Group 1 - EU retaliation tariffs are back in focus, reviving trade risk and raising concerns about second-order effects on supply chains and margins, particularly for globally exposed companies [1][3] - Industrials and multinationals with European exposure are likely to feel the pressure first when tariff narratives resurface [3] Group 2 - The introduction of credit card APR caps starting January 20 poses a risk for financials, raising questions about margin compression and reduced credit availability [4] - Stocks related to consumer lending and payments, such as SOFI, AXP, COF, SYF, and NU, are reacting to headline risks ahead of any finalized policy [4] Group 3 - The software sector is experiencing a risk-off rotation, with investors selling high-multiple growth names to de-risk portfolios amid policy uncertainty [5] - High-multiple software and data platforms like Snowflake, MongoDB, Salesforce, Adobe, and Datadog are under pressure as investors seek perceived safety and liquidity [5]

Summary of the Americas Thematic Focus List Conference Call Industry and Company Overview - **Industry**: The thematic focus is on various sectors across North America and Latin America, particularly in technology, energy, healthcare, and education. - **Companies Featured**: The focus list includes notable companies such as Amazon, Microsoft, NVIDIA, Eli Lilly, and Walmart, among others. Key Themes for 2026 1. **Tech Diffusion**: Emphasizes the rapid adoption of AI technologies across various sectors, with significant implications for productivity and competitive dynamics [12][14]. 2. **The Future of Energy**: Focuses on the increasing demand for energy driven by AI infrastructure and the transition to renewable energy sources [12][17]. 3. **The Multipolar World**: Highlights the shift towards localized supply chains and national economic security, impacting multinational corporations [12][13]. 4. **Societal Shifts**: Explores the implications of demographic changes, AI-driven employment disruption, and evolving consumer preferences [12][18]. Americas Thematic Focus List - **List Composition**: The focus list includes 18 high-conviction stock ideas, with a target holding period of 12-18 months [9][20]. - **Key Companies on the List**: - **Amazon (AMZN)**: Positioned as a leader in AI infrastructure, with a projected 32% upside to a price target of $238.18 [23]. - **Microsoft (MSFT)**: Expected to capture significant AI spending, with a 42% upside to a price target of $456.66 [23]. - **Eli Lilly (LLY)**: A leader in the GLP-1 market, with a 25% upside to a price target of $1,032.97 [23]. - **Walmart (WMT)**: Leveraging AI for operational efficiency, with a 13% upside to a price target of $119.20 [23]. Methodology and Specifications - **Focus List Size**: 15-20 stocks, with equal weighting upon construction [21]. - **Sector Weights**: No fixed sector weights, aiming for diversification [21][22]. - **Regional Weights**: Targeting 80-85% in the USA and 15-20% in Latin America [28]. Important Insights and Data - **Amazon's Growth**: Amazon's custom silicon strategy has grown 150% sequentially, indicating strong demand for its AI capabilities [29]. - **Eli Lilly's Market Potential**: The global diabesity market is projected to exceed $150 billion by the early 2030s, with significant growth opportunities for Eli Lilly [39]. - **NVIDIA's Dominance**: NVIDIA is positioned to capture a significant share of the projected $3-4 trillion in annual AI infrastructure spending by the end of the decade [53]. - **Walmart's AI Strategy**: Walmart's AI initiatives have led to a 50% automation rate in its supply chain, significantly reducing delivery costs [68]. Conclusion The Americas Thematic Focus List presents a strategic overview of high-conviction investment opportunities across key sectors, driven by transformative themes such as technology diffusion and energy transition. The insights provided highlight the potential for significant growth and the evolving landscape of investment in the Americas.

Core Insights - Investors are encouraged to focus on Wall Street's strongest momentum leaders for outsized returns this year [2] - The Driehaus investment strategy, emphasizing "buy high and sell higher," has identified Nu Holdings, Amazon, and Microsoft as strong momentum plays [3] Investment Strategy - The Driehaus strategy prioritizes investing in stocks that are increasing in price rather than those in decline, with a focus on the 50-day moving average as a key criterion [4] - A positive 50-day moving average indicates an uptrend, while strong earnings growth rates and a history of beating estimates are crucial for selecting potential outperformers [6] Screening Parameters - Stocks with a Zacks Rank of 1 (Strong Buy) or 2 (Buy) and a Momentum Score of A or B are considered to have the best upside potential [7] - The screening process has narrowed down over 7,743 stocks to only 41 that meet the criteria, including Nu Holdings, Amazon, and Microsoft [10] Company Profiles - **Nu Holdings**: Offers a digital banking platform across Latin America, the Cayman Islands, and the U.S. It has a Zacks Rank of 2 and a Momentum Score of B, with a trailing four-quarter earnings surprise of 5.3% [11] - **Amazon**: Engages in selling consumer products and providing advertising and subscription services globally. It holds a Zacks Rank of 2 and a Momentum Score of B, with a trailing four-quarter earnings surprise of 22.5% [12] - **Microsoft**: Develops software, services, devices, and solutions worldwide. It also has a Zacks Rank of 2 and a Momentum Score of B, with a trailing four-quarter earnings surprise of 8.5% [13]

