The Intrinsic Value Conference, which returned to Omaha on Friday, May 1, 2026. Shawn O’Malley and Daniel Mahncke, co-hosts of the Intrinsic Value Podcast through The Investor’s Podcast Network, ran the afternoon session together, presenting a live stock pitch and walking through their portfolio construction framework in front of a room of investors who had made the trip to Omaha for the Berkshire Hathaway annual meeting.
O’Malley, President of The Investor’s Podcast and a graduate of Elon University with a degree in Finance and Entrepreneurship, previously worked in S&P Global’s Market Intelligence division. Mahncke, who holds a degree in Finance and Economics from Goethe University in Frankfurt, built his career at a high-net-worth family office before launching an investment research platform that has drawn millions of readers. Their core argument was straightforward: growth investing and value investing are not opposites, they are the same equation, and the two companies they pitched that afternoon, MercadoLibre Inc (NASDAQ:MELI) and Universal Music Group (AMS:UMG), demonstrate exactly why.
The Portfolio Framework Behind the Picks
O’Malley and Mahncke began by describing how the Intrinsic Value Portfolio is constructed. The podcast-driven public portfolio started with 100% cash and is being built gradually, targeting 15 to 20 positions with a hurdle rate of at least 12% annualized returns. Every company they cover receives roughly 40 hours of research and a 60 to 90 minute podcast episode, complemented by a newsletter. They have covered more than 70 companies since launching.
The approach favors monopolies and duopolies, management teams with shareholder-aligned compensation, recurring revenue models, and network and scale effects. Mahncke noted that after working through so many companies, one pattern keeps repeating: mediocre businesses tend to disappoint, while great ones keep surprising to the upside. The portfolio currently sits at roughly 15 positions, trimmed back from a near-peak of 20 after some names proved their quality and others did not. To illustrate how they think about intrinsic value across those names, they framed the session around a single question: how do you compare a business where most of the value shows up in near-term cash flows against one where most of the value lies in growth you are betting on 10 or 20 years out?
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Growth and Value Are Joined at the Hip
Before turning to either stock, O’Malley and Mahncke played a clip of Warren Buffett making the point that anchors their framework: growth and value are not contrasting asset classes, they are part of the same equation. Whether incremental capital invested today produces value depends entirely on what you earn on that capital over time. That framing, the duo argued, is exactly what most investors outside of Omaha still get wrong.
They presented the discounted cash flow equation as a visual anchor. For Universal Music Group, the near-term cash flows on the left side of that equation carry most of the weight. For MercadoLibre, the terminal value on the right side dominates, which means investors must have conviction in the quality and durability of the investments the company is making today to justify ownership. Both approaches are equally valid, they said, so long as the investor is honest about what assumptions are embedded in the valuation.
MercadoLibre – Plausible, Responsible Growth Across a Continent
Mahncke led the MercadoLibre portion of the presentation. He described the company as the Amazon of Latin America, but was careful to note that the analogy only goes so far. Every regional e-commerce platform, whether Coupang in South Korea or Shopee in Southeast Asia, must figure out what the local customer needs that a bare marketplace cannot provide. In Latin America, MercadoLibre’s answer was to build MercadoPago, a PayPal equivalent for a region where credit card penetration was low and banking access was limited, and MercadoCredito, a lending arm that extends credit to consumers legacy banks had largely ignored.
The business runs on three interlocking units: the marketplace, the fintech platform, and the logistics network. Mahncke walked through each in turn, starting with the e-commerce headline numbers. Gross merchandise value stands at approximately $65 billion, growing 26% year over year, while commerce revenue of roughly $16 billion grew even faster at 34%, a sign of operating leverage as the platform matures.
The most important micro growth driver, Mahncke argued, is take rate expansion. The current blended take rate is approximately 21% of GMV, with about 13 percentage points coming from core seller fees. The rest comes from logistics and advertising, and that remainder is where the real margin opportunity lies. Advertising is growing at roughly 70% compound annual growth and currently represents about 2% of GMV. Amazon’s equivalent figure is approximately 8%. Closing even part of that gap would produce enormous margin expansion for MercadoLibre.
