Sands Capital Management, LLC - International Growth on Nu Holdings
Thesis
Nu Holdings serves more than 100 million customers through its digital banking platform in Latin America. Higher provisions created concerns about household debt and credit quality, but Sands believes Brazil's employment and real-wage trends are more relevant to future losses and that accounting changes may overstate delinquencies. After inspecting the balance sheet and engaging with management, Sands remains comfortable with the outlook for healthy risk-adjusted net interest income. The business continues to pursue a large addressable market while trading at its lowest forward earnings multiple as a public company.
“With the business trading at its lowest forward earnings multiple as a public company, we believe investor concerns may be overstated.”
Key risks
- Asset quality and credit-loss concerns in Brazil
- Execution risk from entry into the United States