Brown Capital Management International Equity Fund recently released its Q4 2020 Investor Letter, a copy of which you can download here. In the fourth quarter of 2020, the indexes that represent international equities rose: the MSCI ACWI ex USA Index increased 17.08%; the MSCI World ex USA Index went up 15.91%; and the MSCI EAFE Index returned 16.09%. The Brown Capital Management International Equity Fund lagged these returns. However, you should check out Brown Capital Management’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.
In the Q4 2020 Investor Letter, the fund highlighted a few stocks and MercadoLibre Inc (NASDAQ:MELI) is one of them. MercadoLibre Inc (NASDAQ:MELI) is an online marketplace company. In the last three months, MercadoLibre Inc (NASDAQ:MELI) stock gained 10.3% and on February 26th it had a closing price of $1,638.11. Here is what the fund said:
“In the fourth quarter, we purchased MercadoLibre, an Argentina-based company that operates the leading e-commerce shopping platform in Latin America, similar to Amazon.com. MercadoLibre is a company well known to Brown Capital as it has been held in our International Small Company Strategy since its inception seven years ago. While we are optimistic on MercadoLibre’s outlook, we have liquidated our shares in the International Small Company Fund as we no longer consider it to be a small company. The MercadoLibre platform is growing quickly; it more than doubled the value of items sold in the latest reported quarter versus the prior-year period. Given that e-commerce is only 2.5% of total retail sales in Latin America, MercadoLibre has tremendous room for growth as it trends towards the 10%-plus penetration rate seen in the U.S. and Western Europe. We are particularly encouraged by the company’s significant investment in distribution as well as its shift into the sales of first-party goods, both of which reduce delivery times for customer orders.
While the high growth in the shopping platform is notable, we believe there is a larger opportunity in the company’s payment platform, called Mercado Pago. In the last reported quarter, transaction volumes that were independent of the shopping platform nearly tripled compared to the prior-year period. Mercado Pago offers a strong solution in digital payments and banking services, particularly for micro merchants. MercadoLibre offers a mobile Point of Sale (mPOS) with 2.5 million active units today and sees the market potential at 15 million units. In addition to unit growth, Mercado Pago will also benefit from higher transaction volume on the mPOS systems, as today merchants transact about 500 Brazilian reals per month, while competing mPOS units can generate 3,000 Brazilian reals per month. While the opportunity is large, it is also competitive. We believe Mercado Pago has an advantage as it can leverage the success of the MercadoLibre platform, which is well known in the markets is serves.”
In Q3 2020, the number of bullish hedge fund positions on MercadoLibre Inc (NASDAQ:MELI) stock increased by about 35% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in MercadoLibre’s growth potential. Our calculations showed that MercadoLibre Inc (NASDAQ:MELI) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
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Disclosure: None. This article is originally published at Insider Monkey.