Here’s How FEMSA (KOF) is Building a Competitive Advantage

Harding Loevner, an asset management company, released its “Emerging Markets Equity Strategy” first-quarter 2024 investor letter. A copy of the letter can be downloaded here. In the first quarter, the fund declined 0.1% gross of fees and fell short of the MSCI Emerging Markets Index, which posted a return of 2.4%. Weak stock selection in Financials, IT, and Health Care affected the relative performance of the fund offset by stronger returns in Consumer Discretionary. In addition, please check the fund’s top five holdings to know its best picks in 2024.

Harding Loevner Emerging Markets Equity Strategy highlighted stocks like Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) in the first quarter 2024 investor letter. Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) produces, markets, sells, and distributes Coca-Cola trademark beverages. Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) one-month return was -9.20%, and its shares gained 6.06% of their value over the last 52 weeks. On June 4, 2024, Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) stock closed at $90.27 per share with a market capitalization of $18.964 billion.

Harding Loevner Emerging Markets Equity Strategy stated the following regarding Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) in its first quarter 2024 investor letter:

"In Mexico, leading retailer and Coca-Cola bottler FEMSA (KOF) rolled out its digital wallet Spin three years ago, turning the company’s ubiquitous Oxxo convenience stores into the equivalent of simple banks. With more than 23,000 stores, there are more Oxxos than bank branches in Mexico; indeed, they serve many towns ignored by banks completely. While customers can use the app to send or receive money, similar to Venmo, they can also go to Oxxo stores and make basic bank-like transactions such as deposits and withdrawals. This ubiquity and accessibility to Mexicans from all regions and walks of life makes it easy for workers without bank accounts to deposit money into their Spin wallets to send to their families across town or across the country, who can withdraw it just as easily—or spend it in stores, ideally Oxxo’s own.

To strengthen its Oxxo business, FEMSA has integrated Spin with its loyalty program for Oxxo shoppers, Spin Premia, to encourage customers to shop more at their stores. Management has also been considering partnering with a bank to offer credit to its Spin customers, and it is ramping a payment system tailored for small businesses, also integrated with Spin, that allows other shops to switch more easily away from cash at low cost while broadening acceptance for Spin."

A colorful array of sparkling beverages in dozens of different containers on parade.

Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 13 hedge fund portfolios held Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) at the end of the first quarter which was 10 in the previous quarter. The total revenue of Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) in the first quarter increased by 11.2%, reaching MXN63.8 billion, fueled primarily by solid volume growth. While we acknowledge the potential of Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we discussed Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) and shared the list of largest companies in Mexico by revenue. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.