On the macro side, Mahncke pointed to e-commerce penetration in Latin America sitting at 13% to 14%, compared to 24% in the US and 28% in the UK. Physical retail infrastructure in Latin America is less developed, which tends to accelerate e-commerce adoption, and penetration rates of 20% or more over the next decade are far from unrealistic.
Credit and debit card usage has also been growing rapidly in the region, doubling and tripling respectively in recent years, expanding the pool of consumers who can transact online. Brazil accounts for over 50% of MercadoLibre’s revenue but only about 35% of its operating profit, while Argentina, the most mature market, generates roughly 20% of revenue but over 40% of operating profit. As Brazil and Mexico mature, margin expansion should follow.
The FinTech and Logistics Engines
Mahncke spent considerable time on MercadoPago and MercadoCredito, which he views as the most misunderstood and most important parts of the long-term thesis. Total payment volume on the platform exceeds $280 billion. The credit portfolio has grown approximately 90% year over year to $12.5 billion. Non-performing loans at the 90-day mark stand at around 7%, which Mahncke compared favorably to Nubank’s similar figure, though he noted the net interest margin after losses, what the company calls NIMA, sits at approximately 20%, roughly double Nubank’s equivalent.
That spread reflects higher risk but also a structural advantage: roughly 30% of the data used in MercadoLibre’s credit decisions comes from its own marketplace. Because the platform sees how customers are spending on everyday items in real time, it can detect early signs of financial stress and tighten lending before a credit cycle fully turns. Average loan duration is only three and a half months, which further limits exposure. Mahncke acknowledged the risk but noted that through 2022, including a period of elevated defaults, the business remained profitable overall.
The logistics network, which Mahncke covered more briefly, has evolved from a pure asset-light model, where MercadoLibre simply connected sellers with third-party carriers, to a tiered system that now includes cross-stocking hubs and full fulfillment centers modeled on Amazon’s FBA program. About 75% of shipments now arrive within 48 hours, roughly three times faster than competing platforms in Brazil and Mexico. The progression from flex delivery to full fulfillment is a key driver of future margin expansion in this segment. MercadoLibre operates 30 cross-stocking and fulfillment centers, a figure Mahncke said would matter more once the discussion turned to competition.
The Shopee Question and the Competitive Landscape
Mahncke gave notable attention to Shopee, the Southeast Asian platform that has established itself as the number two e-commerce player in Brazil, surpassing Amazon by item volume. He described Shopee’s operation as impressive and its local seller base, now approximately 90% Brazil-based, as a genuine competitive achievement. But he argued that Shopee and MercadoLibre serve structurally different customers. Shopee’s gamified, discovery-driven experience attracts buyers who want cheap goods and are willing to wait one to three weeks for delivery.
MercadoLibre serves buyers who know what they want, want it quickly, and are willing to pay for quality. As Brazilian incomes rise, Mahncke suggested, customers tend to migrate upmarket, which favors MercadoLibre over the long run. TikTok Shop and Temu represent an even earlier stage of e-commerce intent and are unlikely to displace either Shopee or MercadoLibre in their respective customer segments.
As for Amazon, Mahncke noted that Amazon’s Brazil management team has publicly stated they are not competing with MercadoLibre or Shopee but with their own international operations. Amazon’s global capital allocation priorities, given the scale of AI infrastructure investment in the US, make a decisive push into Brazil unlikely in the near term. The MercadoLibre thesis, he concluded, does not require Amazon to stay out forever, only that history continues to repeat.
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Universal Music Group – A Toll Booth on Global Music Consumption
O’Malley took over for the Universal Music Group section, opening with a question to the room: who listens to music? The unanimous response was his point. Music, he argued, is as close to an indestructible human behavior as exists, and Universal Music Group (AMS:UMG) owns the rights to a third of all of it. Sony Music holds the next largest position, followed by Warner Music Group at roughly half of Universal’s market share, with indie labels accounting for the remainder.
