XP Inc. (XP) is a leading technology-driven platform providing services in Brazil, notes international investing expert Carl Delfeld, editor of Cabot Explorer.

Its services include securities brokerage, private pension plans, investment banking, lending, foreign exchange markets and capital markets services and advisory and wealth management services for investors and institutional clients.

XP recently reported a more than doubling of adjusted first-quarter profit and announced plans to expand its banking services to small and large companies.

The company added about one million active customers in the first three months of 2021, a 47% jump, while assets under custody surged 96%. Adjusted net income rose 104% to the equivalent of $155.6 million.

The company is benefiting from Brazilians seeking higher returns as the benchmark interest rate in the country fell to a record low. “We had the best quarter in our history, and we will reinvest 100% of the result in our growth,” Chief Financial Officer Bruno Constantino said in a statement.

In February, XP announced the launch of a credit card for consumers, with digital banking accounts by mid-year. Last week, the company announced an agreement to acquire a minority stake in Giant Steps, the leader in systematic funds in Brazil. Giant Steps is the largest quantitative investment manager in Brazil, and the quantitative fund industry has been experiencing rapid growth in recent years.

Currently, 80% of the largest managers in the world focus on quantitative strategies, with these strategies representing more than 30% of total assets under management in the United States. In contrast, quantitative strategies represent less than 2% of the total assets under management in Brazil.

This is an aggressive pick in a growth sector that is somewhat insulated from the political and economic turbulence in Brazil. I encourage you to be in a position if you have not already done so. We currently recommend buying one half of our intended position in this stock.

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