1. Nu Holdings Ltd. (NYSE:NU)
Number of Hedge Fund Holders: 63
Berkshire Hathaway’s Shares in Q1 2024: 107,118,784
Nu Holdings Ltd. (NYSE:NU) owns and runs a digital banking platform in Brazil, Mexico, Colombia, Cayman Islands, Germany, Argentina, the United States, and Uruguay. The stock has been performing on several metrics over the past few months. The user base of the firm continues to expand, reaching 100 million customers at the end of the first quarter of 2024. Revenue is also improving, growing a whopping 66% year-over-year in the first three months of the year. The net income during this period was in excess of $440 million, comfortably beating analyst expectations across Wall Street.
Buffett typically invests in firms that have handsome margins. Nu Holdings Ltd. (NYSE:NU) is no exception. The first quarter results of the firm show that it has managed to increase the average monthly revenue per active user by 30% year-on-year, while maintaining the average monthly customer service costs below $1. The company has lots of room to grow as it is still only the fourth largest financial institution in Latin America. Nu Holdings Ltd. (NYSE:NU) is also a smart AI play by Buffett, as the company recently acquired Hyperplane, a Silicon Valley-based data intelligence company, to enhance artificial intelligence capabilities.
In its Q1 2024 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Nu Holdings Ltd. (NYSE:NU) was one of them. Here is what the fund said:
“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. “
While we acknowledge the potential of Nu Holdings Ltd. (NYSE:NU) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than Nu Holdings but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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