Offshore
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Finding Compounders
I just came across this Nick Sleep gem.
Here is an interview Nick Sleep did back in 2013.
Nick Sleep and Qais Zakaria ran Nomad Investment Management which over 12 years compounded at 18%. https://t.co/llJ7i41aEm
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I just came across this Nick Sleep gem.
Here is an interview Nick Sleep did back in 2013.
Nick Sleep and Qais Zakaria ran Nomad Investment Management which over 12 years compounded at 18%. https://t.co/llJ7i41aEm
tweet
Offshore
Photo
Finding Compounders
Look for customer heterogeneity
Source : All Revenue Is Not Created Equal by Bill Gurley (@bgurley ) https://t.co/Y7ZR8TMW27
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Look for customer heterogeneity
Source : All Revenue Is Not Created Equal by Bill Gurley (@bgurley ) https://t.co/Y7ZR8TMW27
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Offshore
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The Kobeissi Letter
BREAKING: President Trump's World Liberty Financial announces USD1 stablecoin which is "100% backed by short-term US government treasuries, US dollar deposits, and other cash equivalents." https://t.co/ckBJDiPdyn
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BREAKING: President Trump's World Liberty Financial announces USD1 stablecoin which is "100% backed by short-term US government treasuries, US dollar deposits, and other cash equivalents." https://t.co/ckBJDiPdyn
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Offshore
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App Economy Insights
$STUB StubHub just filed for a US IPO.
Aiming to raise $1B at a $16B+ valuation.
I spent hours reading the S-1 so you don’t have to.
Here’s what I learned.👇
https://t.co/FH18pXfz7j
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$STUB StubHub just filed for a US IPO.
Aiming to raise $1B at a $16B+ valuation.
I spent hours reading the S-1 so you don’t have to.
Here’s what I learned.👇
https://t.co/FH18pXfz7j
tweet
Offshore
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The Kobeissi Letter
Americans have rarely been this pessimistic about the job market:
The share of employees with a positive view of their employer’s business outlook fell to 44% in February, the lowest since 2016 when data began.
The Glassdoor employee confidence index has declined 12 percentage points over the last two years.
Government and administration employee confidence dropped ~5 percentage points, the most among all groups.
Workers’ confidence in the aerospace and defense sector fell by 3.5 percentage points.
Furthermore, pessimism has increased in 14 of the 24 sectors tracked by Glassdoor.
Sentiment has fallen off a cliff.
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Americans have rarely been this pessimistic about the job market:
The share of employees with a positive view of their employer’s business outlook fell to 44% in February, the lowest since 2016 when data began.
The Glassdoor employee confidence index has declined 12 percentage points over the last two years.
Government and administration employee confidence dropped ~5 percentage points, the most among all groups.
Workers’ confidence in the aerospace and defense sector fell by 3.5 percentage points.
Furthermore, pessimism has increased in 14 of the 24 sectors tracked by Glassdoor.
Sentiment has fallen off a cliff.
tweet
Offshore
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Dimitry Nakhla | Babylon Capital®
A quality valuation analysis on $MELI 🧘🏽♂️
•NTM P/E Ratio: 44.66x
•1-Year Mean: 47.97x
As you can see, $MELI appears to be trading near fair value
Going forward, investors can receive ~7% MORE in earnings per share 🧠***
Before we get into valuation, let’s take a look at why $MELI is a great business
BALANCE SHEET✅
•Cash & Short-Term Inv: $3.70B
•Long-Term Debt: $2.82B
$MELI has a strong balance sheet, an ok BB+ S&P Credit Rating & 48x FFO Interest Coverage
RETURN ON CAPITAL🆗➡️✅
•2019: (4.8%)
•2020: 3.7%
•2021: 8.1%
•2022: 14.7%
•2023: 25.7%
•2024: 23.0%
RETURN ON EQUITY🆗➡️✅
•2019: (14.2%)
•2020: (0.1%)
•2021: 5.2%
•2022: 28.7%
•2023: 40.3%
•2024: 51.5%
$MELI has strong and improved return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2019: $2.30B
•2024: $20.78B
•CAGR: 55.30%
FREE CASH FLOW✅
•2019: $314.29M
•2024: $7.05B
•CAGR: 86.32%
NORMALIZED EPS✅
•2019: ($3.71)
•2024: $37.69
SHARE BUYBACKS❌
•2019 Shares Outstanding: 48.69M
•LTM Shares Outstanding: 50.70M
MARGINS🆗➡️✅
•LTM Gross Margins: 52.7%
•LTM Operating Margins: 12.7%
•LTM Net Income Margins: 9.2%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~7% MORE in EPS