Core Insights - Investing in financial stocks may seem risky due to declining interest rates affecting traditional banks' profits, but fintech companies like SoFi and Nu could present long-term investment opportunities as they attract customers from older banks [1][2] Group 1: SoFi - SoFi, founded in 2011, has evolved from offering only student loans to a comprehensive online platform providing various financial services, including auto loans, mortgages, personal loans, credit cards, insurance, and trading tools [4] - The company has experienced rapid growth, increasing its membership from 2.5 million in 2021 to 12.6 million by Q3 2025, with products in use rising from 1.9 million to 18.6 million [5] - Analysts project SoFi's revenue and adjusted EBITDA to grow at a CAGR of 23% and 38% respectively from 2025 to 2027, with an enterprise value of $31.5 billion, indicating it is reasonably valued at 19 times this year's adjusted EBITDA [7] Group 2: Nu Holdings - Nu, founded in 2013, operates NuBank, the leading direct bank in Latin America, and has successfully attracted younger customers while addressing the needs of a largely unbanked adult population in the region [10] - Similar to SoFi, Nu has outpaced traditional banks in growth by leveraging its digital-native platform to appeal to younger demographics [9]

Core Viewpoint - Emerging markets (EMs) have underperformed compared to U.S. stocks over the past decade, but recent trends suggest a potential turnaround with significant future returns expected for EMs [1][6][16] Performance Comparison - The S&P 500 has increased by 83% over the past 5 years, while the Vanguard Emerging Markets ETF (VWO) has only risen by 6.8%, indicating a stark contrast in performance [1] - Historically, from 1990 to around 2013, EMs and the S&P 500 produced similar returns, but since then, U.S. stocks have significantly outperformed EMs due to factors like a strong dollar and quantitative easing [3][5] Future Outlook - Analysts at Goldman Sachs project that U.S. stocks will return an average of 6.5% over the next decade, while emerging markets are expected to return 10.9%, suggesting a strong potential for EMs to catch up [7] - The recent performance of the Vanguard EM ETF, which is up 40% in the past year, indicates a possible beginning of a longer-term trend of EM outperformance [6] Investment Opportunities - The average P/E ratio for the Vanguard EM ETF is 16, which is about half that of the S&P 500, making EMs relatively cheap [8] - The dividend yield on VWO is 2.67%, significantly higher than the S&P 500's 1% yield, presenting an attractive income opportunity for investors [8] Specific Investment Recommendations - For broad exposure to EMs, the Vanguard EM ETF (VWO) is recommended, although it is heavily weighted towards China [9] - The Cambria Emerging Shareholder Yield ETF (EYLD) is suggested for those seeking high-yield EM stocks, focusing on dividend and buyback yields [11] - Brazilian stocks are highlighted as particularly attractive due to low valuations and high dividend yields, with the iShares Brazil ETF (EWZ) trading at a P/E ratio of 11 and a trailing dividend yield over 5% [12][15] Sector Insights - Brazil is noted as a natural resource powerhouse, with potential for strong returns if commodity prices rise, making it a strategic focus for investment [13] - Individual stocks such as Petrobras, Vale, and Nubank are mentioned as favorable investments within the Brazilian market, with varying performance since coverage began [14]

Core Thesis - Nu Holdings Ltd. is positioned for significant growth in the U.S. market through its recent filing for a national bank charter, which will enable it to expand operations and better serve underserved communities [2][5]. Expansion Strategy - The filing for a U.S. national bank charter is a critical step for Nu, allowing it to operate across all 50 states and target low-income and Latin American communities [2][4]. - Nu's expansion strategy includes offering no-fee accounts, competitive credit cards, high deposit interest, loans, investment products, crypto services, and low-cost remittances, appealing to an estimated 60 million potential customers [4][5]. Competitive Advantage - Nu leverages cloud-based infrastructure, AI, and automation to maintain a structural cost advantage over traditional U.S. banks, enabling scalable and low-cost operations [5]. - The company has a strong balance sheet and regulatory experience across three countries, which enhances its likelihood of receiving approval for the bank charter [3][5]. Market Opportunity - The U.S. market represents a multibillion-dollar opportunity for Nu, with the potential to replicate its successful growth trajectory in Latin America [5]. - Although meaningful profits are projected to be years away, the filing indicates Nu's long-term ambition to establish itself as a dominant low-cost digital bank [5]. Performance Metrics - Nu Holdings Ltd.'s stock was trading at $17.04 as of January 12th, with trailing and forward P/E ratios of 33.03 and 21.23 respectively [1]. - The stock has appreciated approximately 29.77% since a previous bullish thesis was published, reflecting continued execution and growth in the region [6].

