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Many investors closely follow Berkshire Hathaway's portfolio to track Warren Buffett's latest moves. However, many of Berkshire's stocks are still hovering near their all-time highs -- even as it trims many of its top positions, pauses its own buybacks, and focuses on raising cash and buying more short-term T-bills.
Buffett's cautious approach seems to suggest the market might be due for a pullback this year, so it might not seem like the best time to use Berkshire's portfolio as a shopping list for new stocks. But if we dig deeper, we'll find some oft-overlooked names in its portfolio that are still trading well below their record highs. One of those stocks is Nu Holdings (NYSE: NU), which has declined more than 30% after setting a fresh record high last November.
What does Nu Holdings do?
Nu is the largest digital-only direct bank in Latin America. It's based in Brazil, and it also serves customers in Mexico and Colombia. Berkshire Hathaway bought 107 million shares of Nu when it went public at $9 a share in Dec. 2021.
Berkshire sold 20.7 million of those shares in the third quarter of 2024, but its 86.4 million remaining shares are still worth $949 million and give it a 1.8% stake in the company. Berkshire's stake in Nu only accounts for 0.3% of its entire portfolio, but the Latin American bank is still growing much faster than its brick-and-mortar competitors.
How fast is Nu Holdings growing?
Nu's total number of customers more than tripled from 33.3 million at the end of 2021 to 109.7 million in the third quarter of 2024. Its activity rate (its active customers divided by total customers) rose from 76% in 2021 to 84% in the third quarter -- and that figure rose sequentially for the past 12 consecutive quarters.
That robust growth was driven by its rollout of more checking, credit card, lending, insurance, investment, cryptocurrency, and business-oriented services. It also tethered more retailers to its Nu Shopping e-commerce app, which reached 255 million visits in 2023. All of those tailwinds boosted Nu's monthly average revenue per active customer (ARPAC) from $4.50 in 2021 to $9.60 in 2023, and that figure has stayed above $11 throughout the first three quarters of 2024.
From 2021 to 2023, Nu's revenue grew at a compound annual growth rate (CAGR) of 117% in USD terms. It also turned profitable on a generally accepted accounting principles (GAAP) basis in 2023. From 2023 to 2026, analysts expect its revenue to rise at a CAGR of 35% as its GAAP earnings per share (EPS) increases at a CAGR of 55%.