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Billionaire Israel Englander Just Bought 30.9 Million Shares in This Little-Known Warren Buffett and Cathie Wood Stock. Time to Buy?
Financial services is one of Warren Buffett’s favorite industries. His investment vehicle, Berkshire Hathaway, owns a number of insurance and bank stocks.
Another high-profile investor, Cathie Wood, also owns a number of financial services stocks across her exchange-traded funds (ETFs). One rare position that Wood and Buffett share is a fintech company called Nu Holdings (NYSE: NU).
Recently, I was taking a look at some 13F filings and discovered that another well-known Wall Street titan, Israel Englander of Millennium Management, purchased 30.9 million shares of Nu Holdings last quarter — increasing the hedge fund’s position by 370%.
If you’re unfamiliar with Nu Holdings, you might want to put it on your radar. Let’s dig into what makes this up-and-coming financial services company so attractive, and explore if now is a good opportunity to join Buffett, Wood, and Englander.
What does Nu Holdings do?
At its core, Nu is a banking platform. The company offers a variety of services including credit cards, lending, insurance, and investing — all made easy through the company’s online platform.
Simple enough, right? Well, there’s actually a little more to the picture.
While Nu may be seen as a commoditized business offering the same set of products as other larger industry incumbents, there is one big differentiator at play here. Namely, Nu absolutely dominates a key geographic region: Latin America.
Why Nu could be a lucrative opportunity
Financial services and online banking may seem second nature for many people. However, many areas around the world have not yet fully integrated these services and technology into everyday life.
In Latin America, digital banking is still an emerging product. According to a recent study by the Inter-American Development Bank (IDB), the number of fintech start-ups across Latin America and the Caribbean has risen by 340% during the past six years. Brazil, Mexico, and Colombia account for the majority of this growth in the region.
These trends have surely been a tailwind for Nu. At the end of the second quarter of 2018, Nu boasted roughly 5 million customers on its platform. As of the end of the 2024 second quarter, the company has grown more than 20-fold to 105 million customers.
As the company continues acquiring more customers, Nu should be able to strengthen its unit economics by cross-selling additional products and services — further boosting its average revenue per user (ARPU).
With revenue growth eclipsing 50% on a consistent basis, gross profit margin in excess of 40%, and consistent positive net income, Nu is demonstrating an impressive financial profile across the board and I don’t see that slowing anytime soon.
Is Nu a good stock to buy right now?
As of the time of this article, Nu trades at a forward price-to-earnings (P/E) multiple of 23.8.
To put this into perspective, Nu’s forward P/E is trading considerably lower than those of other emerging fintechs such as SoFi Technologies or Upstart — both of which compete in much more saturated markets. Moreover, the average forward P/E of the S&P 500 is 23 — nearly identical to that of Nu. I’d wager that most companies in the S&P 500 aren’t having top line growth of between 50% and 60% on a consistent basis all while widening their profit margins.
To me, Nu is very much overlooked and may be mistaken as “just another bank.” Financial services have a long runway in Latin America, and given Nu’s meteoric rise across the region I’m hard-pressed to believe the company’s penetration will be disrupted by another player anytime soon.
I think the stock could easily become a multibagger for long-term investors and see the latest purchase from Englander as a savvy move.
Don’t miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
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Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $21,049!*
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Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,847!*
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Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $378,583!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of October 14, 2024
Adam Spatacco has positions in SoFi Technologies. The Motley Fool has positions in and recommends Berkshire Hathaway and Upstart. The Motley Fool recommends Nu Holdings. The Motley Fool has a disclosure policy.
Billionaire Israel Englander Just Bought 30.9 Million Shares in This Little-Known Warren Buffett and Cathie Wood Stock. Time to Buy? was originally published by The Motley Fool
The habits of millionaires are a topic of interest when it comes to financial advice. After all, unless they received a large chunk of money as an inheritance or gift, most millionaires had to be smart with their money to get where they are.
Learning how millionaires accumulate wealth — and where they keep it — can provide valuable insights for anyone focused on growing their money. One common question is whether or not millionaires keep money in checking accounts.
Studies show that in recent years, millionaires are keeping a significant portion of their wealth in cash. According to CNBC’s , that portion was about 24% in 2023. While this doesn’t necessarily mean a quarter of a millionaire’s wealth is sitting in a checking account, it does indicate the importance of maintaining liquid assets. And a checking account can be a helpful tool for doing so — whether or not you’re a millionaire.
Anyone, regardless of net worth, can find value in a checking account. Checking accounts allow unlimited deposits and withdrawals, check writing, bill pay, and other features to help you manage your money day-to-day.
While millionaires may keep large portions of their wealth in other deposit accounts and investments, some may use a checking account to manage daily spending. Millionaires also recognize the importance of having liquid assets, like funds in checking and savings accounts. Accessible cash lets you cover unexpected expenses without needing to sell off investments, borrow money, or pay a penalty for tapping your retirement savings early.
