Chit Chat Stocks - Nu Holdings: The Best Fintech Stock In The World? (Ticker: NU)

Episode Date: March 26, 2025

On this episode of Chit Chat Stocks, Brett gives a research report on Nu Holdings (ticker: NU). We discuss: (04:08) The Founding Story of Nu Holdings (07:31) Personal Anecdotes and User Experience in Banking (11:53) Management Team and Leadership Insights (18:44) Business Model Overview of Nu Holdings (31:12) Geographic Opportunities: Brazil and Mexico (38:39) Nu Holdings' Growth Strategy in Mexico (42:44) Competitive Landscape and Market Dynamics (53:19) Navigating the Credit Cycle and Economic Risks (58:41) Future Financial Projections and Valuation Concerns ***************************************************** JOIN OUR NEWSLETTER AND FREE CHAT COMMUNITY: https://chitchatstocks.substack.com/  ********************************************************************* Sign-up for a bond account at Public.com/chitchatstocks  A Bond Account is a self-directed brokerage account with Public Investing, member FINRA/SIPC. Deposits into this account are used to purchase 10 investment-grade and high-yield bonds. As of 9/26/24, the average, annualized yield to worst (YTW) across the Bond Account is greater than 6%. A bond’s yield is a function of its market price, which can fluctuate; therefore, a bond’s YTW is not “locked in” until the bond is purchased, and your yield at time of purchase may be different from the yield shown here. The “locked in” YTW is not guaranteed; you may receive less than the YTW of the bonds in the Bond Account if you sell any of the bonds before maturity or if the issuer defaults on the bond. Public Investing charges a markup on each bond trade. See our Fee Schedule. Bond Accounts are not recommendations of individual bonds or default allocations. The bonds in the Bond Account have not been selected based on your needs or risk profile. See https://public.com/disclosures/bond-account to learn more. ********************************************************************* FinChat.io is The Complete Stock Research Platform for fundamental investors. With its beautiful design and institutional-quality data, FinChat is incredibly powerful and easy to use. Use our LINK and get 15% off any premium plan: ⁠finchat.io/chitchat  ********************************************************************* Bluechippers Club is a tight-knit community of stock focused investors. Members share ideas, participate in weekly calls, and compete in portfolio competitions. To join, go to ⁠Blue Chippers and apply! Link: ⁠https://bluechippersclub.com/ ********************************************************************* Disclosure: Chit Chat Stocks hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to Chit Chat Stocks. Before we get to this episode, we want to talk about our friends at Public. If you're serious about investing, you need to know about Public.com. That's where you can invest in everything, stocks, options, bonds, crypto. They even offer some of the highest yields in the industry, like the bond accounts, 6% or higher yield that remains locked in, even if the Fed cuts rates. What sets Public apart is how they give you the tools you need to make informed investment decisions. Their built-in AI tool called Alpha doesn't just tell you if an asset is moving. It tells you why the asset is moving so you can actually understand what's driving your portfolio's performance. Public is a FINRA registered SIPC insured

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Now, please enjoy this episode. Welcome to Chit Chat Stocks. My name is Ryan Henderson, and I am joined by Brett Schaefer. This is our monthly research episode where either Brett or I brings a stock to the table, and the other person, in this case, this will be me, asks questions about the business model the history, the financials, and the potential for the stock. We're talking about new holdings today, which is one of the maybe fastest growing financial businesses in the world and operates out of Latin America. I'll be asking the questions. Brett will have the answers for us today. And if you enjoy our work, you enjoy this episode, please, please, please, please give us a review

on apple podcast or spotify that is the best way to support this show and if you would like to read more graphics these are this is actually really important for these episodes specifically because it's essentially company reports we have a free newsletter on substack it's chit chat stocks just look it up you'll find our substack where it also includes a bunch of charts any extra data that we have where it's maybe hard to say in audio format but i will leave it there brett why don't you introduce new holdings what uh what made you want to research this company yes thank you ryan as you can see anyone that's watching this episode for the few watching i did change my background light to purple or violet because with new bank with new holdings it seems like that color is taking

over brazil and latin america uh with the majority of the adult population using them to understand new holdings, which we'll interchangeably call new bank. Now we might be calling it new holdings, new bank, that's generally referring to the same thing. And if we're talking about a country specific one, you will, you know, we'll have that for you. And if we want to understand them, and all its success and how they've gotten to over 100 million customers to join the platform, we really need to understand its founding story and the consumer banking landscape in brazil and these other latin american countries then we'll have the context to help understand their business model why they went at the market the way they are they did

and dissect whether it has a competitive advantage and then analyze what they may earn over the next few years all right let's start with set the scene what did the banking landscape look like in brazil as new holdings or new bank was starting to enter the field Yeah, in the newsletter, I called this one a one foot hurdle in improvement. Now, if you think about how some of the digital banking solutions in the United States for listeners here, they came on the scene with smartphones, with branchless solutions, with higher interest rates on savings accounts. These are the SoFi's, the allies of the world.

And there's also the send features with Venmo, Cash App, places like that. And when you look at these products, it's not like the existing solutions were terrible, but there was a significant improvement there. Now in these countries, as we'll get into, there was room for substantial improvement. And that's why New Holdings has taken so much market share. So the founder and current CEO of New Holdings is David Velez. Sorry if I'm not using that accent correctly. That's how I'm going to pronounce it. He was born in Colombia, but he moved to Costa Rica to escape cartel violence, I think before the age of 10 with his family. Then he went to Stanford University and obtained a job as an analyst and portfolio

manager at a venture capital firm focused with his job in Latin America. His biography is important for two reasons. First, being that he's from the region, he can have a deeper understanding of how the Latin American economic engine works. And second, right before founding New Holdings, he got boots on the ground experience on how bad personal finance and consumer banking is in Brazil. And researching this episode, talking with people that have either connections in the region or have just used, you know, banking solutions in Brazil in general, it sounds like a terrible user experience. You have sky high interest rates, terribly penalizing fees, gatekeeping the system only for those with reasonably high income. So forcing a lot of

the population to be cash only. And it's all controlled or was controlled by just a few banks who offered the same and I'll maybe just spell this word out for you because I think you know we tend not to swear on the show for maybe the five people that are listening with kids in the car but we want to respect all our listeners uh some s-h-i-t-t-y services some very very bad services and I don't think uh that's an exaggeration these would sound like a product that everyone hates no one enjoys and you just had to deal with them because there's no other option now that is until Velez and the founding team here saw an opportunity for disruption. And yes, you guessed it, they saw a way to get into the market with the smartphone. Like many of the disruptive stories of

the past 20 years, you know, Uber, Airbnb, well, Airbnb to an extent, but you know, Uber is the classic story. NewBank was able to wiggle its way into the Brazilian financial sector by building a personal finance platform and really a consumer banking application tailored to the smartphone. And it is, of course, at the end of the day, more complicated than this. And we'll get into the nitty gritty of NewBank's business model. But the gist of the story is that Beleza poorly run industry, which was the Brazilian consumer banking sector, and then an opportunity to disrupt it with the smartphone while still remaining profitable. That is why NewBank is now serving the majority of adults of adults in Brazil. Well, any questions on there, Ryan, before I go in to a personal anecdote to kind of exemplify how the legacy financial experience is for a lot of people living in these countries?

