TCOM | AC | NU | PSH
Post 2/x
TCOM 7.7% Position
Trip.com Group (TCOM) is the leading player in China’s online travel agency market, with >50% market share. TCOM leverages its strong domestic position to capitalize on the burgeoning travel markets in China, India, and Southeast Asia. The company’s dual-market strategy, which includes brands like Ctrip, Qunar, Trip.com, and Skyscanner, positions it to capture gains in both domestic and international travel. Despite macroeconomic challenges, the resilience of China’s domestic tourism and the rebound of international travel post-pandemic provide significant growth opportunities.
TCOM’s distinct advantages include its deep connections within China, enabling it to negotiate favorable terms with partners, and its stronghold in the domestic market, which foreign competitors cannot easily penetrate. Additionally, TCOM’s stake in India’s MakeMyTrip and Trip.com's rapid market share expansion in Southeast Asia and the UK further solidify its global presence. TCOM is currently trading at FY25 PE ratio of 16x, but given the superior growth prospects, it should be trading at or even in excess of BKNG at 23x
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AC 7.6% Position
Accor is an hotel management and brand company that owns brands like the Fairmont, Sofitel, Ibis, etc. Hotel Management is a phenomenal asset-light business, and Accor has particularly strong growth prospect given its leading position in Asia / Europe and the Lifestyle segment. AC trades at 12x EBITDA, a large discount to Marriott and Hilton at 18-20x. It would be a highly attractive and complimentary acquisition target for most of its competitors and there is a further catalyst in potential corporate re-organization.
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NU 5.8% Position
NU is a fintech bank operating in Brazil, Mexico, and Colombia. It is one of the best banks in the world and operates with no physical branches. It has >100 million customers in Brazil with a Net Promoter Score nearly 3x of its competitors. It has an average monthly revenue per user of $11 but only $0.80 cost to serve each user, with each user acquisition costing just ~$7 resulting in a >30x LTV/CAC. It is phenomenally profitable in its core Brazil market, and Mexico and Columbia hold a similar promise.
The biggest risk here is macro related - MSCI Brazil ETF (EWZ) declined ~33% in 2024, from a combination of economic concerns and weak currency. NU should continue to grow revenue at 20-25% per year and trades at 18x 2025 P/E.
PSH 5.5% Position
This was once a much larger position (to my detriment) and my main exposure to the US market, but trimmed substantially as it feels like Ackman is once again getting distracted from focusing on basic investing and now running political campaigns on X. That being said, its an Index plus trade (Ackman is one of the most talented investors of this generation), with brilliant capital allocation (cheap cov-lite debt, continuous share buybacks) with a bet of a narrowing of >30% discount to NAV. I believe the NAV discount is a personal embarrassment to Ackman and he will continue to work to reduce it
Key Risks: Heavy fees: 1.6% mgmt fee + 16% carry. Carry is paid on NAV, so there is unfortunately misalignment between how you do as a shareholder on stock price vs NAV. Even if NAV discount persists, the ultimate discount closer (allowing liquidation) will never happen because this is AUM (i.e. fees) in perpetuity. When Ackman gets distracted from focusing on basic investing, i.e. running short campaign on Herbalife, bad things happen. I.e. his campaigns on X.
Read more here:
https://www.valueinvestorsclub.com/idea/Nubank/4655948349
https://www.valueinvestorsclub.com/idea/Nu_Holdings_Ltd/5832517108
Paraphrasing Kerrisdale this is not investment advice, and “is provided to you solely for your own entertainment purposes”.