The history O’Malley told is one of a great business that nearly destroyed itself by clinging to an obsolete model. Before streaming, consumers had to buy entire albums to access a single song, a terrible user experience that was nonetheless enormously profitable for labels. The internet, and specifically piracy platforms like Napster, dismantled that model. Universal and its peers spent years trying to litigate the internet out of existence rather than adapt to it.
iTunes was a partial solution but not a real one. Spotify’s emergence and the mainstream adoption of streaming subscriptions gave the industry a durable internet-native business model. Since then, per capita music monetization and consumption have both recovered and grown. Twenty-one hours per week is the current average time people spend listening to music, up from around 15 hours roughly 20 years ago, and 71% of people say music is critical to their mental health. J.P. Morgan Research, cited by O’Malley, shows that on a cost-per-hour basis, music streaming delivers better value than any other entertainment category.
Universal earns revenue through three channels. Recorded music, which captures royalties every time a song is streamed, accounts for the majority. Music publishing, which covers the underlying composition and lyrics separately from the sound recording, is a smaller but important segment. A growing third business involves artist services: helping emerging acts manage tours, merchandise, fan events, and distribution on digital platforms. Revenue is reported in euros given Universal’s Amsterdam listing and Netherlands headquarters.
The company generates roughly 13 billion euros annually and has grown revenue 60% since its 2021 IPO, with operating profits up 40% over the same period. Operating margins stand at around 16%, with a return on equity that O’Malley described as consistently high. Dividends represent approximately 50% of adjusted earnings, translating to a 2%-plus yield at current prices.
The mechanics of how money flows matter to the thesis. Streaming platforms like Spotify and Apple Music collect subscription revenue and contractually remit approximately 70% of it to music rights holders. Universal, Sony, and Warner then split that pool with artists according to their individual contracts. The labels cannot easily be squeezed by the platforms because any streaming service that loses Universal’s catalog, one third of all music in the world, immediately loses its competitive reason to exist.
Taylor Swift departing Spotify, O’Malley noted, would cost the platform hundreds of millions of subscribers overnight. That mutual dependency gives the labels durable pricing power. One counterintuitive feature of the streaming era, O’Malley added, is that it has made older music more valuable, not less. Over 70% of all streams are of songs published more than 18 months ago. Catalogs age like fine wines rather than depreciating assets, a fact that generally accepted accounting principles fail to capture accurately. Universal spent several hundred million dollars on Bob Dylan’s catalog, and every stream of a Bob Dylan song produces a royalty in perpetuity.
The Valuation Gap and the Bill Ackman Proposal
Despite growing revenue 60% and operating profits 40% since its IPO, Universal’s stock has fallen approximately 20% over that period. O’Malley attributed the disconnect to two factors unrelated to business operations. First, the Bolore family, which owns roughly 18% of Universal’s shares, has been signaling its desire to sell a substantial portion of that stake. The anticipated supply has suppressed buyer interest. Second, Universal trades in Amsterdam, which excludes it from the investment mandates of US-only and S&P 500-mandated funds, effectively locking out a vast pool of capital.
Bill Ackman and Pershing Square have proposed a transaction designed to address both problems simultaneously. The structure involves Pershing’s listed SPARC vehicle merging with Universal Music Group, with Universal shareholders receiving approximately 5 euros in cash per share plus 0.77 shares in the new combined entity, which would list on the New York Stock Exchange.
The 5 euros in cash per share would be funded through roughly 2.5 billion euros of direct capital from Pershing Square, new equity issuance, approximately 5 billion dollars of debt, and proceeds from selling Universal’s stake in Spotify.
The combined approximately 9.4 billion dollars would be used to retire roughly 17% of total shares outstanding, effectively buying out the Bolore family’s position at scale. The US listing would open access to S&P 500-mandated capital. Ackman also intends to redirect the 50% earnings payout currently going to dividends into share buybacks, which carry more favorable tax treatment.
His stated upside case assumes Universal should trade at roughly 25 times forward earnings, in line with the average S&P 500 multiple, implying approximately 78% upside from the price at the time of the presentation.