No, I think maybe some people are envisioning – maybe if you're in Latin America, you might remember how crappy some of these services were. But if you're not and you're thinking, well, what's actually that bad about it? How can it be? you know what were the improvements a brett's going to get get into that but think about all the friction that you have with a legacy bank that the you're not getting as high of a rate on your savings um you're you're kind of getting nickel and dimed with fees everywhere time wasted frustration tons of time wasted think about ever trying to have to call your bank and do something custom like how much of a pain in the butt is that so brett's going to go through a personal

example and it just kind of alludes to the market that new banks going after so why don't uh well what i must say when i read your notes like i laughed at this sorry to laugh at your expense but uh go through your story here didn't lose too much money but yeah so as somebody traveled around columbia uh bang columbia banco columbia branches and atms were ever present and those are sometimes the only atms that you could use especially as a foreigner didn't really know much about like, okay, where this, this ATM over here, right? This is the one I can find. I'm going to use them. And fortunately, you know, as someone who has, uh, as an American, I have access to some of the international digital payment systems, you know, thank you to wise and American express

for making my life easier. But in a country such as Columbia, you want some cash for emergencies or potential emergencies, or when faced with a vendor that only accepts paper currency, you want paper currency in your wallet. So I needed to access a bank of Columbia ATM a few times. Now, not only did these ATMs charge an 8% fee on withdrawals, one time it literally did not give me money. And you're thinking that it just didn't work and they made me restart. No, it said the ATM told me, collect the cash. I got no cash out of the ATM and it said transaction finished. The bank account was, my bank account was credited with the withdrawal. So my personal bank account, it said the money was gone but it had not been in my hands it took time you know obviously i was

upset when that happened and luckily it wasn't a large sum of money but it really you know luckily my bank account uh my u.s bank account recouped the money for me but that's after calling customer support that's after doing with all this stuff and it looked even worse when i would see the local customers in action there was a line at the branch constantly where you had to queue for 30 minutes to an hour. You're wasting millions of hours for these Bank of Colombia customers every year. They deal with sky-high fees all the time, a miserable experience. These ATMs barely work, I guess. Maybe that was just my personal situation, but it doesn't sound like a fun time. And it's no wonder that even after just a couple of years, NewBank has rapidly gotten to 2.5

million active customers in Colombia and 94.9 million total monthly active customers if you add in brazil and mexico i'm just picturing you kicking this atm trying yeah just putting my hands up turning around to all the other people in line and they all speak spanish and you're like come on what's what's going on here yeah just putting my hands up they're like sorry man yeah no there's no one there to help me who am i gonna call banco columbia yeah it's just a miserable experience The user growth is truly astounding. I'm going to pull up this chart here while you talk. But yes, to repeat the numbers Brett just said, in the last four years, they have gone from 18.6 million active customers to 94.9 million active customers.

That's a nearly 50% annual growth rate. And that's actually up, if we back it out even further, it's an even more impressive growth rate. So it's no surprise that they have had such impressive adoption when you actually contextualize what their competition looked like. So yeah, I guess it makes sense why they've done so well. why don't we get into the management team a bit? You mentioned the CEO and founder. What do you think of him and what are his incentives? Okay. So long-time listeners will know that, and you're going to maybe hear this in your head. I've probably heard me say this 10 or 20 times. There's three pillars to my investment thesis, and one of them is trusting management. So I care about three things, valuation, competitive advantage, and do I trust management? Now we're going to look into that third one

today. And Velez founded New Holdings, and he still runs the business right now. And he is in his 40s. So he's in the sweet spot, I would say, of a founder-led managerial age. He's not going to be, you know, getting to the end when he might want to retire sometime. But he's also not too young where he's already gone through the trial and error, made some mistakes. And he's had, honestly, even though he's only in his early 40s, given that they founded this business a while ago, he has a lot of experience under his belt. He's actually already one of the wealthiest people in the world with a net worth of over $10 billion. And I'm assuming one of the top people in all of Latin America. And almost all of this wealth is tied to Newbeck. So sure,

he has skin in the game. But I don't think Velez cares about bringing his net worth to $20 billion. I don't think your lifestyle doesn't change. If you go from $10 billion to $20 billion, I would assume. Is there anything you can do with $20 billion that you can't do with $10 billion? I don't think so. I think for him and a lot of these founders, Zuckerberg is a good example. The game isn't purely monetary anymore. I don't think the number on the spreadsheet matters or at least shouldn't matter, or I hope it doesn't matter primarily to him. And he seems from listening to him, reading him, just kind of picking up on their philosophy that he is dedicated to building and growing new holdings. He does want to provide a better customer experience for these

people. He sees an opportunity here and he also sees an opportunity to make money and help the economic engines of these countries. And I think he's also dead set on crushing these stodgy financial institutions that are leeching off of customers that have taken advantage of them for years. And yes, he's going to do so profitably, but in a way that has a good customer experience because of the branchless solutions, the lower overhead costs, and everything seamlessly working through a smartphone. And if we're talking about shareholders, I think he cares about outside investors as well. The team talks about and focuses on generating a good return on equity or ROE above all else, which is what you want to focus on for a bank. Quarterly net income has now

been positive since the start of 2023 and has continued to march higher, $552 million in U.S. dollars in Q4 2024. We're at about, I think, $2 billion or so, maybe even a little higher annual run weight on net income. And we don't see them bragging about nonsense metrics like adjusted EBITDA over at SoFi. And another note that I think was positive was that Velez decided to get rid of an extra stock-based compensation pay package that was going to be gifted to himself for hitting some stock price targets after the IPO back in, I think the IPO in 2022, but either way, right around the IPO, there was this pay package he was going to get in a form of stock based compensation. Don't know the exact one. Maybe it was options. Maybe it was RSUs. That

doesn't matter. What does matter is that it was going to dilute existing shareholders and dilute the share count by about 1%. But he decided, and he had the full power to do this, to just say, I don't want it. Just take it away. I don't need this product. I think that is a good sign that he's not one of these greedy managers that just wants to take everything for himself. He cares about taking care of his employees, his customers, and his shareholders. And he reminds me of Airbnb's founder, Brian Chesky, or Coupang's founder, Bombsuit Kim. Right around the same age range, they embedded their products kind of right after the smartphone in this new tech, I don't want to call it a revolution, but the new tech boom of the 2010s.

