5 Biggest Losers in Gabriel Plotkin’s Melvin Capital Portfolio

4. PagSeguro Digital Ltd. (NYSE:PAGS)

YTD Share Price Decline as of May 25: 52.24%

Number of Hedge Fund Holders: 27

PagSeguro Digital Ltd. (NYSE:PAGS) is a provider of financial technology solutions to consumers, small entrepreneurs, micro-merchants, and medium-sized companies in Brazil and internationally. The company was established in 2006 and is headquartered in São Paulo, Brazil. As of May 25, the stock has plunged over 52% and is one of the biggest losers in Gabriel Plotkin’s portfolio. The hedge fund slashed its stake in PagSeguro Digital Ltd. (NYSE:PAGS) by 71% in Q1, and the remaining position consists of 2.8 million shares worth $57.7 million.

New Street analyst Soomit Datta downgraded PagSeguro Digital Ltd. (NYSE:PAGS) on May 9 to Neutral from Buy with an $18 price target after slashing long-term market estimates to account for risks from debit volumes, the central bank’s instant payment system, installment profitability concerns, and Buy-Now-Pay-Later schemes in Brazil. The analyst was already concerned that PagSeguro Digital Ltd. (NYSE:PAGS)’s credit is slowing and said it is “hard to see a positive catalyst” currently.

According to Insider Monkey’s data, 27 hedge funds were long PagSeguro Digital Ltd. (NYSE:PAGS) at the end of March 2022, compared to 26 funds in the prior quarter. Daniel Patrick Gibson’s Sylebra Capital Management was the largest shareholder of the company as of Q1 2022, with a stake worth $198.30 million. 

Here is what Artisan Mid Cap Fund has to say about PagSeguro Digital Ltd. (NYSE:PAGS) in its Q1 2021 investor letter:

“We also reduced our position in PagSeguro. PagSeguro is making good progress establishing a fast-growing digital bank and expanding its Brazilian payments business despite the pandemic. However, the company’s growth initiatives will require another year of heavy investment spending in 2021. This comes as Brazil’s progress combatting COVID-19 trails many major economies’, casting a cloud over the broader economic outlook. Given these potential headwinds, we trimmed our position to fund higher conviction holdings.”