Mercator International, an investment management firm, published its “Mercator International Opportunity Fund” fourth-quarter 2021 investor letter – a copy of which can be downloaded here. In Q4 2021 and early in the new year 2022, rising inflation and a more hawkish Fed led to a selloff of growth stocks. The Mercator International Opportunity Fund had a -3.65% return for the fourth quarter of 2021, compared to its benchmark, the MSCI EAFE Index which had a 2.75% return for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Mercator International Opportunity Fund, in its Q4 2021 investor letter, mentioned MercadoLibre, Inc. (NASDAQ:MELI) and discussed its stance on the firm. Founded in 1999, MercadoLibre, Inc. (NASDAQ:MELI) is a Buenos Aires, Argentina-based online marketplace company with a $58.5 billion market capitalization, and is currently spearheaded by its CEO, Stelleo Passos Tolda. MercadoLibre, Inc. (NASDAQ:MELI) delivered a -13.00% return since the beginning of the year, while its 12-month returns are downp by -27.16%. The stock closed at $1,160.80 per share on April 08, 2022.
Here is what Mercator International Opportunity Fund has to say about MercadoLibre, Inc. (NASDAQ:MELI) in its Q4 2021 investor letter:
“Disruptive technology also tends to create a new breed of portfolio managers. These often younger investors have better insight into the way the world is changing and get on the bandwagon early. Rapid success makes them famous, which allows them to attract huge amounts of money. As these funds grow, new money is added to existing positions. With more money chasing the same fashionable stocks, lofty prices get loftier. The better the performance, the more money flows into the funds and the higher their stocks go.
One day this dynamic inevitably comes to an end. The virtuous cycle suddenly turns vicious. As the popular technology funds get redemptions, their managers are forced to sell. Forced sales bring down stock prices which only results in more redemptions. Fundamentals no longer matter and the baby gets thrown out with the bathwater.
MercadoLibre, Inc. (NASDAQ:MELI; 1.75%) is a good example of how this panic-like behavior creates investment opportunities for level-headed investors. For years, this Latin American eCommerce behemoth was priced for perfection, which they managed to deliver. At the end of last summer, MELI peaked at around $2,000. Then, just like that, with no change in its business prospects, the stock price lost more than 40%. The sentiment changed on a dime. That’s when Mercator began accumulating a position after watching it for many years.”
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Our calculations show that MercadoLibre, Inc. (NASDAQ:MELI) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. MercadoLibre, Inc. (NASDAQ:MELI) was in 74 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 68 funds in the previous quarter. MercadoLibre, Inc. (NASDAQ:MELI) delivered a 10.20% return in the past 3 months.
In March 2022, we also shared another hedge fund’s views on MercadoLibre, Inc. (NASDAQ:MELI) in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.