And if it was just about money for either three of these people, they would have retired and gone off into the sunset long ago. They have plenty of money. They have plenty of wealth tied to these businesses. I believe they care about making an impact with these companies beyond just getting more wealthy. They want to win the game, quote unquote. And Belez, I would put in the same boat with these two.

yeah he seems like a great well the results make him seem like a phenomenal operator but when you're in your 40s you're worth 10 billion dollars and you have the largest digital bank in latin i believe they're the largest digital only bank in latin america unless mercato pago could technically be called that they're actually not a bank right yeah they're they're a little bit confusing but yes mercato pago is the only other scaled i sorry the only other fintech personal fintech app at this scale in latin america now are they actually a bank no maybe they're slightly different there are some competitors that have a decent amount of users like inter which we'll talk about below but when you have a population of 600 million i mean if you look at the united

states even this is not a winner take all market so new holdings can be the leader but there's also going to be plenty of room for sizable competitors out there you know in the united states you have Capital One, Discover, American Express, Chase, all these other credit card companies. Yeah, I really like it when you get that manager kind of in the sweet spot where at this point, if they wanted to just exit, wanted to be a billionaire, wanted to run this until they were rich, they would have sold. They would have gotten out of the business. So you know, or you at least have a sense that this is more of a, I don't know, personal journal yeah personal journey uh life's work it's like you said it's beyond just the

monetary benefits uh although he will benefit monetary financially as well and that is the other thing the deferring the stock compensation i love that because my biggest pet peeve is when you have a ceo who is the largest shareholder or the largest independent shareholder and they're taking these stock packages it's like do you not realize that you would benefit the most if you like you are the single shareholder that would benefit the most by deferring this and it would go it would ultimately culminate to you so for him to be able to have sort of the awareness to do that i appreciate that let's talk the business model though because there's a lot of different moving parts here. They do a lot on behalf of customers. I'm going to pull up

the finances while you're talking about it, but what actually does NewBank provide? Yep. And we're going to get into it. FinCheck, as you're going to pull up here, is quite helpful for a lot of these KPIs, segment revenue, ARPU, which they have a separate metric to define their monthly active revenue per customers, and also geographic stuff, which we're going to get into geographic stuff we're going to get into later. But now we're going to just kind of go through an overview of NewBank's business model. They have a sprawling and complicated business model. I may miss something here.

I may not include something in my analysis. If you're a listener, if you're an expert on NewBank, I wouldn't get, don't get mad. I know there's some people out there that know this business quite well. And if you say something wrong, look, it's okay. And this presentation will also focus more on the customer value proposition of NewBank. and it's going to be less on the credit underwriting. This is an area I think I can understand a little bit better and hopefully provide some insights on,

whereas looking at credit underwriting, that's one where at the end of the day, I just have to trust management and I have to trust that the past performance is going to continue, which they have been doing good credit underwriting and profitable credit card lending and personal lending in Brazil and hopefully in Mexico as well coming up here. But I'm not going to have some hot take

about what direction that's going to go or what direction in 2025 the consumer lending economy or some recession is going to happen in Brazil or not. Yeah, and for anyone that's saying, oh, you're not digging deep enough, there truly is only so much you can do as an investor to understand the future of a company's loan book Because what they report is what you get, unless you have some sort of insider information or you have some very confident take on where interest rates are heading, especially in specific regions, you have to basically take their numbers at face value, the net income margins, what they're originating, what yields they're getting on the loans they originate versus their actual cost.

So you kind of have to, like Brett said, have some trust in management when it comes to any sort of lending operation. Exactly. And if you want more details on the credit business at Nubank, how it works, where the potential growth could come from, given the Brazilian and Mexican economies and how those work from a personal lending business, I would recommend, and I'm going to link to this in the newsletter. It's another newsletter from a, I think it's a financial firm called Red Barrel, spelled B-E-R-Y-L. They go into great detail on the lending business in Brazil, and I'm not going to do much better than them. So let's get to it. NewBank's goal is to provide a much better personal finance experience than the traditional banks. This was not hard in Brazil, as I discussed above and why they saw such a wide open opportunity in the nation. I want to go through how a potential customer or even someone who has seen an advertisement like switch to NewBank or is, you know, they use the Bank of Day Brazil or whatever it is, and they are thinking about switching because they saw this advertisement. This is how they would compare the two personal finance mobile applications in

Brazil or just your banking solution. At your existing bank, you can go there and you have ridiculously high fees. You have ultra high rates on your credit card and personal loans. You have stodgy systems that are frustrating to deal with. And you've used them for many years and you know this and you really hate this company at this point. Or you can switch to NewBank you can get a debit and credit card with no fees. You can use the PIX service that is very popular in Brazil to pay, you know, outside the credit card networks. You can have attractive interest rates on your savings account with the app and the products are easy to understand. Oh, and you can also seamlessly manage everything from your smartphone to save time. When you see

this difference. There's no wonder why Nubank has all these customers and why their NPS scores, which is just basically how happy consumers are with the product, are wildly better than any bank in Latin America. 58% of the adult population in Brazil now uses Nubank in some form. This is an astounding figure, I think. That's not even, Nubank in the United States, I think is close to this number. But given the context around how poorly the existing banks treated customers for years and years and years, it becomes less surprising. Now from customer acquisition, new bank from their perspective, they start out with a land and expand model similar to how a software company might start out with a, you know, making inroads at a fortune 500 company. And once they start accumulating

more data on the customer, they say, okay, here's how much money they're earning. Here's how much they're bringing in. Here's how much they're spending. Here's how much they're paying back their loans. They can decide whether they want to offer more products to them, extend their credit limits. They'll start people off at very, very small credit limits and then expand with them over time on higher credit limits, personal loans, payroll loans, and much, much more. And you can see this in the customer expansion chart that I included in the newsletter. I'll try to, maybe Ryan, you can share this one while I'm talking through it because visually it might be hard to see on the video, but they have this one constantly in their IR presentation and I'll

have it in the newsletter. It really shows this land and expand model and how it has worked so successfully for NewBank. And the way they, like I said, Ryan, they love the color purple, but they might, using multiple colors might help here in this situation. So when a customer joins NewBank, It will generate around $1 to $3 in average revenue per month, which is ARPAC, A-R-P-A-C is the acronym. You might see them tossing around from time to time. However, if we look at the company's customers who joined in 2017, they now generate close to a $25 in average monthly revenue per active customer.