Using Benjamin Graham’s 2G rule of thumb, $MELI has to grow earnings at a 22.33% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be more than the (22.33%) required growth rate:
2025E: $46.91 (24.5% YoY)
2026E: $64.98 (38.5% YoY)
2027E: $84.98 (30.8% YoY)
$MELI has an ok track record of meeting analyst estimates ~2 years out, but let’s assume $MELI ends 2027 with $84.98 in EPS & see its CAGR potential assuming different multiples
40x P/E: $3400💵 … ~17.6% CAGR
38x P/E: $3230💵 … ~15.4% CAGR
36x P/E: $3060💵 … ~13.2% CAGR
34x P/E: $2890💵 … ~10.9% CAGR
As you can see, $MELI appears to have attractive return potential IF we assume >36x earnings (a multiple justified by its growth rate & moat)
$MELI boasts an expansive growth trajectory, fueled by powerful network effects that should drive sustained momentum
Key factors contributing to its promising outlook include 🔑
1. Margin expansion
2. Unparalleled access to Latin America's burgeoning economy
3. Network effects that produce self-reinforcing dynamics ensuring long-term competitiveness, among other things
Those buying $MELI today at $2165💵 are buying it for a fair price, with little margin of safety — however, these growth rates have to be revised down substantially for $MELI to miss the mark, even if the company grows earnings at 25% CAGR over the next 5 years, shareholders will likely end up with a decent return
I consider $MELI a strong buy closer to $1945💵 (~10% below today’s price) where I can reasonably expect ~12% CAGR while assuming a conservative 32x end multiple, ensuring some margin of safety
#stocks #investing
___
𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.
𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.
𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞[...]
A quality valuation analysis on $MELI 🧘🏽♂️
•NTM P/E Ratio: 44.66x
•1-Year Mean: 47.97x
As you can see, $MELI appears to be trading near fair value
Going forward, investors can receive ~7% MORE in earnings per share 🧠***
Before we get into valuation, let’s take a look at why $MELI is a great business
BALANCE SHEET✅
•Cash & Short-Term Inv: $3.70B
•Long-Term Debt: $2.82B
$MELI has a strong balance sheet, an ok BB+ S&P Credit Rating & 48x FFO Interest Coverage
RETURN ON CAPITAL🆗➡️✅
•2019: (4.8%)
•2020: 3.7%
•2021: 8.1%
•2022: 14.7%
•2023: 25.7%
•2024: 23.0%
RETURN ON EQUITY🆗➡️✅
•2019: (14.2%)
•2020: (0.1%)
•2021: 5.2%
•2022: 28.7%
•2023: 40.3%
•2024: 51.5%
$MELI has strong and improved return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2019: $2.30B
•2024: $20.78B
•CAGR: 55.30%
FREE CASH FLOW✅
•2019: $314.29M
•2024: $7.05B
•CAGR: 86.32%
NORMALIZED EPS✅
•2019: ($3.71)
•2024: $37.69
SHARE BUYBACKS❌
•2019 Shares Outstanding: 48.69M
•LTM Shares Outstanding: 50.70M
MARGINS🆗➡️✅
•LTM Gross Margins: 52.7%
•LTM Operating Margins: 12.7%
•LTM Net Income Margins: 9.2%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~7% MORE in EPS
Using Benjamin Graham’s 2G rule of thumb, $MELI has to grow earnings at a 22.33% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be more than the (22.33%) required growth rate:
2025E: $46.91 (24.5% YoY)
2026E: $64.98 (38.5% YoY)
2027E: $84.98 (30.8% YoY)
$MELI has an ok track record of meeting analyst estimates ~2 years out, but let’s assume $MELI ends 2027 with $84.98 in EPS & see its CAGR potential assuming different multiples
40x P/E: $3400💵 … ~17.6% CAGR
38x P/E: $3230💵 … ~15.4% CAGR
36x P/E: $3060💵 … ~13.2% CAGR
34x P/E: $2890💵 … ~10.9% CAGR
As you can see, $MELI appears to have attractive return potential IF we assume >36x earnings (a multiple justified by its growth rate & moat)
$MELI boasts an expansive growth trajectory, fueled by powerful network effects that should drive sustained momentum
Key factors contributing to its promising outlook include 🔑
1. Margin expansion
2. Unparalleled access to Latin America's burgeoning economy
3. Network effects that produce self-reinforcing dynamics ensuring long-term competitiveness, among other things
Those buying $MELI today at $2165💵 are buying it for a fair price, with little margin of safety — however, these growth rates have to be revised down substantially for $MELI to miss the mark, even if the company grows earnings at 25% CAGR over the next 5 years, shareholders will likely end up with a decent return
I consider $MELI a strong buy closer to $1945💵 (~10% below today’s price) where I can reasonably expect ~12% CAGR while assuming a conservative 32x end multiple, ensuring some margin of safety
#stocks #investing
___
𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.
𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.
𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞[...]