2. Nu Holdings Ltd. (NYSE:NU)
Number of Hedge Fund Holders: 59
Share Price as of the close of September 27: $13.87
Nu Holdings Ltd. (NYSE:NU) is a Brazil-based digital banking company that provides financial services in multiple countries of Latin America. It is also one of the best-performing Warren Buffet stocks in 2024. The company’s share price has surged 103% over the past year, driven primarily by consistent growth in its net income over the last six quarters.
The company reported strong results during the second quarter of 2024, generating a revenue of $2.8 billion, representing a 65% increase from last year. Gross profit for the quarter climbed to $1.4 billion, up 88% from last year, while net income reached $487 million, resulting in a record-high annualized return of equity of 28%, and an EPS of $0.12 which beat analysts’ expectations of $0.10 per share.
These strong results were mainly attributed to two factors. The first is customer growth. The total number of Nu Holdings Ltd. (NYSE:NU) customers reached 105 million during the quarter, up from 65 million two years ago. This was fueled by extraordinary growth in Brazil, where an average of 1.2 million new customers are added every month.
Secondly, the active user base also expanded 27% year-over-year. This was the 11th successive quarter during which the metric showed improvement. Products and services launched for users are also being well-received. As of Q2, there were an average of 4.1 products per active customer. Average revenue per active customer also increased 6% sequentially during the quarter to reach $11.2.
Despite the strong show in Q2, the company admitted that its market shares in credit cards and loans are on the lower side. For instance, around one-third of the population in Brazil have NuBank as their primary bank account, but only 13-14% use NuBank’s credit cards. The proportion is even lower – in single digits – when it comes to loans, noted Youssef Lahrech, President and CEO, in the Q2 Earnings Call.
However, that is one minor area of concern for the company, and its overall outlook looks promising. There is consensus among Wall Street analysts on the stock’s Buy rating. Investors also remain bullish on the stock. Baron FinTech Fund stated the following regarding Nu Holdings Ltd. (NYSE:NU) in its first quarter 2024 investor letter:
Nu Holdings Ltd. (NYSE:NU) is a digital bank with operations in Brazil, Mexico, and Colombia. Shares appreciated during the quarter after the company reported strong balance sheet growth and improving margins. New product launches and expansion in newer countries are yielding favorable results. Nu also benefited from inclusion in the MSCI Brazil Index, which prompted buying from passively managed funds. We continue to own the stock because Nu is disrupting the financial services industry in Latin America with its digital distribution and intense focus on user experience. The company has grown to serve over 90 million customers in less than 10 years, largely through word-of-mouth referrals. We believe the company’s superior product offering will drive continued share gains in large and growing markets.
According to Insider Monkey’s database, 59 hedge funds had a stake in the company as of Q2 2024, making it one of the best stocks under $15 to buy now.
