“StoneCo (STNE)’s Current Problems are Fixable”, According to LRT Capital

LRT Capital Management, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. A return of +18.39% was recorded by the LRT Economic Moat strategy year-to-date, extending its 12-month returns to +35.34%. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.

LRT Capital Management, in its Q3 2021 investor letter, mentioned StoneCo Ltd. (NASDAQ: STNE) and discussed its stance on the firm. StoneCo Ltd. is a Cayman Islands-based financial technology solutions company with a $5 billion market capitalization. STNE delivered a -80.53% return since the beginning of the year, while its 12-month returns are down by -76.83%. The stock closed at $16.34 per share on November 26, 2021.

Here is what LRT Capital Management has to say about StoneCo Ltd.  in its Q3 2021 investor letter:

StoneCo Ltd. (STNE) – the Brazilian payments company is down over 60% from its recent highs in February and down close to 50% since June alone. The company has encountered difficulties, particularly as they relate to their credit business, forcing it to stop lending and write down a sizeable portion of their loans. However, the example of PagSeguro Digital Ltd. (PAGS) demonstrates that it is possible to profitably lend to merchants in Brazil. We believe that the problems that StoneCo is facing are fixable. At the same time, the company’s core payment business continues to grow quickly with a large opportunity for further growth ahead of it.”

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Based on our calculations, StoneCo Ltd. (NASDAQ: STNE) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. STNE was in 37 hedge fund portfolios at the end of the third quarter of 2021, compared to 44 funds in the previous quarter. StoneCo Ltd. (NASDAQ: STNE) delivered a -67.59% return in the past 3 months.

Disclosure: None. This article is originally published at Insider Monkey.