Grupo Supervielle: Banking in Argentina

10/05/2017 5:00 am EST


Paul Goodwin

Emerging Markets Specialist and Analyst, Cabot Wealth Network

Our latest featured stock is off the beaten path; Grupo Supervielle (SUPV) is an Argentina-based holding company that operates in the financial sector, says Paul Goodwin, editor of Cabot Emerging Markets Investor.

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Argentina is subject to some intense financial tides, and Grupo Supervielle’s revenues were flat in 2016. But over the past three quarters, revenue has grown 15% (Quarter 4 2016), 29% (Quarter 1 2017) and 24% (Quarter 2 2017).

Earnings were up 26% in Quarter 1 of this year and 153% in Quarter 2. And analysts are forecasting earnings growth of 35% this year and 31% in 2018.

SUPV came public in May 2016 at $11 and wasted no time climbing to $16 by September. The stock went through a post-IPO correction to $12 in December, but pushed out to new highs in March 2017.


At that point, the stock took a break, trading flat at $17 through April and part of May, then under resistance at $18 through June and July.

SUPV broke out in mid-August, ripping above $20 by the end of the month and has traded up to $23 in September, with a couple of major volume spikes.

The stock experienced some major action last week when its secondary stock offering was fully subscribed, allowing the company to raise $412 million. The offering will increase the stock’s liquidity, making it more attractive to institutional investors who prefer stocks with larger volume.

Argentina is still technically a frontier market according to MSCI, which is the recognized authority on such classifications. The country has been on the upgrade review list for a while, and likely came close to achieving emerging status during MSCI’s review in June 2017.

Everyone was pleased by Argentina’s removal of capital controls and restrictions on foreign exchange, but felt that the country needed more time before the policy changes could be considered irreversible.

When Argentina does gain emerging status, SUPV and other Argentinian stocks will enjoy a big buying boost as the companies who offer emerging ETFs and mutual funds buy the stocks necessary to emulate the MSCI Argentina portfolio.

We’re not really banking on that, but it’s nice to know that it’s a possibility. Our recommendation of SUPV is based on our traditional mix of story, numbers and chart. With plenty of added liquidity to work with, this soundly diversified financial stock looks like a good addition to our portfolio.

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