Frank Sands (Trades, Portfolio), CEO and CIO of Sands Capital Management, purchased a 377,115 share stake in MercadoLibre (MELI, Financial) during the second quarter. The trade had a 0.02% impact on the  portfolio. Since the purchase, MercadoLibre has gained an estimated 44%.
MercadoLibre has a market cap of $8.24 billion, a P/E ratio of 63.04, an enterprise value of $8.14 billion, a P/B ratio of 22.59, a quick ratio of 1.59 and a dividend yield of 0.27.
MercadoLibre is an Argentine online marketplace that is dedicated to e-commerce and online auctions. The company was established in August 1999 and has since expanded its operations across South America. It now operates in countries including Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominicana, Ecuador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Portugal, Salvador, Uruguay and Venezuela.
According to GuruFocus, MercadoLibre has a 6 of 10 financial strength rating, with a cash to debt ratio of 1.33, an equity to asset ratio of 0.32 and an interest coverage ratio of 6.28. The company has a Piotroski F-Score of 7, which indicates a very healthy business situation. The company also has an excellent 9 of 10 profitability and growth rating, with an operating margin of 20.05%, a net-margin of 18.50%, an ROE of 37.03%, an ROA of 12.29% and an ROC (Joel Greenblatt (Trades, Portfolio)) of 213.56%, which ranks it above 96% of the companies in the global specialty retail industry.
Over the previous year, MercadoLibre’s market price has more than doubled, gaining an estimated 107%. Over the previous decade, the company has gained an estimated 543%. These large gains are partially due to the company’s excellent financial results that it has reported over the previous decade. Its revenue has grown by an 20.50%, its EBITDA has grown by 33.50%, operating Income has increased by 37.20%, its EPS without NRI 61.30%, and its free cash flow growth has increased by 37.80%. Additionally, the company has a Beneish M-Score of -2.84, indicating that it is not a manipulator of its financial statements, which is a good sign for investors.
Sands likely purchased a stake in MercadoLibre because the company has nearly two decades of operating experience, is expanding its operations and has reported excellent financial results over the past decade. EBay (EBAY, Financial) also acquired a 19.5% stake in the company in 2001, according to eBay's website.
Frank M. Sands Sr. founded Sands Capital Management in 1992. The investment firm uses a bottom-up, independent, research-driven, value-based approach when investing in securities. His son, Frank M. Sands Jr., joined the firm after earning a BA from Washington & Lee University, an MS from John Hopkins University and an MBA from the Darden School at the University of Virginia. After graduation, Sands gained 6 years of investment experience working as a research analyst and portfolio manager for Fayez Sarofim & Co. before he joined Sands Capital in 2000 to work alongside his father. Since 2000, the father-son duo, along with the Sands Capital investment team, has provided strong investment results for its clients and has grown from approximately $900 million in assets to approximately $32 billion over the previous 16 years.
Disclosure:Â Author does not own any shares of this company.
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