VISA (Symbol-V)

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strathglass
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VISA (Symbol-V)

Post by strathglass »

IPO is history. Trading has started.

Well, actually trading hasn't happened yet according to BNN and TDW real time quotes.

But what does this ridiculous bid-ask spread mean? (Is it real?)
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Post by Subby »

Typically, it's the CEO of the corporation that makes the first trade with a 1 board lot order.
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deaddog
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Post by deaddog »

I had asked for 1000 shares at RBC DI 3 weeks ago and got none. :cry:
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Post by Mike Schimek »

Well the banks have made their billions, the masses have piled in, now we will see what happens to the stock in the future.

The banks sure must be happy; their average P/Es are float in the low teens while their Visa spinoff (unless I'm mistaken, haven't checked the numbers) is likely priced at > 20, which would seem to mean they have about doubled the value of that asset by spinning it off to the lucky buyers.

:roll:
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Mike Schimek
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Post by Mike Schimek »

Does anyone actually own this? Forward P/E of 30ish? This would scare the jeepers out of me.

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Post by LurkyDismal »

yep. they have lots of room to create margin, which they will start with now as they are public. text book of what MC did.

work for their competitor...also public. stock at $22X
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Post by Mike Schimek »

It would appear congress is contemplating new credit card issuer rules, which sound like they would have an adverse effect on credit card issuer profits.

http://money.cnn.com/2008/04/17/news/ec ... 2008041712

Seems like the banks sold out of the credit card business and dumped it into the lap of new suckers... I mean lucky shareholders... just in the nick of time. What exquisite timing.

The Visa IPO was sort of like playing poker, with the IPO share buyers on one side, the banks on the other. Except the banks had a stacked deck, could see all the buyer's cards, and knew what cards would be dealt next.

I guess it's clear who's most likely to walk away from the table with the money.

:wink:

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Mandatory Visa Infinity Upgrade

Post by kcowan »

Mandatory Visa Infinity Upgrade

We just got our new Infinity cards. Seem to be just like the old AeroGold. Apparently, while they charge us the same price ($120/yr plus $50/yr second card), they charge the merchants an extra 0.5% for processing them.

The only benefit for the cardholder is Trip Cancellation Insurance. The renewal date has been extended to 05/2010 to coincide with the introduction of chip cards.

Ths diadvantage is that they are new card numbers and so any and all auto payment schemes need to be updated, including Internet-based payments. This is especially troublesome for us because our card was compromised and we just completed that process a couple of months ago.

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This is being handled like the Rogers bungled opt out plan of a few years back. You had to tell them not to upgrade you by June 13th, based on fine print in your May invoice.
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Re: Mandatory Visa Infinity Upgrade

Post by AltaRed »

kcowan wrote: This is especially troublesome for us because our card was compromised and we just completed that process a couple of months ago.
That is a real PITA. A bit of a tangent here, but my ex is currently in the process of doing the same thing. Card was compromised just about a week ago. All this 'auto charge to CC' flexibility has its drawbacks.
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Re: Mandatory Visa Infinity Upgrade

Post by westinvest »

kcowan wrote:Mandatory Visa Infinity Upgrade

We just got our new Infinity cards. Seem to be just like the old AeroGold. Apparently, while they charge us the same price ($120/yr plus $50/yr second card), they charge the merchants an extra 0.5% for processing them.

The only benefit for the cardholder is Trip Cancellation Insurance. The renewal date has been extended to 05/2010 to coincide with the introduction of chip cards.
The other new benefit is the out of country medical coverage for you and your spouse for up to 15 days, up to age 64. This is useful to me as my wife and I always bought an annual policy, and it was going to be substantially more expensive for me next year after I turn 60.

Agree with the all the other comments though, spent two hours this week updating all my accounts where the credit card number is pre-loaded.
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Re: VISA (Symbol-V)

Post by ThinkDividends »

VISA IS ON FIRE

Visa is now part of the S&P 500 Index (as of close Friday, December 18).

Visa increase its dividend by 19% in November (first time since IPO).

-------------------------

Visa shares hit an all-time high on Friday of $89.69 as momentum has been building all week as index funds will be forced to buy shares in Visa once it become part of the index on Friday, December 18. S&P made the annoucement of the changes to its indexes on December 11.
"We estimate that about 51.3 million shares of Visa will need to be bought by S&P 500 index funds. Visa's 1-month average daily trading volume is about 4 million shares, implying about 13 days of buying volume," according to analysts at Keefe Bruyette & Woods.
It is worth noting that S&P classifies Visa as an Information Technology stock and not as a Financial company. The logic behind this is that Visa is involved in data processing and transactions management via its payment network. Visa does not assume any credit risk when people use their cards.

