Financial Sector Ideas

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Mastercard - >>> 3 Top Growth Stocks You Can Buy and Hold for the Next Decade

These growth stocks are potential multibaggers.


Motley Fool

by Neha Chamaria

Oct 17, 2020


https://www.fool.com/investing/2020/10/17/3-top-growth-stocks-you-can-buy-and-hold-for-the-n/


You need three things to buy and hold a stock for a decade: conviction, trust, and patience. You must be strongly convinced that the underlying company has solid growth catalysts for several years to come, trust that management will capitalize on those opportunities and unlock greater shareholder value, and be patient enough to hold onto the stock through volatility to reap rich returns years down the line.

If you think you can do it, here are three top growth stocks riding on three separate megatrends that could make you crazy rich only if you buy and hold them for a decade -- preferably even beyond.

Ride this energy shift

Renewable energy is changing the dynamics of the global energy sector. Among all the energy sources in the U.S., renewable energy grew the fastest, at a nearly 100% clip between 2000 and 2018, according to the Center for Climate and Energy Solutions. Further, renewables are projected to make up 45% of global electricity generation by 2040, up from only about 26% in 2018.

You probably already know how the world's biggest companies are already making the shift. Amazon, for example, strives to power its operations with 100% renewable energy as early as 2025.

Given the backdrop, renewable energy stocks are compelling buys for at least the coming decade. Consider Brookfield Renewable Partners (NYSE:BEPC)(NYSE:BEP), one of the world's largest owners and operators of renewable energy assets, worth $50 billion.

Brookfield typically buys value assets, develops and turns them around, where necessary, to make them profitable, and eventually monetizes mature assets to reinvest the proceeds opportunistically. Through recent acquisitions, the company has expanded significantly into solar and wind, although hydropower generates 66% of its cash flows. Brookfield has an incredible track record of cash flow generation, as evidenced in its dividend growth: The stock's dividends have grown at a compound annual rate of 6% in the past 20 years.

In the coming decade, Brookfield shares could easily generate annualized double-digit returns for three major reasons:

Brookfield has 18,000 megawatts (MW) of renewable capacity under development.

Management is targeting 6%-11% growth in funds from operations.
It aims to grow its annual dividend by 5%-9%.

Brookfield's development pipeline is not only among the largest in the world, but also nearly as large as its current capacity of 19,300 MW. If that should take care of growth, the fact that 95% of its cash flows are contracted should ensure cash flow resiliency, even through tough times. Whichever way you slice it, Brookfield Renewable looks like an easy multibagger stock in the making.

A megatrend poised to mint you money

The war on cash is raging, and it's only a matter of time before nations across the globe become cashless societies, as people ditch paper money for cards and other forms of digital payments. E-commerce, in particular, is a massive tailwind that should bolster the transition, opening up a world of opportunities for Mastercard (NYSE:MA).

Mastercard doesn't issue cards but facilitates transactions made through them on its payments-processing network. It's an incredibly asset-light, high-margin business model, as Mastercard earns a fee on every transaction made using its cards anytime, anywhere in the world. The advantage of network effects here is unmistakable -- the more cards issued by banks and financial institutions, the more value it adds to Mastercard.

Mastercard has 2.6 billion co-branded cards in global circulation and reported $7.3 billion in sales and an operating margin of 51% in the first half of 2020. Although the coronavirus outbreak hit its earnings, Mastercard's long-term story is getting even stronger as digital payments pick up, especially during the COVID-19 pandemic.

Meanwhile, management is savings costs, where possible, while pumping money into high-growth areas like business-to-business solutions and data and analytics. Mastercard's revenue from value-added services like data analytics, consulting fees, cyber and intelligence fees, and loyalty reward fees jumped 23% in 2019.

The global fintech industry is projected to grow exponentially in the coming years. With its solid global presence, partnerships with some of the world's biggest companies, suite of lucrative value-add services, and thirst to grow via acquisitions, Mastercard could earn multibagger returns for investors in the coming decade and beyond.

