These 2 Warren Buffett and Cathie Wood stocks beat the market so far in 2023
Cathie Wood and Warren Buffett are two of the most famous investors in the world, although for very different reasons.
Buffett runs the big conglomerate Berkshire Hathaway (BRK.A 0.01%) (BRK.B -0.57%) and has historically been a value investor, although he engages in a variety of investment strategies and in almost every industry. Wood, on the other hand, runs ARK Invest, which manages several exchange-traded funds (ETFs) focused on growth stocks and is known to be a big-tech investor and also a supporter of crypto.
While they have different investment strategies, both Berkshire and ARK happen to own two of the same stocks. These two stocks are doing just fine compared to the broader market so far in 2023. Let’s take a closer look at these two stocks.
Berkshire and ARK both appear to be interested in the fintech space in Latin America, particularly in Brazil, which is a very fast growing banking and finance market. ARK Invest owns 2.45 million shares in the payment and e-commerce company StoneCo (STNE -0.60%), worth about $25 million. Berkshire owns close to 10.7 million shares worth more than $114 million.
StoneCo stock is up about 32% this year, which is very positive compared to S&P 500up about 5% so far this year. Tech Stocks are generally higher, thanks to recent favorable data on inflation.
StoneCo makes it easier for merchants in Latin America to do business and conduct sales, both online and in person. This includes the provision of various financial services such as payments, digital banking and various lending products, as well as software such as an e-commerce platform, marketplace and customer interaction tools. By the end of the third quarter of 2022, StoneCo had more than 2.3 million paying customers, generating $14.5 billion in volume across its platform.
The company has struggled due to geopolitical and macro headwinds in Brazil in 2022, a common theme in the country, but still shows promising growth in a high-opportunity market. The stock trades at about 18 times forward earnings, which is a growth valuation, but certainly not unreasonable, given the opportunity.
2. Nu Holdings
ARK Invest owns the Brazilian digital bank Now Holdings (DOES NOT 3.31%) in both his ARK Fintech Innovation ETF and it is ARK Next Generation Internet ETF. Together, ARK owns close to 4.5 million shares worth more than $18.1 million. Berkshire owns more than 107 million shares worth close to $431.7 million. The stock is up close to 16% this year.
Nu got its start by offering credit cards with no annual fees to Brazilians and then expanded to many other banking products and financial services. Its sleek fintech interface makes it much easier for customers to use and access than the established banks in Brazil.
Since launching in 2014, Nu has amassed an astounding 70 million customers and now banks 39% of the Brazilian adult population. Now also operating in Mexico and Colombia. In the third quarter of 2022, the company generated more than $1.3 billion in revenue and even managed a small profit of 7.8 million dollars.
But as a bank, Nu is not immune to broader macro headwinds, which have added to concerns about how its credit card and personal loan portfolios are holding up. Still, it’s not common to see a fintech company with this kind of incredible growth also showing signs of profitability.
Bram Berkowitz has positions in Nu. The Motley Fool has positions in and recommends Berkshire Hathaway and StoneCo. The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway, short January 2023 $200 puts on Berkshire Hathaway and short January 2023 $265 calls on Berkshire Hathaway. The Motley Fool has one disclosure policy.