Fact: Visa does not issue cards, extend credit or set rates and fees for consumers. Visa’s products enable banks to offer consumers choices: Pay now with debit, or later with credit products. In fact, 70% of Visa payment transactions in the United States are not credit, but debit and prepaid cards. Therefore, Visa's customers are financial instituations not individual cardholders.
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Re: VISA (Symbol-V)

Post by adrian2 »

Inside Visa’s data fortress
On the outskirts of Washington D.C., a short road turns off a main thoroughfare and leads up to a non-descript building that has been deliberately left out of Google Earth. A security guard mans a booth at the entrance, ensuring all visitors have received prior clearance and that their identification is in proper order.

Beyond the checkpoint, the road swerves sharply to the left. The hairpin turn has been designed to stop fleeing vehicles. There are hydraulic posts that pop up from the surface, capable of stopping a large truck going 110 kilometers per hour, should the need arise.

At the top of a small hill are two buildings. One is a cluster of administrative offices, the other can only be reached by crossing a bridge over what employees call “the moat.” There are no crocodiles or even water in the moat, but rather a deep pit that separates the heart of all this secrecy and security from the rest of the world.

Inside, infrared motion detectors, fingerprint readers, hordes of cameras and “man-traps” – airlock-like chambers – prevent unauthorized individuals from gaining access. There are, I’m told, more people watching you than there are actually working in the building.

Welcome to Visa’s Operations Center East, the newest of its high-tech, high-security data centres, where the financial secrets of millions of customers are stored and processed.

As the moat implies, the building is a veritable fortress. Spanning 35,000 square metres, the OCE is built for disaster. The 18-inch-thick concrete walls can withstand an earthquake of 7.0 magnitude and hurricane-force winds of up to 270 kph. The ceilings can even support 10 m of snow.

[...]

Still, despite the rising tide of breaches, the credit card company insists the amount of money that people are actually losing through fraud is decreasing. In the early 1990s, before the rise of e-commerce, Visa lost 18 cents out of every $100. Fraud was much more primitive then, usually resulting from lost or stolen cards.

Today, with global criminal enterprises actively trying to steal customers’ financial information, fraud is a much more sophisticated business. Yet despite that, Visa says its loss has declined to 5 cents for every $100.
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Re: VISA (Symbol-V)

Post by Profit not Prophet »

Thought I'd see what the forum had to say about Visa. Interesting that it's been 4 years of nothing although a neat story about the fortress. The stock has a beautiful chart to the sky that has recently had a 10% stumble. I'm mostly beige VTI index usa but considering a little tryst with big plastic here :) Story seems intact and they bought visa europe from the banks.
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Re: VISA (Symbol-V)

Post by AltaRed »

Straying from your IPS? I don't buy into the argument that one can successfully play individual stocks long term along with core indexing. But since I don't have that yacht yet in the Bahamas, WTFDIK?
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Re: VISA (Symbol-V)

Post by Profit not Prophet »

95% sensible shoes with the us dollar part but a little bit of spice for the last bit :) My yacht is a used canoe in the basement. Living the frugal dream.
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Re: VISA (Symbol-V)

Post by Koogie »

AltaRed wrote:Straying from your IPS? I don't buy into the argument that one can successfully play individual stocks long term along with core indexing. But since I don't have that yacht yet in the Bahamas, WTFDIK?
I taste the Kool-Aid too. But, WTF has the Canadian Index done for anyone in.... forever ? I don't necessarily believe in gambling stock picking either but when it comes to Banks, Credit Card Cos, Insurance Cos.. can it be that wrong ? As long as you buy at a good valuation and expect to hold to index like terms...
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Re: VISA (Symbol-V)

Post by AltaRed »

But why stock pick if the core holding is an index? Or vice versa? One or the other makes sense but a hybrid in the same market?
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Re: VISA (Symbol-V)

Post by Koogie »

AltaRed wrote:But why stock pick if the core holding is an index? Or vice versa? One or the other makes sense but a hybrid in the same market?
A valid point. It depends on the market. I'm spitting out the Canadian index KoolAid at the moment. Does it make sense in the US ? (NYSE: V) Yes, but my opinion is based on my personal biases. And investing is more often more about defeating personal psychology than mathematics in my opinion. Mind you, I screw up learn as I go. When I started in the early 90s, everyone and their dog (and my sister) told me that Mutual Funds were the key to the future and that stock picking would never work. Now, indexes have replaced that factor in the orthodoxy.

Me, I'm trying to be smart enough to avoid the mistake of "certainty" again. A hybrid approach might the right way to getting the "only free lunch" in regards to the Canadian market.