This e-commerce growth player won't fail you

E-commerce was already booming when the COVID-19 pandemic and ensuing lockdown and homebound lives added fuel to the fire. It was a huge blow for brick-and-mortar stores, as many were forced to shut shop. That's when Shopify (NYSE:SHOP) stepped in, helping merchants of all sizes set up online stores quickly with easy access to everything from inventory management to payments processing.

The results were visible in Shopify's numbers: In its second quarter, new stores created on its platform jumped 71% sequentially and its gross merchandise volume (GMV) soared 112% and revenue 97%, both year over year. GMV, which reflects the total dollar value of orders processed on Shopify's platform in a given period, hit $30.1 billion in the quarter, registering record growth since the company went public in 2015.

Meanwhile, Shopify continues to innovate. In Q2 alone, it launched channels enabling merchants to customize their storefronts within Facebook and Instagram and sell their products online on Walmart. It also expanded its contactless payments in Canada and saw 65% year-over-year growth in merchant cash advances and loans through Shopify Capital. The company also automated some areas of Shopify Fulfillment Network, its new logistics arm that's gotten off to a successful start.

With more than 1 million merchants across 175 countries already on board, Shopify has grown by leaps and bounds in recent years and will likely continue to do so as adoption of e-commerce further gathers steam. For patient investors in the stock, that could mean some solid returns in the coming years.

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>>> American Express Has Challenges Its Rivals Don’t Face, Analyst Says


Barron's

By Carleton English

Oct. 9, 2020


https://www.barrons.com/articles/american-express-has-challenges-its-rivals-dont-face-analyst-51602270567?siteid=yhoof2


Expectations for the card company’s 2021 revenue may be too high, according to Susquehanna Financial.

American Express stock was hit with a rating downgrade as Wall Street worries the card issuer will suffer from continued weakness in travel and entertainment spending.

Shares of the company were up 0.4% in afternoon trading despite the downgrade by Susquehanna Financial analysts to Neutral from Positive. The S&P 500 was up 0.9%,

The analysts expect that the credit-card issuer will have difficulty navigating a world where people are spending more time at home, given that many of the merchants it does business with are also struggling.

The back story. American Express (ticker: AXP) shares have recovered from their March lows but are still down 15% this year. They are lagging behind Visa (V), which is up 9%, and Mastercard (MA), which has gained 17%.

American Express, which is more closely associated with business and travel spending than its peers, has faltered because both of those areas have been hard-hit during the last seven months. There is little sign of activity returning to pre-pandemic levels anytime soon.

Offices have been reluctant to bring workers back on site, and restaurants are operating at reduced capacity. Sports are still largely being played in stadiums with cardboard cutouts of fans. Broadway will remain closed through May 2021, it was announced Friday.

What's new. James Friedman, analyst at Susquehanna, doubts that the card issuer will be able to do much better than the merchants it does business with.

“It would be hard for AXP to do better than their merchants, so consensus ‘21 revenue up 11% looks full to us,” Friedman wrote Friday. He said growth of 7.5% appears more reasonable after looking at projections for the airline, hotel, dining, and retail industries.

He credits American Express for quickly managing its credit risk at the start of the shutdowns, but says it faces other disadvantages. While Visa saw a drop in credit-card spending earlier this year, that was more than offset by an increase in debit-card usage. American Express is primarily a credit-focused business, Friedman wrote.

Looking Ahead. Despite the downgrade, Friedman maintained his target of $110 for the stock price, given that it is not far from Friday’s level near $107. He expects third-quarter revenue will come in at $8.6 billion and that earnings per share will be $1.06, up from previous estimates of 97 cents a share. But looking to 2021, he expects the company will earn $7.43 a share, down from his previous forecast of $7.65.

American Express reports its third-quarter results on Oct. 23.