Newer customer cohorts are even on a more aggressive trajectory. And then again, inflation is going to help this over the long-term kind of tick, tick, tick up higher and higher. They are inflation, I think, protected business, given that they're a financials company. So again, they can go from $1 to $3 in average revenue per month. And basically what 10 to 20 exit over the next five to six years. So this land and expand model has worked wonderfully for them. You know, at first you may sign up, you just might have a high yield savings feature, get the free credit card, you're not making much money for new bank. But over time, they're going to expand to more lending products, make NewBank their primary banking institution,

or even sign up for its investments and insurance products. We can also see this in NewBank's product history. It began with an easy-to-use credit card with no fees. That pretty much was their only product to start off with in Brazil, but it grew quickly because, hey, that's something the market didn't have. Then it expanded with a consumer bank account to attract deposits with high interest rates. If you know SoFi or Ally in the United States, that's the same product strategy they had. And with deposits rolling in, Nubank has begun expanding its credit lending. Now it is rapidly expanding its personal lending business. I know they call it something different, but just thinking about segment income and stuff like that, it's going from just credit card

lending to more lending offerings over time. Mortgages aren't a big deal in Brazil compared to the United States, but they essentially, I guess, the way I would look at it as an investor and what I think I care about is they want to expand the potential lending opportunities that are at their disposal to make with these customers. And as Ryan is showing from our friends at FinChat here, which again, we use this throughout this episode, I use this constantly to research for this show. And this was, I think, my favorite chart I made using the platform. And you can use our link in the show notes, finchad.io slash chitchat and get 15% off any paid plan. If we look at this chart that Ryan's sharing here, it has the segment analysis of what

is it, Ryan, fees and commissions, interest income on regular lending and interest income on credit cards. At the beginning of their operations, before they got into lending, the majority of their revenue were credit card interchange fees. And then in 20, uh, let's see back in around 2018, I think maybe just, you know, generally around that time period, I might getting the beginning of the exact year off interest income on credit cards began to take over the business and grow much faster. Then in 2021, the personal lending statement began growing at an insane rate and should surpass credit card lending sometime in the near future. So they're stacking revenue segments on top of each other with their existing customers and it's going quite well yeah so as

brett mentioned i pulled up the different segments just common sized it so there's just a little toggle that shows the percentage of overall revenue in q what was that q1 of 2020 personal lending accounted for six percent of overall interest revenue or just uh total revenue in general today it accounts for 60 which is equivalent to uh and keep in mind there's like an interest uh charge offset here so it's going to look a little bigger but it's basically the same size as the credit card business yep and you can slice and dice this many different ways i think the big takeaway i have and it is very important when looking at the mexican opportunity which we'll get into later in the episode, is that this land and expand strategy has worked

extremely well. And there's an opportunity to continuously grow this RPAC, this monthly average revenue per active customer over time. And if you think about the tens of millions of customers, what do we have here? We have that chart at the front. Let me just scroll up to it. In September of 2020, they had 20 million active customers, and now they have 95 million. If you think about all those that have joined over the last few years. You have tens of millions that have joined the platform and hopefully they can go on that same customer journey as the ones from 2017 that went from $1 to $3 in monthly revenue to $25. Yeah. And I think with a lot of these financial services, and I'm not sure if NewBank has a Venmo peer-to-peer sending system, but I think at some

point you basically hit escape velocity where you have so many users especially in certain geographies on your platform already that they basically become sort of your best salesman and are attracting other people to the platform really easily and i would guess that that's basically where they're at today let's get a little bit less of a network opportunity network effect than a venmo but yeah i mean think about right now ryan if someone said where would i go for a high-yield savings account, you would say SoFi and Ally, right? Check those out.

Yeah. Or Public. Public. And our friends in Public. Has the highest one also. Yeah. You kind of have a few that are top of mind based on friends you have that use the platform.

Being a startup in a world where someone is already offering a really high rate, it becomes tougher and tougher. Let's talk about the different geographic opportunities starting with their largest market currently, Brazil. All right, listeners. we've got a new sponsor here at chitchat stocks and their name is blue chippers club blue chippers club was recently started by two friends of ours with the goal of building a tight-knit community

of stock focused investors inside this community everyone gets to share and break down their portfolios pitch stocks receive feedback and participate in weekly calls we truly love this idea and it's why we're promoting it here on the show in fact we are in this community ourselves and enjoy just how much value we get by collaborating with other investors. If you're interested in joining, head on over to bluechippersclub.com and hit apply. Right now, it is completely free to join.

The link is in the description. Yeah, how shocked were you at the revenue number here? I was surprised that they have 50% of adults. That blows my mind in a single country. That is true. And I guess when looking at the revenue number here, the country does have a sizable population. I think, what is it? 240 million. Let's do a quick check. I think people will like that. Yeah. 211 million as of 2023. So almost the size of the

United States, but a little bit smaller. But Brazil does have by population is the largest country in Latin America. And today, given that they're starting market, the majority of new Bank's revenue still comes from Brazil. This market generated around $9.5 billion in revenue in 2024 and is closing in on 100 million active customers. If we look at the revenue from 2018, the chart is incredible. They had 200, let's see that screenshot I made was a little blurry, maybe 285 million, 286 million in revenue in 2018. And now it's about $9.5 billion. It's incredible growth, 79% annual growth rate, just phenomenal stuff. And discussed above, over the long term, Brazil's monthly RPAC, or monthly revenue per active customer, I think

should reach about $30. We can talk about maybe $30 is a bit aggressive. I think they can get there with inflation, but to be conservative, we're going to make some estimates here. Let's say they can get to 25. And using round numbers, let's say that active customers in Brazil eventually reach $100 million. Using those figures, $25 in monthly active revenue per customer and $100 million active customers, that's a $30 billion revenue opportunity in Brazil or over 3x its current levels. We'll talk about profitability in the final section by combining everything together, but I think that even if you look at that 58% of adult population number, there is still plenty of room to grow spending or revenue generation by expanding into more lending,

Getting more of their lending and credit card stuff over to Nubank as opposed to the legacy institutions over the next five to ten years. And that's going to help them grow and grow and grow in Brazil. We can also use this section to talk about the Ultraviolet card. They call it Ultravioleta, but essentially it's Ultraviolet card. It's a new initiative. It's not like this year, but a couple of years ago they launched it. And it's essentially a little bit of a card in the American Express model. You know, they get a metal card and they get perks focused on travel.