That's also because I am in the fortunate position of not having to "outperform" I need my low single digit return, nothing more. I care not to outperform the TSX, the NYSE, the DAX, etc.. For others in accumulation mode, this might not produce satisfactory long term returns. Y-KM-MV.

edited: backasswards phrasing.
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Re: VISA (Symbol-V)

Post by brad911 »

AltaRed wrote:But why stock pick if the core holding is an index? Or vice versa? One or the other makes sense but a hybrid in the same market?
I think its very possible to do and have often been tempted to try the following;

Invest the majority of a portfolio in a couch potato format with 25% invested in the best 5-10 dividend growth stocks in the S&P500 for the past 15 years.

I've never had the time to run the numbers, but the combined portfolio, I would guess, would outperform the couch potato alone.
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Re: VISA (Symbol-V)

Post by Lazy Ninja »

adrian2 wrote:Thought I'd see what the forum had to say about Visa. Interesting that it's been 4 years of nothing although a neat story about the fortress.
Not a lot of talk about this company here. Probably too low a yield to interest the dividend types and, of course, the indexers wouldn't be interested regardless, but I'll weigh in. Visa is my favourite company, my largest individual stock holding in the U.S., and my third largest individual holding overall. Visa makes up approximately 4% of my total portfolio. I also own MasterCard, and have about 6.5% of the total portfolio invested between the two of them.

I just can't look at this company's results over the years without wondering: what's not to like? They've doubled their revenues over the past six years, doubled net income over the last five years, EPS growth has exceeded net income growth due to share buybacks. The company has nearly quadrupled its dividend since 2011. They have a net profit margin that is currently over 47% and still somehow seems to move higher every year. Prior to the Visa Europe purchase they had no long term debt and a return on equity/capital of over 22%. They have a very wide moat and don't need to spend a ton of money to maintain it; capex generally comes in at less than 5% of revenue. Visa has a market cap of about 158 billion compared to about 218 billion for Walmart, but the latter employs about 2.2 million people, while Visa has 11300 employees.

Visa would appear to have quite a few significant tailwinds working for them. There's the aforementioned Visa Europe acquisition, they are moving into China, they took Costco's business away from American Express, and of course a secular shift towards electronic payments in general, which is likely to benefit Visa as much as anyone since they have the largest market share.

As always, the great equalizer is valuation. My problem is always trying to decide how much to to pay for this company. I went through a phase a few years ago where I decided I didn't want to pay more than 15 times trailing twelve month earnings for any company. By that standard, Visa could lose 40% of its value tomorrow and still wouldn't qualify as a potential purchase. I'd have to double check, but I believe in the past I've paid as much as 29 times trailing P/E, although I can't say I was very happy about it. It has sold off a bit the last little while as some appear to be trimming companies with abnormally high multiples, yet it still currently trades at about a 50% premium to the S&P 500 on a price to earnings basis. The market is currently estimating growth of about 15% over the next year, which would give it a PEG of about 1.7, which seems reasonable to me. I'm a growth at a reasonable price guy who admittedly has trouble determining the reasonable price part, but I would consider adding to my position if it gets much cheaper in Canadian dollar terms over the next little while.
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Re: VISA (Symbol-V)

Post by Lazy Ninja »

Forgot to add that I like Visa and MasterCard's business model considerably more than that of American Express. I don't like how much debt and leverage is out there, and prefer the companies that just process transactions and don't lend money to their customers. I don't see a lot of risk in owning Visa over the next five years or so, but I feel the greatest threats to them by far are regulatory in nature. Or, to put it another way, if your greatest concern is that a company is so successful that the government could change the rules in order to limit their profitability, you've probably found yourself an interesting investment opportunity (at least in the interim).
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Re: VISA (Symbol-V)

Post by kcowan »

Costco Mexico charges 2% for using any credit card. But with 1% cashback and 2.5% waiving of vig, it is still 1.5% better to use ours.

Our annual payments for property taxes, vehicle license and fideicomiso are all accepted without surcharge. That more than compensates for many restaurants now demanding cash.
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Re: VISA (Symbol-V)

Post by Profit not Prophet »

Thanks Ninja well rounded line of thinking there. I have a bit of usd coming in and with the recent moderate price decline I'm tempted to buy a smidgeon.
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Re: VISA (Symbol-V)

Post by Profit not Prophet »

For what it's worth a cbc story on early results/speculation. Seems it's costing Wally some.

http://www.cbc.ca/news/business/walmart ... -1.3709435
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Re: VISA (Symbol-V)

Post by Lazy Ninja »

It's interesting that Walmart hasn't announced any further details of extending the ban yet, but there's not really much information in the article. This kind of stuff is just speculation masked as news:
Now that almost three weeks have passed since the Thunder Bay move, Meredith suspects that Walmart has crunched the numbers and doesn't like the results. "Translated, sales have dropped," he says.

Carleton University business professor Ian Lee agrees. "They got the data back and it was not good," he suggests. And that negative data, concludes Lee, "caused them to rethink and postpone a further rollout."
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