Sands Capital Management, LLC - Technology Innovators on Nu Holdings
Thesis
Nu Holdings operates a digital financial-services platform serving more than 100 million customers in Latin America. Higher-than-expected provisions raised 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 an accounting change may overstate delinquencies. After reviewing the balance sheet and engaging with management, Sands remains comfortable with the prospect of healthy risk-adjusted net interest income. The business also trades at its lowest forward earnings multiple as a public company while continuing to pursue a large addressable market.
“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