Although Warren Buffett is a justifiably celebrated and successful investor, not all of his company’s holdings have soared in popularity recently. Case in point: Brazil-based fintech Nu Holdings (NU 0.48%), which according to data compiled by S&P Global Market Intelligence suffered a 13% decline in share price over this just-completed trading week. This occurred on news of a fresh asset buy and an analyst’s price target cut.
A modest but impactful analyst move
Of the two news items, that cut was the more impactful. It was made by Tito Labarta, an analyst at perennially influential financial services company Goldman Sachs. Tuesday morning before market open, Labarta shaved $2 off his Nu Holdings price target for a new level of $17. On the bright side, he maintained his buy recommendation on the stock.
However, when a company is in a relatively early stage of its existence, even modest adjustments like that can have quite the impact on investor sentiment. Nu Holdings has already suffered the indignity of being sold by Buffett, whose Berkshire Hathaway trimmed its stake in the company’s shares by nearly 20% earlier this year.
Berkshire still owns a pile of Nu Holdings, though, and the company continues to expand its position as a new powerhouse in its massive domestic market.
Questions of synergy with new investment?
Nu is eager to grow by acquisitions, and hungry to be a player abroad. To this end, it announced on Monday that it invested $150 million to become a minority shareholder in international banking conglomerate Tyme Group.
The company operates in the rather geographically separated markets of South Africa and the Philippines. Investors might feel that the synergies between Nu Holdings and Tyme aren’t particularly strong given the geographies.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and Goldman Sachs Group. The Motley Fool recommends Nu Holdings. The Motley Fool has a disclosure policy.