It's catering to the wealthier customers in Brazil that are doing international travel. You get an exclusive lounge at the Sao Paulo airport, travel protections like insurance and stuff like that. Instant cash back on purchases and even international internet using a free eSIM card. That one sounds quite nice to help you focus on, you know, the travel perks and stuff like that. For a wealthier customer in Brazil, it sounds like a no-brainer, and it looks like people are adopting this rather quickly. For some stats on this product, per the latest investor relations presentation, they have 688,000 customers using the card, growing 132% year over year, 84 NPS, and already 10%

of the Brazilian credit card portfolio comes from this card. Again, that's important because from an RPAC perspective, these are going to be much more valuable customers. And it sounds like a fantastic upsell to these wealthier customers. I think one high spending ultraviolet card, a card member might be worth 10 or even 20 of the poor Quinta account members. Now they're going to treat, you know, it's not like they're going to treat the, their whole point is that they treat everyone well because the legacy institutions did not even

and even give accounts to these poor customers so they're going to treat everyone well but again i think this is quite promising if they can get a couple million people using these ultraviolet cards yeah it seems like there's a lot of value to this card um mentioning all the different offerings you can get with it but i just find it funny how everyone just wants a nice heavy metal card to to flex when they they buy dinner or something like that yeah and there are some concerns i've read from other investors and how the brand of new bank in brazil is not necessarily the same as an american express in the united states it might be more of a capital one or a basic checking account and we've seen the struggles that capital one has had to try to move into the

travel market and ultravioleta is it's like a master card i don't know how much brand prestige it has but we do know i i'm very confident that no matter where you are in the world people like credit card perks and they like them very much they think it's cool they love the travel perks and i think given the numbers of this they seem to have reached fantastic product market fit and copying some of the American players and just saying, look, we know it worked for them. We know it worked for Chase, Capital One, and American Express in the United States. That'll probably work in Brazil for the wealthier customers as well. Okay. So Brazil, currently their largest market by revenue, if I'm not mistaken.

The second largest for them is Mexico. You are the perennial optimist on the country of Mexico altogether. What do you think this opportunity looks like for them? Yeah, maybe perennial is the wrong term, but optimist at the moment for the reshoring opportunity. Yes. So we'll talk about Mexico. New Holdings does operate in Colombia, as we talked about, but I'm going to exclude them from our analysis. I'm sorry to the Colombians listening to this. The economy is just not large enough to matter compared to Mexico at the moment. Mexico is a sizable opportunity and its GDP is down near as big as Brazil. The population is a good chunk smaller at about 130 million total in Mexico, but there is still an opportunity to

attract, I think, tens of millions of customers in Mexico to start using NewBank as their primary bank account. And in just a few years after launch, it has already surpassed 10 million active customers, or maybe 10 million total customers. Either way, rapid growth and revenue is growing like gangbusters. I'll read off the numbers here. We maybe don't have to share the chart, but this is another FinChat chart that was quite helpful when making this episode. In 2019, they had zero revenue in Mexico. In 2020, when they launched into the country, or at least officially launched, started making money, they had $1.4 million. 2021, $29.5 million. 2022, $201 million. That was almost 10x growth there. 2023, $355 million in revenue,

and 2024, $651 million in revenue, quite astounding growth. And why have they grown so quickly in Mexico? I think two things, one similar macro backdrop as Brazil or legacy makes Mexican banks don't treat customers. Well, many people are solely operating on cash before they use smartphones. It's a frustrating, uh, operating environment for personal finance solutions. And, you know, there was just the same opportunity for me to come in and say, look, We'll have an easy to use smartphone. We'll treat you well. We'll have high interest rates on these savings accounts.

And there was just this huge hole that was opened up for them to take over. And I think the second thing now is New Holdings knows what works from its playbook. After learning for years in Brazil through trial and error and what works to acquire customers, how to keep them, how to grow with them over time, New Holdings is now a well oiled machine. And they're using these sky high interest rates on deposits to attract customers in Mexico, which is why the market is growing even faster than Brazil at the same point after launch. Deposits in Mexico grew 438% year over year, not a typo, Ryan, to $4.5 billion in USD in 2024.

That is incredible growth and indicates that new holdings is at the beginning of its S-curve in market share gains in Mexico. In Mexico and Colombia, the company is getting highly aggressive with these interest rates paid to customers, and it is now working. They still remain profitable on a consolidated basis, which I think is good, because look, they can take the very high, like they're still generating so much money in Brazil, they're highly profitable in this region, they can take some of that excess capital, get a little aggressive to acquire these customers in Mexico. And over time, they know that they if they have the same playbook as in Brazil, they'll have positive return on equity over the long term. And with a slightly higher GDP per capita

than Brazil, I think Mexico RPAC can maybe, we can say conservatively get to $30 over the long term. Who knows what it'll be exactly, but I think it can be slightly higher than Brazil. And if they can get to 40 million active customers, that is $14.4 billion in revenue opportunity in New Bank, Mexico, or over 10x today's levels. And these are just two markets. Now they're all actually only in three markets, we can add on Columbia for a nice little cherry on top, that's not going to be, I mean, they can still get to a billion in revenue, maybe 2 billion, 3 billion in that market. It's not going to be highly important for the country. But there's really even in just Brazil and Mexico, excluding any new markets they enter, there is a still a

ton of potential for top line growth over the next five years. As we're going to get to into these final sections here, there's barely any important competition that can slow them down. Yeah. And my suspicion, correct me if I'm wrong on any of this, but my suspicion is that users, just purely users, will grow faster in Mexico than it will in Brazil over the next five to 10 years, just because they're so nascent in that market relative to brazil however that's gonna bring down most likely that'll bring down the aggregate average revenue per active customer because they're going to acquire them at these uh potentially you start out slow yeah you yeah we saw the the cohort analysis chart where basically you

end up driving a lot more revenue in kind of year two year three year four when you've collected data on them and you can offer these other loan packages to them as well you can offer other products once you kind of have a better sense of who these customers are. So you get the customers in the door. It might look like it's hurting the average revenue per active customer. And you might even think, is the customer worth less in Mexico? But I don't think that's the case. Just purely from a geographic standpoint and market opportunity, I think Mexico- And incomes per capita are higher. Yeah. I think Mexico has a real chance of being as big for NewBank as Brazil is today.