The amount of money a millionaire keeps in their checking account is highly personal and depends on preference. However, because checking accounts rarely earn competitive — if any — interest, some millionaires intentionally limit their checking account balance. Some may choose to keep the bare minimum, such as a couple of months’ worth of essential expenses, in their checking accounts, keeping the rest of their wealth in more lucrative assets.
Regardless of preference, it would be surprising for a millionaire to keep more than $250,000 in a single checking account. That’s because the Federal Deposit Insurance Corp. (FDIC) only insures up to $250,000 in deposits per institution, per account holder.
While millionaires may use checking accounts for day-to-day financial transactions, they may also use some of the following accounts in addition to, or in place of, a checking account:
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Savings accounts: Like checking accounts, savings accounts provide a high degree of liquidity, allowing you to access your money as needed for regular or unexpected expenses. High-yield savings accounts, in particular, give millionaires an extra bang for their buck. Some of the best accounts currently offer rates upwards of 4% versus the national average savings account rate of 0.46%.
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Cash management accounts: Cash management accounts (CMAs) pay competitive interest rates while maintaining more accessibility than a savings account. Some CMAs come with a debit card and ATM access, and many provide extended FDIC coverage limits by “sweeping” additional deposits into partner banks. CMAs are available at brokerages, not banks, facilitating easy transfers between investment and cash accounts.
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Money market accounts: Similar to CMAs, money market accounts combine features of checking and savings accounts, often paying competitive interest rates and providing check writing and ATM access. Banks and credit unions offer these accounts, which are federally insured. Minimum opening deposit and minimum balance requirements are often higher than those for standard savings accounts.
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Retirement and tax-advantaged accounts: Millionaires understand the importance of investing for their later years, and retirement accounts such as 401(k)s and IRAs allow them to do so in a tax-advantaged way. Some retirement accounts, like 401(k)s, are offered by certain employers. Others, such as traditional and Roth IRAs, are available to anyone.
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Brokerage accounts: The IRS limits contributions to tax-advantaged accounts, and millionaires typically invest beyond these limits. They do so with taxable brokerage accounts, which can hold investments such as stocks, bonds, and mutual funds without contribution limits.
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Other investments, like real estate, commodities, and art: Some millionaires may decide to diversify their portfolio with other investment types. These could include real estate investments, such as investment properties or real estate investment trusts (REITs); commodities, such as metals or energy products; art; and more.
The amount of money millionaires keep in their checking accounts depends on personal preference. While some millionaires may keep six figures in their checking account to maintain a comfortable cash cushion, others may choose to keep the bare minimum in checking. You wouldn’t expect millionaires to keep more than $250,000 in a checking account, however, because balances over this threshold aren’t typically insured.
There’s no single bank that’s a favorite among millionaires; it’s another matter of preference. However, millionaires are likely to bank with institutions that offer private banking to those who meet specific financial requirements. Private banking may include wealth planning services, waived fees, dedicated bankers, and additional perks. J.P. Morgan Private Bank, Citi Private Bank, and Bank of America Private Bank are among some of the most popular banks for millionaires.
Billionaires may have checking accounts, but they likely use accounts that cater to ultra-high-net-worth individuals. These accounts may come with perks such as a dedicated banker, waived fees, and competitive interest rates. Alternatively, billionaires may opt for a cash management account with higher FDIC insurance coverage limits and checking account features.
No rule says you can’t have a million dollars in a checking account, but FDIC insurance typically only covers up to $250,000. Plus, you can get a bigger return on your investment by keeping $1 million elsewhere. One alternative is a cash management account, which acts like a checking account but generally earns higher interest. Plus, many cash management accounts insure more than the standard $250,000 by sweeping funds into multiple partner banks.
Lumen Technologies, Inc. (NYSE:LUMN) shares are trading higher on Monday after the company announced it is partnering with Meta Platforms, Inc. (NASDAQ:META) to significantly increase Meta’s network capacity and help drive its AI ambitions.
Lumen’s partnership offers Meta enhanced flexibility with secure, on-demand bandwidth, supporting its complex computing requirements and enabling it to serve billions daily.
Ashley Haynes-Gaspar, Lumen’s EVP and chief revenue officer, said, “We’ve transformed our company to meet this demand. As Meta’s customers use more AI services across its platforms, we’re helping provide Meta with a seamless, effortless, and flexible network that will meet its growing needs.”
Lumen Technologies said its Private Connectivity Fabric enables long-term network capacity for Meta’s AI.
Alex-Handrah Aimé, director of Meta’s Network Investments stated, “Our AI tools are performing increasingly more complex tasks including enabling conversations in a variety of languages and translating text to images in real time, while helping people interact with the world around them in new, immersive ways.”
Lumen will report third quarter 2024 results on November 5, 2024.
Investors can gain exposure to the stock via Invesco S&P SmallCap Utilities & Communication Services ETF (NASDAQ:PSCU) and First Trust Cloud Computing ETF (NASDAQ:SKYY).
Price Action: LUMN shares are up 9.50% at $7.38 at the last check Monday.
Image via Shutterstock
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This article Lumen And Meta Join Forces To Boost AI With Flexible, On-Demand Network Solutions originally appeared on Benzinga.com
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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