Baillie Gifford Dumps 248,000 MercadoLibre (MELI) Shares Worth About $479 Million

Baillie Gifford & Co cut its MercadoLibre stake by 248,304 shares, an estimated $478.99 million trade, leaving the fund with 3.23 million shares valued at $5.59 billion, or 5.71% of AUM. The filing appears more like portfolio trimming than a bearish thesis shift, as MercadoLibre remains the fund’s third-largest holding and the company posted 49% year-over-year growth in net revenue and financial income. The news is relevant for positioning and sentiment, but is unlikely to materially change the stock’s fundamentals on its own.

Analysis

This is less a fundamental warning on MELI and more a signal that a high-quality holder is normalizing exposure after a large prior run-up and elevated portfolio concentration. In names like MELI, incremental selling by a sophisticated long-only often matters more for marginal supply than for thesis change: when a position is already one of the top weights, trims can remove a layer of “price-insensitive” demand and leave the stock more exposed to momentum unwinds if growth decelerates even modestly.

The second-order issue is that MELI sits at the intersection of consumer spending, payments, and credit in a region where macro beta is still high. That creates a reflexive setup: if earnings remain strong but the multiple keeps derating, the stock can underperform despite healthy operating data because investors are paying for durability, not just growth. The fact that the position remains large after the trim implies conviction is intact, but it also means further de-risking could occur if FX, rates, or Latin America consumer-credit data soften over the next 1-2 quarters.

The market may be missing that the real trade is not “MELI versus nothing” but “MELI versus other platform compounders with cleaner earnings visibility.” If this is part of a broader de-grossing in concentrated winners, beneficiaries are likely the mega-cap liquidity magnets and lower-beta internet/fintech names that can absorb flows without the same regional macro friction. For MELI, the near-term catalyst path is earnings revisions: another quarter of >40% top-line/financial income growth can re-rate the stock, but any miss on take-rate, credit quality, or merchant activity would validate the seller’s timing.

Contrarian view: the selloff may already have done most of the work. A stock down meaningfully over 12 months while fundamentals remain strong often creates a better forward setup than the headline sentiment suggests, especially if management keeps compounding share in commerce and payments. The risk/reward is therefore asymmetric only if the market has over-penalized macro noise; otherwise, this can remain a dead-money compounder until growth re-accelerates versus tougher comparisons.

Key Decisions for Investors

• Maintain a tactical underweight/short MELI for 4-8 weeks only if Latin America consumer-credit and FX data remain soft; use a tight stop above the post-earnings gap high, since a revision beat can force a fast squeeze.
• Pair trade: long AMZN / short MELI into the next earnings window. AMZN offers cleaner global demand exposure and lower regional macro beta; MELI has higher upside but more valuation fragility if the market rotates toward quality at a reasonable price.
• If already long MELI, hedge with short-dated downside puts into earnings rather than selling stock outright. This preserves participation in a re-rating while capping the risk of a 10-15% drawdown on any margin or credit wobble.
• Consider a relative long NU / short MELI basket if you want fintech exposure with a cleaner credit narrative and less commerce cyclicality; the trade works best over 2-3 quarters if Brazil credit momentum holds and MELI faces tougher comps.
• Avoid chasing the name immediately after any relief rally; wait for either a post-earnings reset or a broad EM risk-off move to re-enter, because MELI tends to offer better entry points when liquidity-driven selling exhausts.