$TBBB: Tiendas 3B is Mexico's Aldi. Is it too late to buy? | Fruit Tree Capital

SPEAKER_1 (0:00)

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Andrew Walker (0:32)

You're about to listen to the Yet Another Value Podcast with your host, me, Andrew Walker. Today, I've got a great one. Why? Because well, if you're watching on YouTube, I busted out the mustache and my wife has been on me saying, you can't be wearing that mustache anymore.

I shaved it a few days ago and I said, honey, it's going to have to wait. We're going until I can get proof of this beautiful thing on the YouTube and I'll probably shave it tomorrow. But more importantly than that, today we've got Alberto Vadia from Fruit Tree Capital. This is his first appearance on the podcast. I think you're really going to like him. We're talking about TBBB. This is a dominant, burgeoning dominant, discount retailer in Mexico. As you're going to hear in our conversation, discount retailers have worked all across the world.

The potential to buy into one is really interesting. I wish I'd done it when I first saw it about a year ago, but it's a really interesting, fascinating long-term story. And really the key question to me, hey, they're at 3,500, do the economics as they go from 3,500 stores to potentially 15,000 stores in Mexico, do they stay the same? That's question one. And then question two is, hey, the valuation here is rich, the stock has run a ton, and I hate to just look at a stock price and say, did we miss it? But did we miss it? I hear from a lot of people who used to be bulls who say, hey, it's hard for me to underwrite this at really attractive IRRs anymore. But again, 3,500 to 15,000 stores add to your paybacks. That's how you get, it kind of doesn't matter if you pay 20 times price earnings, 40 times or a hundred times price earnings at the start. Because when you go from 35 to 1500, there are to 15,000 earnings go up really quickly. So I push Alberto on all of that. He's got great answers. I think you're really going to enjoy it. I think this is an awesome interview. So we'll get there in one second. But first, let's just go straight into the word from our sponsor. My sponsor this time, as so many of my podcasts are, Trata, trata.com. If you like this podcast, you will love Trata. Why? Because it's two by-siders talking about stocks. This podcast is two by-siders talking about stocks. There are two by-siders talking about stocks, but it's two smart by-siders who have a position in the stock, talking about what they're thinking about with the stock, what they're worried about, the upsides, the downsides, why they own the stock. And guess what? They've got not one, but two interviews on TBBB, which I used to help prep. You'll hear me throughout the conversation saying, it was so useful for me for prepping for it, for getting ready for this, for thinking about the business, for understanding, as somebody starting from almost here on this company, what's the history here? So if you like this podcast, I can guarantee you will like Trata. Go to trata.com/tbbb, that's trata, trata.com/t and then three B's behind it. And you'll actually see a sample of one of the calls that I used to prep for this podcast. So thank you to Trata for sponsoring this podcast. And now let's get to the interview.

All right, hello and welcome to Yet Another Value Podcast. I'm your host, Andrew Walker. What do you say? I'm happy to have on for the first time, Alberto Viada from Fruit Tree Capital. Alberto, how's it going?

Alberto Vadia (3:28)

Good, good.

Andrew Walker (3:30)

I just butchered your last name, didn't I? It's Vadia.

Alberto Vadia (3:32)

Vadia, it's Vadia.

Andrew Walker (3:33)

Sorry.

Alberto Vadia (3:34)

Don't worry.

Andrew Walker (3:35)

I was reading.

Well, hey, that's an embarrassing start on my end, but we're going to push through two things before we get started. First, disclaimer, remind everyone nothing on this podcast is investing advice. There's a full disclaimer at the end of the podcast and in the show notes. Second disclaimer, Alberto, you came highly recommended by David Bastion from Kingdom Capital. He's a friend. I think really highly of him. When I first trained my first AI model, I actually fed it Kingdom's letters. I said, anything that Kingdom is interested in, I want it to be. My AI loves him. I love him. You're coming highly recommended, so I hope you're ready to bring the heat.