within the next five to 10 years. And for context, Brazil currently is much larger. I think Brazil accounts for around 80% of NewBank's overall revenue. Yeah. Let me give the numbers for you, Ryan. So $9.5 billion in Brazil, $651 million in Mexico. All right. Where to next? And can you talk a little bit about the competitive field? Who else is in here? You've mentioned Mercado Pago and Inter. Can you talk about them a little more? Sure. So let's talk about international expansion first. This is something they talk about. They have ambitions to be well beyond these three countries, although I think it's a positive for investors that unlike who are an example. My favorite example of this is Sea

Limited, although it's a slightly different market of just expanding to countries just for the excitement of it and not actually focusing on getting a positive return on investment while going into these markets. And if we look at, say, let's just use GDP size as a rough gauge for how attractive a market could be for new holdings to enter. It's not like a social media app. You have local banking regulations. They require a lot of boots on the ground in the country, especially with NewBank's model where they want to be the full-fledged personal finance solution for you when in this market. Now, given that, only larger economies really make sense to expand into. And if we look at the list i include in the newsletter here we see that if we just go gdp uh total gdp

four countries in latin america and the caribbean one is brazil 2.3 trillion mexico 2 trillion argentina 600 billion colombia i can't even read that but the if you go colombia chile and peru you're at the 250 million to about 300 million per sorry billion per so significantly smaller than brazil or mexico but still sizable and then if you go to the country even below that which would be something like the dominican republic or venezuela they're much much smaller than even peru colombia and chile so when i look at that i think the only markets that make sense to enter and that are going to be anywhere meaningful for this company would be Argentina, Peru, and Chile. Now, luckily, those are very closely geographically aligned. They have a lot of

relationships between these two countries. I would hope and expect that these are the three countries they enter over the next 10 years. I would be disappointed, and this would be a little bit of a risk if they felt the need to expand rapidly into smaller countries or outside of Latin America. And even if we combine number three through six on this list, those economies are still much smaller than each of Brazil or Mexico's. So they're not that big. And perhaps combined, they can be a $10 billion revenue opportunity over the long term. But again, it just shows that you really need to care about just Mexico and Brazil here when looking at NewBank. And the fact that new holdings is growing so quickly in Mexico, that is the one indicator for future growth that I

think is important, besides the fact that cohort analysis we did in Brazil. Now we can talk about competition. They operate in different countries, large market, you know, personal finance, it's always a competitive field. They have a ton of competitors out there, the legacy institutions in Brazil, direct digital banking competition, and MercadoLibre's fintech subsidiary called Mercado Pago. I am generally not concerned about any of them getting in the way of new holdings because I don't think that anything's going to change with this market over the next five to 10 years. So if another smaller company comes in and copies what NewBank has, well, NewBank has the scale to take advantage here. You have to come into the market somewhere different and new holdings

is offering such an attractive model to the customers that I think that's going to be hard can do. The legacy institutions are in a classic innovators dilemma situation. I think it would take a miracle for them to recover, at least take back this market share. And it would shock me if they stopped ceding share to new holdings just because they haven't for the last five to 10 years. They have the overhead, they have the tech debt, they have all these branches, and it's just not going to work. And if we look at the digital banks, there are some well run digital banking competitors such as Inter. Inter has 36 million customers in Brazil, maybe some other markets as well. I'm not an expert on this company. They generated close to $1 billion, or excuse me,

1 billion Brazil reals in net income last year, and it's grown quite quickly. But like I've said previously in this episode, I don't think you can expect personal finance to be a winner-take-all situation. And just look at the United States, look at any market. There will be other players in the industry. New holdings will do fine either way, and I still think it can retain its lead and be the number one player, regardless of legacy, newer banks, MercadoLibre over the long term. Now as a note here, I took a look quickly at Inter. They're trading at a PE of 14.5 and they've grown their net interest income at a 37% annual rate since 2015. Maybe that's an opportunity. Maybe that's a cheaper bank than new holdings here. Could be

something that's interesting as well. Maybe it makes sense to own both. Now that leaves us with the third competitive set, which is Mercado Pago. This is an interesting one because it's tied to the, it has a fintech subsidiary of Mercado Libre. It's quite large. It works seamlessly with the Mercado Libre marketplace, which for anyone that doesn't know is the e-commerce platform in Latin America or the number one. It's kind of like the Amazon of Latin America. We actually did a comprehensive overview with Brian Stoffel recently on this company. However, when looking at Mercado Pago, I think Nubank is actually a bigger threat to Mercado Pago than the other way around. But look at Mercado Pago, they were invented to make it easier for customers to shop on Mercado

Libre, which meant focusing more on helping businesses process payments, helping you spend money on Mercado Libre, or essentially send money to small businesses or spend money with businesses. Yes, you know, they offer financing and some banking solutions, but it's not the number one priority of the business like a new bank. It is available in more countries, but within the two countries that actually matter, Brazil and Mexico, new bank can offer a much better personal finance product because they have the comprehensive regulation, regulatory approvals, and they can, they're just focused on this.

This is their number one priority and MercadoLibre has not had nearly as much success with lending, with customer acquisition as Nubank. Let's think about it from a customer decision standpoint. You know, Mercado Pago is older. You have used them in the past to send money. You've used them to spend on Mercado Libre, and maybe you've even used it to pay for it at a local shop and acquired a personal loan. However, with the arrival of Nubank, you can now use this service as your primary bank. Mercado Pago cannot offer as high of an interest rate as Nubank, so you're going to go with NewBank because they have a better interest rate they can offer you and they don't have as comprehensive of the sweetest products. So you use NewBank more and it can offer you a

full suite of products. So why wouldn't, I just don't understand why people wouldn't consolidate with them because I'm sure you can use the product. If you're a customer of NewBank or customer of Mercado Pago, you can shop on Mercado Libre either way. I just think that makes it more of a threat to MercadoLibre than the other way around. And we can see this playing out quantitatively with the numbers. I mean, Nubank is set to surpass MercadoBago in Mexico within a few years when we talk about number of users perspective. Now, using an American analogy, Venmo had and still has many more active users than SoFi or Ally. But what's more valuable? I would be more optimistic on the earnings growth of SoFi or Ally over the long term

because they can offer a better, fully-fledged banking solution compared to Venmo. You might still send money to an individual from Venmo, but that doesn't make them much money at all. I believe Nubank should steal some share from Mercado Pago in Brazil, but especially Mexico, and that Mercado Pago is not, unless they change their business model, unless they really focus on directly copying new bank, it's not a threat you should be worried about. In fact, it should be the other way around. Finchat.io is the complete stock research terminal for fundamental investors. They have robust financial data on more than 100,000 stocks globally. That

