What happened
Shares of the Brazilian digital bank Nu Holdings(NYSE: NU) traded roughly 11.4% higher as of 2:37 p.m. ET today after a large, well-known institutional investor revealed that it has taken a position in the company.
So what
The large Japanese conglomerate and tech investor SoftBank(OTC: SFTBF) revealed in its 13F filing, which shows what stocks the company bought and sold between April 1 and June 30, that it has purchased 22 million shares of Nu valued at nearly $82.3 million.
That means the average cost of shares purchased by SoftBank was $3.74. That's right around the bottom of where the stock traded at its lows in June. SoftBank had been named as an investor in Nu before the company went public, along with Berkshire Hathaway. But NU was not listed among SoftBank's holdings in its 13F for the first quarter of the year.
Nu is also expected to report earnings results for the second quarter of the year after the market closes today. Analysts on average expect Nu to break even for the quarter and generate revenue of close to $908 million.
Now what
Nu has disrupted the Brazilian and Latin American banking markets, which are still developing, in a big way by offering a sleek digital experience and lower-fee banking products and services.
At the end of the first quarter, the fintech company had acquired nearly 60 million customers at an extremely low customer acquisition cost. While the company is working toward growing monthly revenue per user, I am bullish on the stock, given the progress it has made and the massive market opportunity.
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Bram Berkowitz has positions in Nu Holdings Ltd. The Motley Fool has positions in and recommends Berkshire Hathaway (B shares) and SoftBank Group Corp. The Motley Fool recommends Softbank Group and recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
