Hi Everyone,
While NU has PEG around 0.7, and I have been happy to hold this company for a few years. However, the turnover in the c-suite and the rapid expansion to other verticals has me concerned. The COO, Youseff Lahrech, has removed from his position with little fanfare on May 21, one week after he participated in the conference call with the CEO taking over his duties. Recently the Chief Product Officer, Jag Duggal, the Investor Relations Office, Jorg Friedemann, and Chief Legal Officer Elita Ariaz were also shown the door. For a high growth bank that is expanding to mobile cellular networks, digital payments, travel, and, possibly ecommerce this is strange. I would think this should be an all hands on deck time for the company. This contrasts sharply with Mercadolibre that maintains a highly cohesive management team through all of its growth. I could be wrong, but this kind of “streamlining” is more typical of mature companies that are attempting to gain efficiency. This upheaval seems more like policy differences amongst leadership. I think NU is too risky to continue to hold. I am in the process of liquidating my entire position. Recently, Berkshire Hathaway has liquidated their holdings too.
Best,
bulwnkl
47 Likes
It does seem weird but David Velez is actually getting more involved in day-to-day operations. For the last couple of years, he has been focused on the big picture but thought the team wasn’t making decisions fast enough. Velez now has 15 direct reports so they flattened the org structure a bit.
As an aside, Jorg got offered a CEO position which is a huge upgrade over IR.
Interestingly, MELI’s founder stepped back to Chairman last week. I actually like the fact that Velez is getting more involved. He’s stepping up the intensity. Brazil has a CEO so that business is set up really well and the GMs in Mexico and Colombia are also strong.
We’ll see how this turns out but I trust Velez quite a bit. MELI has a really strong bench so I’m not worried about them either though!
25 Likes
Hi fish13,
Prior to this, I liked David Valez too. Jorg’s situation is understandable. If Jag didn’t have a good development process, Chief Product Officer might be understandable too. But add on top of that the Chief Legal Officer. In addition to David’s other skills, is he an experienced attorney as well, or does he want to skirt legal obstacles?
Some people have to be the smartest people in the room and do not work well with others. CEO’s that I have worked with that can’t be bothered with technical details or CEO’s that skirt the law or that commit fraud behave like this. It hasn’t ended well.
I totally see this as a fabulous GARP stock, if I am wrong. And I definitely could be mistaken. I hope for the investors and employees sake that I am wrong.
For me, I see great growth opportunities without these questions, so that’s where I am deploying my money.
Best of luck.
bulwnkl
23 Likes