NU Holdings (NU)----classic buy and hold

I think it will go up just by virtue of people fat fingering MU

P/E is not the best ratio for evaluating banks. I'd look at P/B, ROE, net interest margin(how much profit do they make on their core business), and credit quality. Then P/E if the other ratios made sense. A bank is a balance sheet business. The primary value of a bank is how efficiently it can borrow money from depositors and lenders, then turn that into profitable loans. Here's a few rules of thumb:

ROE: 10% - 15% is good. Above 15% is excellent

P/B: 1x is average. Less than that can be undervalued or just a weak bank. Above 1 usually mean stronger, but it could also mean you're paying a lot.

Net interest margin: this is the profit margin you're making on the bank's money. For a big emerging market bank like NU, it should be at least 5%. 10-15% is strong. Above 15% nad you might be running too hot.

For comparison purposes, a big U.S. bank would probably have a 2-3% net interest margin.

Credit quality: If the percentage of credit losses/non-performing loans are steady or going down from quarter to quarter, that's good.

For a big bank American bank, it should be no more than 4%, meaning $4 out of every $100 in loans is in real trouble. 1-2% is normal, and less than 1% is great.

For a fast growing emerging market bank, more than 10% is probably dangerous. 3-6% might be normal. Less than that is really strong.

P/E: under 10x is cheap. 10-15x is average. 15x is expensive.

Since one of the most attractive things about NU is the growth, I'd look at PEG.

Under 1: you're buying earnings cheaply. That's a good thing.

2-3: average

3+: expensive

You could get more granular and look at trailing P/E versus forward P/E. You could look at Tier 1 capital and loan loss reserves. Interest rates of course(generally, the higher the better for a bank).

All of these are rules of thumb. You have to know the context behind all the numbers. That's why you gotta read the filings. That's how you learn why something is happening.

My simple analysis based on cursory research is that this is a good business given the tremendous growth. I would really watch the credit quality though because rapid expansion usually leads to worse quality.

The easy part of the thesis is customer growth and low operating costs. The bit I’d want to pressure test harder is credit quality when the cycle gets uglier, because that is usually where fast-growing lenders stop looking cheap and start looking risky. For a bank, I’d spend more time on underwriting, delinquency trends and funding mix than on the headline PE.

There's something wrong inside the company. Alot of the top leadership staff have left, early investors sold their stake, ceo sold a sizeable chunk of her holding. My guess would be that they are fudging the numbers. One of their competitors recently got caught doing the same. Since they just announced a buyback program I bought a bit.

I dunno... Still very expensive for a bank, unknown risks to rapidly expanding credit lines, I could go on and nit pick here and there... But there is one data point that hits hard:

Zero insider purchases in 6 months.

I hold a position.

FYI, the country is spelled “Colombia” not using a “u”

It’s one of my largest holdings, and I’m still adding to my position every week. Most likely, NU will outperform SoFi over the next three years mark my words.

Downgraded