Let's face it, historically, LatAm has been a set of trainwreck economies. Periods of thin, uneven prosperity garnished by long dark periods of political and economic chaos. Argentina, where MELI is HQ'd, has historically been one of the most underperforming, confiscatory economies in the West. I mean, even right now, the region is in a leftist shift. It's been one that has at least most places incorporated free market ideals. But you look at untapped (socialist) markets like Bolivia and Venezuela in particular, even if you added up Guat, Hond, ESal and Nic, and wonder if they'll ever get their shi!t together if not now in this era of high commodity prices. In other words, big political risks, especially if the golden gooses of copper and oil start to get trounced and state budgets start to run out.
Complacency is another. Look at RIMM (I am long): one minute inventing a category of new devices, next minute beset by tons of challengers, which is to say: excess profits bring ruinous competition. Let's hope Marcos can innovate and maybe broaden out the product lines so there's some portfolio of diversification. Wouldnt mind seeing MELI do a couple of strategic buyouts, or maybe start up its own search business.
And of course, the cultishness of we longs dictates another risk: overvaluation and a bolt for the exits on any institutional run on small-caps. If IBD farts, we go down, in other words.
I went out and sold a $50 call last week but if SP holds 1050 as now looks possible, we could see this thing go way higher on EPS adjustments that should be coming in, which will lower our multiple and make us look more attractive in the market.