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Fiserv - >>> 200 Banks and Credit Unions Go Live with Zelle via Fiserv in 2020


Yahoo Finance

October 6, 2020


https://finance.yahoo.com/news/200-banks-credit-unions-live-140000271.html


The Federal Savings Bank and SECU among financial institutions offering Zelle® P2P payments with Fiserv turnkey implementation


As a growing number of consumers have embraced digital payments during the COVID-19 pandemic, financial institutions have added or enhanced person-to-person (P2P) payment capabilities, with more than 200 banks and credit unions going live on the Zelle Network® via Fiserv to date in 2020.

In total, Fiserv, Inc. (NASDAQ: FISV), a leading global provider of financial services technology solutions, has enabled implementation of P2P payments for more than 400 institutions via the Turnkey Service for Zelle. And with more financial institutions choosing to offer Zelle, Fiserv has optimized the path from pipeline to go live so that banks and credit unions can get their customers up and running faster than ever before.

The Federal Savings Bank and SECU are among the financial institutions that have recently added or enhanced their P2P payment capabilities.

"We chose Zelle because we wanted to offer our customers an innovative way to send money quickly via P2P," said Jackie Katz, vice president of Retail Banking at The Federal Savings Bank, a Chicago-based veteran-owned bank with offices across the U.S. "We had been offering a different service, but it did not have the speed or name recognition. Since moving to Zelle via Fiserv, we have seen a nearly 1000% increase in transactions."

"Even prior to COVID-19, our strategy has been to push towards more sophisticated digital technology for our members to allow them the ease of banking from their homes," said Becky Smith, executive vice president, chief strategy and marketing officer at SECU of Maryland, which serves more than 250,000 members throughout the state. "Now that we are in a new environment, being able to offer Zelle has proven to be even more meaningful to our members who have been asking for a service like this."

Zelle allows consumers to send and receive money directly from one U.S. financial institution account to another, typically within minutes when both parties are already enrolled.

"We’ve seen consistent growth in P2P payments every month for the past three years, and the recent pandemic has accelerated that trend," said Tom Allanson, president, Electronic Payments at Fiserv. "The number of financial institutions offering Zelle via Fiserv has more than doubled in 2020, expanding access to easy, fast and secure digital payments at a time people need them most."

In a world moving faster than ever before, Fiserv helps clients deliver solutions in step with the way people live and work today – financial services at the speed of life. Learn more at fiserv.com.

Zelle and the Zelle related marks are wholly owned by Early Warning Services, LLC and are used herein under license.

Additional Resources:

Turnkey Service for Zelle - https://www.fiserv.com/en/about-fiserv/resource-center/brochures/turnkey-service-for-zelle.html

About Fiserv

Fiserv, Inc. (NASDAQ:FISV) aspires to move money and information in a way that moves the world. As a global leader in payments and financial technology, the company helps clients achieve best-in-class results through a commitment to innovation and excellence in areas including account processing and digital banking solutions; card issuer processing and network services; payments; e-commerce; merchant acquiring and processing; and the Clover® cloud-based point-of-sale solution. Fiserv is a member of the S&P 500® Index and the FORTUNE® 500, and is among FORTUNE World’s Most Admired Companies®. Visit fiserv.com and follow on social media for more information and the latest company news.

About Zelle®

Brought to you by Early Warning Services, LLC, an innovator in payment and risk management solutions, Zelle makes it fast, safe and easy for money to move. The Zelle Network® connects financial institutions of all sizes, enabling consumers and businesses to send fast digital payments to people they know and trust with a bank account in the U.S. Funds are available directly in bank accounts generally within minutes when the recipient is already enrolled with Zelle. To learn more about Zelle and its participating financial institutions, visit www.zellepay.com.

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>>> Fiserv Looks Expensive. Is It a Buy?

This fintech is starting to see the fruits of its big merger.


Motley Fool

by Dave Kovaleski

Oct 1, 2020


https://www.fool.com/investing/2020/10/01/fiserv-looks-expensive-is-it-a-buy/


Fiserv (NASDAQ:FISV) has been one of the most consistent and best-performing stocks over the past decade. It has had 11 straight years of positive annual returns through 2019, and over the last 10 years it has posted an annualized return of about 23%.