includes more than 10 years of income statements, balance sheet, cashflow, and even company-specific segment and KPI data. Want to see Amazon's advertising revenue? Finchat tracks it. like to track NVIDIA's data center business, they've got that too. The breadth of FinChat segment and KPI data is truly one of a kind. You can go to finchat.io slash chitchat to get 15% off any paid plans. If you sign up today, you'll automatically get two weeks of FinChat Pro for free, no card required. Again, that's finchat.io slash chitchat. The link will be in the show notes. All right. If you're serious about investing, you need to know about public.com. That's where you can invest in everything stocks option bonds crypto you can even earn some of the highest

yields in the industry like the six percent or higher yield you can lock in with a bond account public is a finra registered sipc insured platform that takes your investments as seriously as you do fund your account in five minutes or less at public.com slash chitchat stocks and get up to ten thousand dollars when you transfer your old portfolio that's public.com slash chitchat stocks Paid for by Public Investing. Full disclosures in the podcast description. Yeah, I think it's enough to just say this is not a winner-take-all. It never is with financial apps.

Right. And look at the numbers. Yeah. Look at the users. I wouldn't be like super worried, I guess, as a MercadoLibre shareholder. I would monitor it to see if they're just like stealing share. But I think there's definitely a world in which – and my suspicion is that a lot of people have both apps downloaded and use both apps. So yeah, I wouldn't worry too much about the competitive standpoint.

All you have to know is that for the most part, they are taking share from legacy banks. That is really going to be probably the ultimate driver of usage and transactions here over the next decade. Exactly. And there's still an opportunity to do that. I think the key takeaway from this episode is there's still an opportunity to do that in Brazil and a huge runway to do that in Mexico. Okay. As we kind of wrap things up here, we're going to talk about the valuation in a bit, but let's talk about the credit cycle. Obviously, we've talked a lot here about the growth of the platform, the amount of users,

the average revenue that they're generating. But with any financial company, there is sometimes really quick growth can seem a little concerning. So what are your overall thoughts on the lending side of things for new? Yeah, the growth, quick growth can be concerning. And on the one hand, they do have shorter term loans, so it can recycle quickly. And they can pivot a little bit quicker than maybe other financial institutions. But yes, I mean, look, as a bank, there is an obvious risk we can talk about here, the consumer credit cycle, you know, if users in Brazil and Mexico start struggling financially, and they can't pay their loans, new banks' earnings are going to go down. That's a fact. That may happen. It's not a durable

grower. This isn't Netflix. There's going to be some earnings volatility if those economies go into a recession. And if we look at their metrics that track the health of their credit portfolio, they use a sub 90 day or 15 to 90 day and plus 90 day delinquency rates to track the health of its credit portfolio. So far, given the numbers, given their net income, they have been a great underwriter of credit. But who knows what could happen over a multi-year period that makes these metrics much worse. And in recent quarters, these numbers have inched up. Over the last quarter, they moved in the right direction. But over the last few quarters, they have moved in the wrong direction. The company is still generating capital. It still

has a positive ROE, even while investing aggressively in Mexico and Colombia, which is probably both those markets probably highly unprofitable at the moment. The way I look at it, though, and this is as someone who's focused on buying and holding for the long term, I don't know if the credit cycle concerns me except from a standpoint of when I can buy the stock at an attractive price. If I'm holding NewBank or holding new holding stock, okay, look, the Brazilian economy has gone through major volatility in the last 10 years. There's been stagnant GDP growth. It's been a really tough time for them. You've had currency depreciation versus the United States. So it even looks better in local currency. And it's actually,

they've still grown so impressively in the US dollar terms. NewBank has done fine in this environment and my expectation would honestly be is it going to be worse over the next 10 years it would be that would be very tough i think my expectation would be for them to bounce back somewhat over the next decade if i don't know they've just fallen behind a little bit i think the the country can do much better than it has and the second thing i would say is new bank has a conservative balance sheet they have plenty of capital to get through a downturn They are growing deposits quickly. They have lower overhead costs than traditional banks, and they have diversified revenue streams. Now, when Mexico starts scaling up, they'll have

geographic diversification as well. So I think there's a lot of ways for them to play this market and in a downturn, which I think they saw at some point, I can't really remember when that happened. Maybe it was COVID, maybe something else. Sometime this happened in Brazil, not an expert on that economy, but they can pull back quickly. This isn't like the Charles Schwab's or the First Republic banks that loaded up with a bunch of mortgages and stuff like that. You're not going to have this issue. You're not going to have someone stuck with a bunch of long-term loans that are just deteriorating in value. These are short-term credit card and personal loans where someone I talked to, a listener of the show, friend of the show, said that their family

members they're familiar relationships in uh brazil and when talking with the people that use you know these startup products in those markets they're short-term loans you know they get paid once a month this person gets paid once a month and sometimes they need some just some loans to make it through to the till they get paid these aren't long-term loans i think they can uh whether that quite fine and they run with a conservative balance sheet yeah i think this would be an area that would be very important to focus on if it were long duration loans that NewBank was originating. When the cycle is so short, they're able to weather any interest rate changes pretty well. Even if you get delinquency rates that jump pretty quickly, you're able to end up passing that

through in the origination yields you can get. Sure. Yes. On that perspective, I'm just thinking more of ability to pay back in general just if the economy goes through a tough period yeah i mean i think anyone that's competent to like u.s markets or the u.s consumer the rates it's priced into the rates uh that they yeah that's true charge so it's true um i wouldn't worry too much about it let's talk about the future financials unless you have anything else on that front uh well well we let's see the last thing i would add on that is that honestly an economic downturn could be an opportunity for new holdings and it might be a great opportunity for an investor because they should be able to take share in a downturn given

their conservative balance sheet and the way they can get aggressive and still make it through to the other side and this is the type of stock to get hit badly during a recession when the numbers could look a little ugly for a temporary time period, but you have a longer term time horizon than Mr. Market. And the one thing I'm concerned about, and I got some flack on this on Twitter for saying this was my concern, because maybe it's a long term concern. I'm being a little too cynical. I'm thinking too far in the future. But this, again, it comes back to management, their culture and creating shareholder value. If we see the graphic I have below here, which Maybe Ryan can share it, but it'll be in the newsletter and it's in their IR pages.

New Holdings has an ambition to be large and diversified beyond financial services. They say this. They have a three-act plan for their company. Act one, building the largest and most loved retail banking franchise in Latin America. I would say done. That's it. That's it. I say act two is expand beyond financial services.

