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No. of Recommendations: 2
At first glance, MELI seems like an excellent recommendation, and I am intrigued by it. I have a sort of “follow-up” question, prompted by our shared experiences with CRESY.

The newsletter write-up states, “At today’s prices, it would take . . . a crippling and concerted blow by the Latin American governments to cause us to sell this stock in the near term.”

This seems to say, at least implicitly, that MELI’s exposure to the Argentina government is a limited risk. Is this a correct reading of your view?

I see that the company locates its servers in the US to avoid possible confiscation by Argentina. (Which is both sensible and kind of shocking, in a way.)

What would happen if Argentina imposed a 70% or 90% tax on the worldwide income of MELI? (Impossible? Check out highest marginal US tax rates over the last 90 years.)

This is just an example – the larger question is what are your thoughts on the Argentina-specific government risk here?

I am not suggesting that kooky governments kill an investment thesis (although maybe Venezuela does); in fact, I recently picked up a little bit of CRESY as part of my John Templeton Basket. I just would like to understand your thinking on this point as I launch my own analysis of MELI.



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