$TBBB: Tiendas 3B is Mexico's Aldi. Is it too late to buy? | Fruit Tree Capital

<p>Tiendas 3B has more than 3,700 stores in central Mexico, opens roughly 150 more every quarter, and earns its money back on a new store in about two years. It is the Aldi model, built by a founder who saw BIM work in Turkey, moved to a country where he did not speak the language, and has spent 21 years compounding it. Alberto Vadia of Fruit Tree Capital thinks it is a hundred bagger from here.</p><p>My problem is the price. The stock is approaching $50, it has run a ton, and the bulls I was reading a few months ago were underwriting it in the mid 30s. So I push Alberto on the thing that actually decides this: do the unit economics survive the move from 3,500 stores to 15,000, or does a two year payback quietly become a four year payback once they leave central Mexico? We also get into the two equity offerings from a business that self funds every store it opens, why every other hard discounter on earth stayed private, what Costco at 40 times earnings implies for a Mexican retailer, and whether adding fruits and vegetables is an expansion or a risk.</p><p>This episode is sponsored by Trata: <a href="https://www.trata.com/tbbb">https://www.trata.com/tbbb</a>. Trata is two buysiders who own the stock talking about what they are actually worried about. They have two calls on TBBB that I used to prep for this one, and you can hear a sample at the link.</p><p>Chapters:</p><p>(00:00) Intro</p><p>(01:48) Sponsor: Trata</p><p>(02:50) Alberto Vadia, Fruit Tree Capital</p><p>(04:22) What is Tiendas 3B, and the Aldi playbook</p><p>(07:27) Why they own it: no debt, management, compounding</p><p>(08:45) What is the market missing?</p><p>(12:09) The chicken and egg problem in hard discount</p><p>(13:25) Private label, 900 SKUs, and beating Walmart on ibuprofen</p><p>(16:55) The stock has run: have we missed it?</p><p>(18:52) Why every other hard discounter stayed private</p><p>(21:12) Costco at 40x, and the Mexico haircut</p><p>(26:43) Do the unit economics survive stores 5,000 to 15,000?</p><p>(28:43) The self splitting distribution center model</p><p>(31:46) The equity offerings, and who was actually selling</p><p>(36:49) No loss leaders, and the missing fruits and vegetables</p><p>(41:58) Why is a Mexican category killer listed in New York?</p><p>(45:36) The bare bones deck and the HQ visit</p><p>(46:50) Long term, volatility, customer first</p><p>Alberto Vadia / Fruit Tree Capital: <a href="https://www.linkedin.com/in/albertovadia/">https://www.linkedin.com/in/albertovadia/</a></p><p>Links:</p><p>Yet Another Value Blog - <a href="https://www.yetanothervalueblog.com">https://www.yetanothervalueblog.com</a></p><p>See our legal disclaimer here: <a href="https://www.yetanothervalueblog.com/p/legal-and-disclaimer">https://www.yetanothervalueblog.com/p/legal-and-disclaimer</a></p>