Last year it made a big move to buy First Data, which gives the company greater scale and broader offerings, as First Data brings complementary capacities. But it also brought in a lot of debt. On top of that, earnings and revenue have been challenged by a global pandemic and resulting recession. At Wednesday's close, Fiserv's stock price was down about 11% on the year.

After a decade of strong growth, Fiserv's multiples are very high, with a price-to-earnings ratio of around 82. Given its muted growth and high valuation, is Fiserv too expensive right now?

Big move to expand and grow

Fiserv is a fintech that develops the technology banks and financial institutions use to process payments and move money. Overall, more than $1 trillion is moved every year via Fiserv's technology. Fiserv has long been one of the few dominant players in the niche core processing industry, with about 37% market share.

The company also provides payment processing at the point of sale through its 2019 acquisition of First Data and its Clover payment system, a competitor of Square. Fiserv hopes to increase its market share long term through this acquisition.

Taking into account the First Data acquisition, which closed in July 2019, adjusted earnings were down 5.8% year over year to $631 million in the second quarter, while adjusted revenue dropped 12% to $3.2 billion. This was primarily due to lower payment revenue and debit transactions, both of which were impacted by the pandemic, explained Robert Hau, CFO and treasurer, on the second-quarter earnings call.

>> Revenue in this segment tends to be driven by transactions and/or accounts, and tends to be fairly resilient in the typical recessionary periods. But this pandemic has been different, for example, debit-oriented transactions, which have historically been very resilient were impacted much more than prior recessionary periods and have solidly improved, consistent with the reopening, since the trough in early April. <<

Earnings were also severely impacted by higher expenses, which were primarily merger-related. This resulted in a drop in adjusted operating margin from 29.7% a year ago to 28.8% at the end of the second quarter. But there are a few good reasons to like where Fiserv is headed.

Fiserv is a buy

The earnings outlook for the rest of the year and beyond is strong. Fiserv expects to finish the year with 10% earnings growth, driven by strong sales growth. Sales were up 38% in the second quarter year over year and 20% year to date. Most notably, the company had two major wins in its credit card processing business, signing on with Atlanticus Holdings and Genesis Financial Services, two providers of consumer credit solutions. Overall, the company added 42 new bank merchant clients in the quarter, with about 70% being competitive takeaways. Since the First Data merger closed, Fiserv has signed more than 160 banks and credit unions and clients with a strong pipeline -- exhibiting the potential strength of this new merger. The company cites its highly configurable processing platform and breadth of integrated solutions as major competitive advantages.

The sales spike generated almost $900 million in free cash flow in the quarter, up 23% year over year. Year-to-date free cash flow is $1.7 billion through the second quarter, up 13%, and about $3.5 billion since the merger. This has allowed the company to pay down some of the debt it brought over from First Data -- about $1.5 billion of its $21.5 billion in long-term debt. It expects to continue to pay down debt next year with its strong free cash flow, along with expense savings from the merger, with an expectation to reach its targeted leverage in the middle of 2021.

As a result of double-digit earnings growth expectations and its debt and expense reduction plans, Fiserv's forward P/E is expected to come down significantly, from about 82 now to around 19 for 2021. That makes Fiserv a great buy right now at this reduced price.

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>>> How Visa Makes Money

Visa's data processing and services segments generate the most revenue


Investopedia

By NATHAN REIFF

Sep 21, 2020


https://www.investopedia.com/how-visa-makes-money-4799098?utm_campaign=quote-yahoo&utm_source=yahoo&utm_medium=referral&yptr=yahoo


Visa Inc. (V) is one of the dominant digital payments brands globally, providing services about 200 nations to individual consumers, merchants, financial institutions, and governments.1

?While best known for its Visa credit card used by millions of consumers, the company provides an unusually broad range of services. That includes authorization, clearing, and settlement services for financial institutions and merchants; and credit, debit, and prepaid card services to consumers and businesses.1?

