Research archive for V

Visa reported numbers after the bell yesterday. Visa of course is one of the largest companies on the planet that enables seamless payments on their switching networks, be it that you are transacting online, in a foreign country and paying for goods and services, or whether you simply are at your local store that offers the service. Remember checks and travellers checks? I guess in the years to come you could argue the case for a cashless society and companies with the payments systems, those who enable the merchant to speak to your financial institution across their reliable and trusted networks and "get the transaction done" are operating in the right space. And by right space, I mean that a company like this, their peers and other payment networks, will see an uptick in their business.

A Visa is an annoying stamp that you need when you are going to visit a place, even more so if you are going to spend a short holiday there and spend your money. It is a less annoying when you are using a card in far flung parts of the world and are paying for something rather than carrying cash. In their "Our business" segment on their website, I think that they sum it up perfectly with the ease of use: "We have a simple and unwavering vision that can be traced back to our beginnings in 1958: To be the best way to pay and be paid for everyone, everywhere. We know that every Visa transaction is a promise. Whether it's a street vendor in Brazil selling food to make a living or a fisherman in Rwanda paying his daughter's school fees, we want to provide the most secure and seamless payment experience possible."

Hey, this caught my eye yesterday, an announcement by Visa -> Visa Introduces EMV Chip-based Biometrics. Visa is teaming up with ABSA here in Mzansi (why not, for sho!) with biometric cardholder verification. That is fancy for fingerprint technology. So as far as I understand it from the release, you will stick your card into the ATM and instead of being asked for a pin, you will place your fingerprint there and hey presto, the cash will come out of the machine. It will verify that you indeed are the person who owns the bank account and the funds are yours. No more hands covering the pin pad, nobody can steal your fingerprints. Hopefully very soon the card itself will be nowhere, Apple Pay and Android Pay (its newer, check it out: Android Pay) can solve the physical card issue.

Visa takes you more than places. Some Visas are harder to get than others. Some have reams and reams of documentation. This Visa however requires that you pay your bank back, they will facilitate the payment. I have heard the theory that the winners in the electronic payment systems will be newer systems. The fact of the matter is that the capital controls imposed on Greeks shows how reliant people are on cash. The machines in the shops worked, it was the way of life, paying for everything cash all the time that is pretty old and outdated.

Visa. What a business! Along with MasterCard, the company is trying to send cash into the afterworld, one swipe at a time. The reason why Visa remains extremely attractive as an investment is clear, whilst politicians may think that the company charges too much for their services, the fact is that they have engineered global payment networks that work like clockwork and is easily accepted at most global pay points. There is no need to get travellers cheques, there is no need to get cash and get ripped off on the exchange rate. You can draw money out of any ATM anywhere in the world, in the local currency if you need cash when you have arrived at your destination.

Visa takes you places. It seems that it has taken you further as an investor in its not so long period as an investment, the company has only been listed since March 2008, March 18 to be precise, be sure to put that into your calendar as the day BEFORE my birthday, OK? Accepting all presents now, we are open. Just a refresher in terms of ownership structure, the Western European operation is a separate business under the same brand, principally owned by the member banks in that region. Since it listed back then, the company has returned an astonishing 285 percent to their shareholders, that is nothing short of remarkable.

Visa. It is something that gets you into a country. The company however has its roots in a town by the name of Fresno (California), anyone who has watched the DreamWorks Animation animated movie Monsters versus Aliens will recall the place. Yes, it used to be my youngest daughters favourite movie that one. The annual report of Visa last year : Our business traces its roots to 1958, when an innovation center run by Bank of America began to mail cards to its customers ... where it did business with about 45 percent of the families living there. At the same time, the bank met with local retailers and explained that many local families would soon have these cards. In a short space of time, a network was created that would benefit both parties.

Visa announced yesterday that they will increase dividend rate by 20%, raising the annual payout to 1.92 Dollars a share. On a share price of 212 Dollars that is around 0.91 percent, pre tax. A two year treasury note yields 0.38 percent. One is supposed to be safe as houses and the other is a growing business in the more than a little exciting area of electronic payments. Results are next week, after the market closes on the 29th of October.

Visa takes you places, or so the strap line goes. Visa has also taken their shareholders places, mostly always good ones. Why do we like this company? It is pretty simple, the investors relations landing page (do we still call them that) obviously describes the company better than I ever could:

Visa. The card that supposedly takes you places and enables you to be in a cashless world, engaging through the best payment network in the world to debit your account, in your currency. Making it easy to perform the same transactions both inside of your borders and in other countries across the world. The direct translation from Latin for Charta Visa to English (according to Wiki) is "paper that has been seen", which makes sense why the business is called Visa. Nice. The company operates in over 200 countries and territories (36 million merchant locations) and according to the 2013 Annual report, the company has four defining characteristics:

Last week our biggest holding in New York, Visa released numbers for the first quarter of their fiscal year. Revenues increased 11% to $3.4bn while earnings per share increased 14% (thanks to big share repurchases) to $2.20. These numbers come off the back of payment volume growth of 11% which came to a whopping $1.2 trillion.

Visa released results two days ago, but less than 48 hours ago if you know what I mean. Here are the results for the full year and fourth quarter, downloadable from their IR site: Visa Inc. Reports Strong Fiscal Fourth Quarter and Full-Year 2013 Earnings. Nice. Mr. Market did not really think that the results were that great, the stock sold off post the results, there was obviously a little disappointment in the numbers.

What happened to Visa last night? The stock was seven and a half percent lower on the session, giving back most of the positive action over the last 10 weeks. It has all to do with the capping of swipe fees of specifically debit cards, of which Visa has nearly a one third share in the US. Cast your mind back, the original fee was set at 12 US cents, but the payment processing companies managed to hike that to 21 cents. Yesterday a court, a District Court, overruled the US Fed's authority to raise the fee, at the time. It seems like a knee jerk reaction to me, nothing is final. Nothing is ever final in terms of rules and regulations set in stone by politicians. It changes and evolves. We will see what transpires, but I doubt that it is a huge deal for now, but would have a fair impact if reversed.

Last night we received third quarter results from what is now our biggest holding in New York, Visa. Thanks to its performance and consistent additions it has overtaken both Apple and GE in our portfolios. So far this year the stock has returned 23.2%, 48.51% over the last year and 155% over the last 5 years. That is just the share price and excludes dividends. Let's look at the results and see if we can expect these kinds of returns going forward.

The banks used to own and run Visa in order to link banks with different card issuances. When it listed in 2008 the banks each got a portion of the company. Some of the banks sold, some of them held on to them. The ones that held on have obviously done very well as the share price has gone from the listing price of around $64 to $156 today. Since the reorganisation in 2007 Visa and Visa Europe have operated independently because the members (banks) in Europe decided to keep it as a non-profit association and pay Visa Inc royalties for their services.