10 Best Bank Stocks To Invest In For the Long Term

5. Nu Holdings Ltd. (NYSE:NU)

Number of Hedge Fund Investors In Q3 2024: 54

Nu Holdings Ltd. (NYSE:NU) is a Brazilian bank with a presence in lucrative markets such as the US and Germany. It is one of the hottest plays in the industry due to an extreme focus on digital banking in Brazil which is a country dominated by conventional banks. In today’s tech-savvy environment, Nu Holdings Ltd. (NYSE:NU)’s lead in digital banking initiatives provides it with a sizable moat in one of the largest economies in the world. However, the high expectations built around its presence in Brazil and an intensive focus on growth as evidenced by a recent initiative to start offering telecommunications services in the country can create trouble for Nu Holdings Ltd. (NYSE:NU)  down the road. This was evident after the bank’s third-quarter earnings which saw the stock slide by 14.8% over the next couple of days despite the fact that Nu Holdings Ltd. (NYSE:NU) $592 million in profit beat analyst estimates of $559 million. The shares slid as revenue of $2.9 billion didn’t beat estimates by much, which indicated to investors that perhaps growth is slowing down.

White Falcon Capital Management mentioned Nu Holdings Ltd. (NYSE:NU) in its Q3 2024 investor letter. Here is what the fund said:

“We sold half of our position in Nu Holdings Ltd. (NYSE:NU), which has been one of our highest IRR positions. We initiated a position in NU in the fall of 2022 at $4 per share and it is now trading at $14 per share. As has been communicated by us many times, good business and good managements tend to surprise to the upside. There is an option value in good quality businesses that mediocre businesses at cheap valuation just do not provide! That has been the case with NU where the actual business performance far exceeded our expectations. While we still believe NU has the potential to do well, the current risk-reward profile suggests that trimming our position might be a prudent move.”