TIP834: DLocal (DLO): Multibagger Potential with Decade-Long Runway w/ Daniel Mahncke & Shawn O’Malley

**SPEAKER_1** (0:00)
You're listening to TIP.

**Daniel Mahncke** (0:03)
Welcome back folks to The Investor's Podcast, episode 834 And the last stock I pitched to you, Shawn, was Pinduoduo by many measures, the largest e-commerce company in the world, trading at a low single-digit earnings multiple, and with about 60% of the market cap in cash.

**Shawn O'Malley** (0:21)
Fascinating company and opportunity. One of the most surprising things to me was the connection to Buffett and Berkshire. Today's company, I don't think, has any surprise connections to Buffett that I'm not aware of.

**Daniel Mahncke** (0:33)
I wish it would, but unfortunately, I cannot offer that today. But it's yet another name with lots of growth, high margins, trading at a mid-teen multiple, so slightly more expensive, but still relatively cheap, I would say, and also with a lot of cash on the balance sheet, although it's not 60% of the market cap this time.

**Shawn O'Malley** (0:51)
And it's earlier in its life cycle, so we could have a company here that generates exceptional returns for maybe decades to come.

**Daniel Mahncke** (0:58)
That's the idea.

**SPEAKER_1** (1:02)
Since 2014, with more than 200 million downloads, we have interviewed the world's best investors, studied deeply the principles of value investing, and uncovered many compelling investment opportunities. We focus on understanding businesses and intrinsic value, investing accordingly, and sharing everything we learn with you.
This show is not investment advice. It's intended for informational and entertainment purposes only. All opinions expressed by hosts and guests are solely their own, and they may have investments in the securities discussed. Now for your hosts, Shawn O'Malley and Daniel Mahncke.

**Shawn O'Malley** (1:49)
For those who have followed along with The Investor's Podcast, you might know that Daniel and Kyle alternate on pitching me their favorite new stock idea each week, so we can find opportunities for our intrinsic value portfolio of stocks that we manage, which I should mention if you want to check out the portfolio, it's linked in the show notes below and updated weekly. You can also get updates on our portfolio for free by signing up for our intrinsic value newsletter, and you can find that in the show notes too, or just by going to theinvestorspodcast.com.

**Daniel Mahncke** (2:22)
I should mention that more often. I got a lot of questions all the time about where to actually find the portfolio that we always talk about, but there's one more thing that we could say. So maybe you want to complete our little advertising campaign here in the beginning and bring up our New York City Conference.

**Shawn O'Malley** (2:37)
It's great that you bring it up. Yeah, we'll be hosting our second and much larger Intrinsic Value Conference in Midtown Manhattan this September on Saturday the 19th. And if you want to join us and network with a great group of investors, you can head to intrinsicvalueconference.com to purchase your tickets before they sell out. And prices are going to increase over time ahead of the event. So the sooner you purchase, the better the deal you'll get.
All right, well today, Daniel, it's your turn to make a pitch. And I got to say, when I look at DLocal's headline numbers and valuation, I do see why you want to cover the company. It's growing revenue at 50% plus, yet it's trading at 15 times earnings. So that is a pretty nice setup. But before we get further into the numbers, you got to give me some background on what we're looking at here today, because I don't think this is your average payments company.

**Daniel Mahncke** (3:31)
No, it's not. Otherwise, I also wouldn't have brought it, because I know you're not the biggest fan of payments companies. But I think there's a major difference between most companies that immediately come to one's mind and DLocal is not one of them. For example, it's a B2B business, business to business, meaning they have big merchants that they serve and it's operating in emerging markets. But it's good to know that its customers are all companies that we know quite well. You have these global giants like Amazon, Meta, Netflix, Uber, Alibaba, also Pinduoduo, and all these sorts of companies that we know well and where you have the feeling, well, if those companies choose DLocal as their main payment provider in that part of the world, I assume that will make it a bit more attractive for you to look at this company today.

**Shawn O'Malley** (4:15)
Yeah, that's probably true. You would think these companies surely must do their due diligence when it comes to who they trust with routing billions of dollars of payments through. So that definitely gives this business some credibility. But maybe you want to begin by just giving an elevator pitch on what DLocal does and how it got started because I always suspect very few people in the audience are going to be familiar with the company.