I boosted my stake in MercadoLibre by about 85% today. I think macro fears are overblown for a company that has profitably compounded for decades. It has thrived across cycles… regardless of consistent Brazilian currency weakening, some Argentinian hyper-inflation and other macro fits in the markets where it presides.

Furthermore, I think the most aggressive period of absorbing large, front-loaded credit loss provisions will soon be behind us as it begins to find economies of scale in its newer card business. I also think the currently hefty CapEx cycle should begin to slow in 2025 as it puts the capacity it needs into place. I think both of these items should lead to currently negative EPS estimate revision trends reverting in the coming quarters. We’ve seen some sell-side notes express similar opinions in recent weeks, and I agree with them.

MELI is an elite company that consistently executes, takes market share, finds successful product expansion wherever it tries to and simply wins. It’s also beginning to enjoy better macro in the important Argentinian market. At 45× 2025 earnings and a 1.28x PEG ratio, I’d been waiting to more meaningfully accumulate shares to see if Mr. Market gave me a better deal. 1.28x is rather expensive for a Latin America company, but this deserves to be.

I feel like my decision to wait was me getting a little too “cute” on market timing and assuming I know a pullback is coming. I don’t. I want this to be a materially larger portion of my portfolio today and I’m comfortable with paying up. Furthermore, based on my expectations for pivoting estimate revision trends this year, I don’t actually think this will end up trading for 45x forward earnings. I think it’ll be closer to 40x and a 1x PEG.

The purchase today was funded by a new deposit.

Updated holdings & performance:

As explained last portfolio update, there’s a visual bug on Schwab when using the January 1st 2023 start date I was using.

They said they would fix it but haven’t yet. When I move the timeframe back one single day, the issue is resolved. That’s my plan until they fix it. I’ve included performance charts with the December 31st 2022 and January 1st 2023 start dates so you can see what I mean and see that this has no material impact on results (very small negative impact on my overall outperformance but oh well).