discount 2 yrs by 15%.
this is Price = $5 * (25 - 10)/(15 - 10)/1.15/1.15 = $11+ today.
tying this all together... fair value is probably between 10 and 11 today. so buying $12 is defn being a bit opportunistic and playing a reversion move on BRL related assets. i'd not be surprised to see this thing move back toward $13/14 into year end, and equally i'd not be surprised to see it test the big green dilly from Aug 5 this year that ripped thru $10.
So, it's not an obvious trade for those who don't know this asset or haven't been following that closely. perhaps easier to wait for better entry even if that means some chop here/ there and you get a bit of fomo if first move is up.
The way i'm personally playing it are $10 and $11 strike 2027 leaps. allows me to amp my exposure without necking out too hard on a notional cash-in basis. offers about 3-1 leverage, so a 1.5-2% options position gets me a gross effective of about 5-6%. that's comfy for now. i'd like to get this position closer to 10-15% if/when we hit the 10s area or below (and it will be one to manage b/c *WHY* we go there will matter a lot - not just a rote plan, these things always evolve and perhaps there are other better deals out there too esp in the US or my favs
NXT, 
TSM, 
META).
anyway. wanted to flag. should be on your radar. this is a quality LT compounder that's gotten cheap b/c of geography, but is a neo-bank virus to the existing dino's in latam.
LMK what u think or esp if u see it differently.
have a good week my friends
V
NUBot $12, load closer to $10 if/when
- is one of the three stonks in latam that i've commented in the past is worth keeping a v close eye on b/c of the growth rates and tremendous product. the others are
MELI and DLO (the latter of which worked out nicely and we made a good exit earlier this year from the lows, but it took a minute).- back to Nubank:
1/ brazil in earlier innings of economic funeral, but what's new this happens every so often and those battle tested growers tend to come out of these events eating massive share, Nu will be one of these
2/ timing is always the tricky thing. you want to take calculated risk, but unlike the US stonks, you have clear geo/ FX and therefore adverse flows risk to consider. invest in emerging mkts and you need to have a tolerance/ knowledge of currency risk, minimally. i'm not going to downplay that here, but only to flag this needs to be something you consider if/when considering a stake in nu. the counter point is they're growing bananas outside of Brazil as well and likely take over pretty much over every other latam country similar to Meli. IMO, there's no competition for the growth engine they can export into latam.
3/ let's math and use two approaches... PE and ROE -> book value
a1. PE: let's imagine the 62c next year (in USD) is 50c - only a 15% growth. the reason you'd look at this is b/c most investors r going to be focused here, so you stand the chance of risk-evaluating what others see and making a call (similar to support and resistance vs. some esoteric TA you've developed). in this vein, what would you pay for a 15% EPS grower (ignoring all other factors of what this biz is and only considering it's a bank in Latam)? maybe 10-12x? def sub 1x PEG. b/c it's brazil, brazil is currently fukt. so you put a "depressed multiple" on a depressed EPS. at call it 50c and 10x - you're at $5 bucks. sick downside from the $12 it closed at today. so that's probably *worst* case, from today's POV. let's call that -60%. diddy slip and slide party pain.
a.2: PE: but this isn't some "new kid on the block". a lot of Nu investors are smart int'l types that are going to look beyond trough '25, even today, including papi warren B. so if we assume we pick up from 15% toward 20% the following year and go 50c -> 60c, you'd probably start to consider at that point at least a PEG of 1x given growth would extend to the following yrs as well. at 20x on 60c you're at $12 for year-end '26. and let's give it a 15% discount (Ke brazil finger in air - but likely in the ballpark) and you get to $10 and change for the 12M view e.g. YE25, which is the bogey we're all looking at today given we're already done w/ '24. so that's 20% downside.
combining a.1 and a.2 above... i'd likely weight a.2 as being perhaps a 70% and a.1 as 30% given the logic described, investor base and this isn't some going concern issue. also i'm being mega conservative w/ my EPS estimates as well. if you haven't noticed, they keep ripping the cover off the ball on EPS. so combined that's -60%*30% + -20%*70% = 33% downside more or less or a $8 stonk.
b: ROE thinking. 25% ROEs (probably expanding) and growing book at probably ~11/SHR for the next 2 yrs combined gets you to a book of $5. when you consider this likely continues to grow nearly 15-20% a year... and we could be conservative and say it's 10% a year (cut it more than in half)... at a 15% Ke you get:
Price = BookVal * (ROE - g)/(Ke - g) then discount 2 yrs by 15%.
this is Price = $5 * (25 - 10)/(15 - 10)/1.15/1.15 = $11+ today.
tying this all together... fair value is probably between 10 and 11 today. so buying $12 is defn being a bit opportunistic and playing a reversion move on BRL related assets. i'd not be surprised to see this thing move back toward $13/14 into year end, and equally i'd not be surprised to see it test the big green dilly from Aug 5 this year that ripped thru $10.
So, it's not an obvious trade for those who don't know this asset or haven't been following that closely. perhaps easier to wait for better entry even if that means some chop here/ there and you get a bit of fomo if first move is up.
The way i'm personally playing it are $10 and $11 strike 2027 leaps. allows me to amp my exposure without necking out too hard on a notional cash-in basis. offers about 3-1 leverage, so a 1.5-2% options position gets me a gross effective of about 5-6%. that's comfy for now. i'd like to get this position closer to 10-15% if/when we hit the 10s area or below (and it will be one to manage b/c *WHY* we go there will matter a lot - not just a rote plan, these things always evolve and perhaps there are other better deals out there too esp in the US or my favs
NXT, TSM, META). anyway. wanted to flag. should be on your radar. this is a quality LT compounder that's gotten cheap b/c of geography, but is a neo-bank virus to the existing dino's in latam.
LMK what u think or esp if u see it differently.
have a good week my friends
V
免责声明
这些信息和出版物并不意味着也不构成TradingView提供或认可的金融、投资、交易或其它类型的建议或背书。请在使用条款阅读更多信息。