It’s not often we’d utter Warren Buffett and Scottish Mortgage Investment Trust in the same breath. After all, the first is a blue-blooded value investor, while the latter mainly invests in tech innovators.

Yet the portfolios of both Berkshire Hathaway, Buffett’s giant holding company, and the FTSE 100 growth-focused trust have one stock in common: Nu Holdings (NYSE: NU).

Oh, and Cathie Wood of Ark Invest also loves this under-the-radar company!

What do these top investors see in Nu Holdings stock? And at $14, should I also invest?

What is it?

Nubank (owned by Nu Holdings) is a Brazilian fintech company, but not just any old one. It’s Latin America’s largest digital bank, with 105m customers in Brazil, Mexico and Colombia.

Nubank’s purple credit cards are ubiquitous in Brazil, where 56% of the adult population now use the app. Clearly, it’s doing something (very) right!

Founded in 2013, the firm provides customers with a comprehensive suite of financial services through their smartphones. They can pay bills, apply for loans and insurance, invest in stocks, trade crypto, and more.

Massive opportunity

Admittedly, that doesn’t sound different to other challenger banks. However, it’s important to remember than Latin America still has tens of millions of people who are either underbanked (limited access to financial products) or unbanked (no access at all). Nubank can offer them credit whereas traditional banks won’t.

It costs the company just $7 to acquire a new account, yet the average monthly revenue per active customer reached $11.20 in Q2. That’s an eye-catching ratio.

Looking through Reddit threads, I note Nubank has an excellent reputation for customer service, something physical banks in the region notoriously lack.

Rapid growth

Over the past two years, the branchless bank has tripled its revenues and seen net income grow consistently. In Q2, revenue jumped 65% year on year on a currency-neutral basis, reaching a record $2.8bn. Adjusted net income skyrocketed 131% to $562m.

Given this eye-popping growth in profits, it’s easy to see why some top investors rate Nu Holdings highly. The best bit though is that the stock isn’t ridiculously overvalued relative to its growth.

Wall Street expects earnings per share to grow at an average of 53% over the next five years. This means a forward earnings multiple of 24 for 2025 may end up looking ridiculously cheap a few years from now.

Should I buy?

Naturally, there are risks associated with Latin America, which is no stranger to economic volatility. As the company expands its credit portfolio, non-performing loans could potentially increase.

Meanwhile, fintech giant MercadoLibre — the region’s largest company — will continue to present formidable competition.

Despite these challenges, I remain bullish. Millions of people in rural areas across the region can’t access physical banks, which often impose minimum balance requirements that are hard for low-income individuals to meet. This is fertile ground for Nubank to continue growing for a very long time.

CEO and co-founder David Vélez is already thinking beyond three countries. “100 million…only represents 1.25% of the world’s population. We are confident that by doing what is best for our customers, we are winning them over for decades. We optimise long-term value creation, not short-term. It’s an infinite game.”

This compelling growth stock ticks all my boxes. At $14, I think I’ll buy it for my portfolio.