Core Insights - Investing in the intersection of financial services and technology offers significant opportunities, with one fintech stock, Nu Holdings, experiencing a 62% increase in 2025 and a 364% rise over the past three years as of January 12 [1] Company Performance - Nu Holdings has shown remarkable financial performance, with a 42% year-over-year revenue increase in Q3 2025, and analysts project a 31% revenue growth for 2026, indicating a strong growth trajectory [3][4] - The company has expanded its customer base significantly, reaching 127 million customers by the end of Q3 2025, up from 70 million three years prior, with a strong presence in Brazil where 60% of the adult population are customers [4] Market Potential - Latin America presents long-term growth potential due to a high number of unbanked and underbanked individuals, coupled with increasing smartphone and internet penetration, which positions Nu for continued success [5] Valuation and Investment Opportunity - Nu Holdings is currently trading at a forward price-to-earnings ratio of 21.8, which is attractive compared to the S&P 500's 22.4 multiple, suggesting that investors are not overpaying for the stock [6] - The company's scalable digital banking model, which avoids significant operating costs associated with physical branches, has led to substantial growth in both revenue and customer numbers, making it an appealing investment opportunity [7]

Core Viewpoint - Nu Holdings has experienced significant growth, with shares increasing by 61.6% in 2025, driven by its expansion in Brazil, Mexico, and Colombia, and is now trading near an all-time high [1][2]. Group 1: Growth and Market Expansion - Nu Bank has achieved widespread adoption in Brazil, with over half of the adult population using its products, attributed to low fees and an easy-to-use mobile app [3]. - The company has expanded into Mexico, reaching 13 million customers, and is aggressively growing in Colombia, where it has captured 10% of the population [4]. Group 2: Financial Performance - Nu Holdings reported a net income of $2.5 billion over the last twelve months, a significant turnaround from previous losses, indicating strong profit potential as the business matures [5]. - The stock currently trades at a market cap of $80 billion, with a price-to-earnings ratio (P/E) of approximately 32, which is considered premium compared to other banking stocks [7][8]. Group 3: Future Outlook - The rapid addition of new customers and potential entry into more Latin American markets suggest that earnings will continue to grow, which may normalize the current high P/E ratio [8][9].

Group 1 - Ero Copper Corp. (ERO) has seen a Zacks Consensus Estimate for its current year earnings increase by 8.1% over the last 60 days [1] - Nu Holdings Ltd. (NU) has experienced a Zacks Consensus Estimate for its current year earnings rise of 7.1% over the last 60 days [1] Group 2 - Kohl's Corporation (KSS) has reported a Zacks Consensus Estimate for its current year earnings increasing by 104.4% over the last 60 days [2] - Fulgent Genetics, Inc. (FLGT) has seen a significant increase in the Zacks Consensus Estimate for its current year earnings by 775% over the last 60 days [2] - The Beachbody Company, Inc. (BODI) has experienced a Zacks Consensus Estimate for its current year earnings increase of 58.3% over the last 60 days [2]

Core Viewpoint - MercadoLibre (MELI) presents a concerning investment picture, with significant financial health issues despite reporting a 39.5% year-over-year revenue growth to $7.41 billion in the last quarter, suggesting potential investors should be cautious about this stock in 2026 [1]. Financial Performance - The Zacks Consensus Estimate for 2026 earnings has been revised downward by 1.54% over the past 30 days to $59.59 per share, indicating market pessimism regarding MELI's growth trajectory [2]. - MELI's revenue growth masks underlying profitability issues, with aggressive fintech expansion leading to compressed margins and increased credit losses [7][8]. Economic Environment - MELI's extensive exposure to Latin America subjects it to significant macroeconomic headwinds, including Argentina's inflation rate of 31.40% and a downward revision of Mexico's GDP growth projections to 1.5% for 2026, which could pressure e-commerce transaction volumes [4][5]. - Brazil's elevated interest rates to combat inflation are increasing funding costs for MELI's $11.02 billion credit portfolio, further compressing net interest margins and reducing consumer disposable income [5]. Profitability Challenges - The net interest margin after losses has compressed by 320 basis points to 21% in Q3 2025, highlighting difficulties in scaling consumer lending in volatile markets [9]. - Despite a projected total payment volume of $275.8 billion for 2025, the fintech operations are absorbing capital while delivering weaker profitability, with income from operations margin falling to 9.8% and net income margin declining to 5.7% [8][9]. Market Performance - MELI shares have declined by 11.7% in the past six months, underperforming both the Zacks Internet-Commerce industry and the Zacks Retail-Wholesale sector, which increased by 5.7% and 4.1% respectively [10]. - The stock's performance gap compared to peers like Nu Holdings and Amazon indicates critical execution weaknesses, as aggressive top-line growth fails to create shareholder value [10]. Valuation Concerns - MELI trades at a price-to-earnings ratio of 36.35X, significantly above the industry average of 24.26X and the broader sector average of 24.66X, making its valuation difficult to justify given ongoing margin compression [13]. - Without a clear pathway to margin expansion and sustainable profitability, the current premium valuation offers minimal safety for prospective investors [13]. Conclusion - The combination of regional economic instability, aggressive fintech expansion eroding profitability, and significant underperformance relative to peers makes MELI an unattractive investment proposition [16].