And act three, a global AI-driven digital banking model. I'd say red flag, red flag, red flag. Put up those red flags because that is dangerous commentary that reminds me of, you know, Shopify's and other companies that try to expand and it doesn't go too successful. You know, yes, New Holdings has executed brilliantly in the past with their product development. And yes, some companies like Amazon succeed in expanding outside of their core competency, but most destroy shareholder value. And I would be concerned if they started expanding into new geographies outside of Latin America

started making large acquisitions or endeavor not entirely new business models you have such a long runway to grow with what you have right now and it's such a good model just keep it that way yeah i kind of see this and shrug my shoulders i say let's just focus on act one for the time being and that that is what they're doing they're focused on expanding in latin america that's i and they've done a good job of it and so far they haven't actually launched anywhere but latin american countries unless i'm mistaken so only three two yeah they're only in those three i say let's kind of wait and see here that's tough rhetoric though you see that rhetoric and you go it sounds like peloton all right so my hour analyst had to come up with this i don't think

this is like hopefully not i don't know velez talks like this he reminds me a little bit of tobias lutke risk shopify's founder all right let's estimate some future financials what do you think they could earn in the future and what do they trade out today all right let's make it simple combine brazil and mexico and my estimates of what they could do in the future that's 45 billion dollars in revenue let's add in columbia some other countries and get to 50 billion what net income margin are they going to earn on this i would say surprisingly high for a bank maybe not surprisingly high. In 2024, new holdings had a cost of revenue of 54% and the cost of revenue includes interest expense, transactional expenses, and credit loss allowances. I don't

think they're going to achieve much scale in this business. They haven't achieved that much scale of it in the past and it'll probably scale with revenues, cost of revenue. So let's only estimate it falls to about 50% when we get closer to maturity. I think that's a fair figure. The one we can look at here, though, that is highly impressive is the leverage on customer support costs, marketing costs, and general overhead expense. These made up 21% of revenue in 2024 compared to a whopping 57% in 2020. At scale, I think this can probably fall to about 15% of revenue. If we add 15% plus 50%, and that's a total cost, like going from revenue to operating

margin of 65% or inverting that, a 35% operating margin. Now we can add in some taxes here and roughly maybe we get to a 20 to 25% net income margin without too much more operating leverage. Tax rates are obviously subject to change in these various countries, but a 25% net income margin, Ryan, on $50 billion in revenue is $12.5 billion in annual net income. Today, the market cap of the stock is 56 billion dollars the question i have here is why don't i own this thing i think that's a fair question what concerns you the most why if you were a month from now this still wasn't in your portfolio you don't own any shares what would drive that um i think the track record alleviates these concerns but there is a history of fintechs

latin america pivoting to credit underwriting and hitting rough patches i mean stoneco mercado libre i think even poxiguro too there is history of and a lot of short reports in latin america on these fintechs remember d local remember there's one on xp stoneco i think about how they're massaging figures and stuff like that i think the number one concern for me is i don't have boots on the ground anecdotal evidence. But besides that, it's really

hard. Their execution has been top notch. They are they follow the SEC. They have audited financials like, yes, okay, you know, sometimes that that doesn't mean much sometimes,

right? Enron, all these other companies. But when I look at management, I trust them. And, again, the numbers speak for themselves. The model makes a lot of sense. There's plenty of room for them to take market share. Remember that from the Peter Lynch episode. That's one of the most important ways to be a durable grower is if you're a market share taker with a better business model competing against the innovator's dilemma or taking advantage of the innovator's dilemma.

I like this stock. I don't know. What do you think, Ryan? Just in general, there's perhaps no industry where the innovator's dilemma is more obvious than banking. You've got just tons of people working at branch banks. You make money when they go to your ATM, when you charge your 8%, and it's just a huge profit driver for you. What are you going to do? Turn that off? Fire all those people? Have a whole bunch of your customers have nowhere to go and try to get them to switch to a digital solution? It's tough. going from the ground up as the digital provider here is you are in a much more advantaged position so i like that for new bank first i will say before this there was something that was just kind of keeping me out it was keeping me uninterested maybe it was the history of latin american financial companies that seem to massage the numbers a bit that's kind of one of it

one of the concerns don't or or this just have bad or like not good earners and they go down 90 like uh yeah i'm saying that poorly but they have these ambitions to expand into new products and it totally fails and the stock plummets yeah and i don't know there's something whenever american investors become infatuated with some fast growing financial company in latin america i get like the sense that something's going to go wrong but there's also mercado libres yeah yeah 100 and new bank does seem to have it seems to have attracted a pretty compelling following of investors here part of that is probably because buffett i guess berkshire was invested here which we didn't even talk about but usually whenever that happens it tends to draw

some interest i really like this company and i don't know if i necessarily have any reason why why i shouldn't own it i like i think the valuation is reasonable i think your assumptions are reasonable they're probably i mean they're optimistic but given the it's like a 10 year they have yeah yeah they could be they could be achieved i don't know i don't know what's keeping me out but for some reason i just there's i got a little bit of a hesitation here there's always the and again we just talked about these the the latin american fintechs a fast-growing credit portfolio we don't have boots on the ground experience in this in these countries or much and just maybe on a vacation but i think new holdings and the way they operate

their past performance how profitable they've been in the past how conservative they run their balance sheet, how good their lending has been compared to a lot of these other fintechs. I think they should alleviate some of those concerns, but you just have this worrying sense that maybe it breaks, but I don't think it will. I think this stock will do well over the long-term. I'm not sure if I'm going to own it in my portfolio. Maybe it works for me or not. There are a ton of stocks that I like or think are going to do well over the long-term that just aren't for me. But I think this one will do well. I do like the business model.

I would be shocked if they weren't bigger in five years and the valuation doesn't look too demanding. All right. Well, that is going to do it. We've got some more fascinating episodes coming up here soon. We've got an interview with an emerging manager. Actually, it might not even be emerging anymore. A fund manager, a friend of ours who has done –

he's had some great episodes on this show in the past, and hopefully we have another interesting one for you. I am researching S&P Global, less of an emerging financials business but more of a financials and data player here in the U.S., very established, very, very established actually, more than I think might be 150 years old. So been around for a long time. Investor overview on Li Lu. Get ready for that. We're going to be researching that soon. And then my next stock research episode is going to be Interactive Brokers, BKR.

I think that one could be a promising opportunity as well. All right. Well, that is going to do it. Thank you all for tuning in. We want to remind listeners that Brett and I are not financial advisors. Anything we say or discuss here on this podcast is not formal advice or recommendation. We may buy, sell, or hold any of the securities discussed in this podcast. So please do your own work and consult a financial advisor if you need one. Thank you all for tuning in and we'll see you all next time. We'll see you next time.