Visa makes its profits by selling services as a middleman between financial institutions and merchants. The company does not profit from the interest charged on Visa-branded card payments, which instead goes to the card-issuing financial institution.1? Visa so dominates the market that it has only a handful of big rivals, including Mastercard Inc. (MA), as well as digital payments companies such as PayPal Holdings Inc. (PYPL).

KEY TAKEAWAYS

Visa is a digital payments company providing transactions between financial institutions, consumers, merchants, and banks.
The company's data processing operations generate the largest portion of revenue.

Visa's strategy is to aggressively expand its presence in contactless payments, e-commerce, and other digital vehicles.

Visa recently extended its global partnership with PayPal, enabling the expansion of real-time access to funds for individuals and small businesses.

Visa's Financials

Visa's business was adversely impacted during Q3 of its 2020 fiscal year (FY), the three-month period that ended June 30, 2020. The company reported net income of $2.4 billion on $4.8 billion of net revenue. Net income fell 23.5% while net revenue fell 17.2% compared to the same quarter a year ago.2?

Net revenue from Visa's U.S. business, which comprises about 49% of total net revenue, fell 8.0% compared to the year-ago quarter. Net revenue from international sources, which accounts for the remaining 51% of total net revenue, fell 24.5%. Visa indicated that these revenue declines were mostly due to year-over-year (YOY) changes in payments volume, cross-border volume, and processed transactions, all of which were impacted by COVID-19.3?

Visa's Business Segments

Visa reports as a single segment, which is Payment Services. But it routinely divides its revenue into four subsegments, which are the major generators of revenue for the company.4? These segments are: Service Revenue, Data Processing Revenue, International Transaction Revenue, and Other Revenue.4? Visa describes these subsegments as "components" of net revenue, but they are reported gross of client incentives. The sum of the revenue totals for each segment equals gross revenue of about $6.4 billion for Q3 FY 2020. Visa's net revenue of $4.8 billion for the quarter is equal to that gross revenue figure minus client incentives.5?

Service Revenue

Visa's service subsegment consists of revenue from services provided to support client usage of Visa's payment services. This is separate from the authorization, clearing, and settlement related to the company's payment services, which is included elsewhere.6? In Q3 FY 2020, Visa's service revenue was $2.4 billion, or about 38% of the company's total gross revenue. This is up 0.2% YOY.5?

Data Processing Revenue

Visa's data processing revenue includes all revenue generated as a result of the company's clearing, settlement, authorization, network access and similar services.6? In Q3 FY 2020, data processing revenue accounted for the largest portion of the company's gross revenue: $2.5 billion or about 40%. This figure is down 5.1% YOY.5?

International Transaction Revenue

Visa is heavily involved in cross-border transaction processing and currency conversion, and these activities generate revenue in the subsegment of international transaction revenue.6? In Q3 FY 2020, international transaction revenue was $1.1 billion, or more than 17% of gross revenue. Revenue for this component was down 44.3%.5?

Other Revenue

Visa also earns revenue from license fees, value-added services, account holder services, and more. These sources are grouped together as Other.6? At $314 million or nearly 5% of Visa's Q3 FY 2020 gross revenue, the Other component accounts for the smallest portion of revenue. Other revenue fell 8.2% YOY.5?

Visa's Recent Developments

Visa recently announced that it extended its global partnership with PayPal. The extension of the partnership will enable the expansion of real-time access to funds for consumers and small businesses that are sending or receiving money using PayPal, Venmo, or Xoom. It will expand PayPal's Instant Transfer services, which leverages Visa Direct for real-time payments.7?

How Visa Reports Diversity & Inclusiveness

As part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of Visa and its commitment to diversity, inclusiveness, and social responsibility. We examined the data Visa releases to show you how it reports the diversity of its board and workforce to help readers make educated purchasing and investing decisions.

Below is a table of potential diversity measurements. It shows whether Visa discloses its data about the diversity of its board of directors, C-Suite, general management, and employees overall, as is marked with a ?. It also shows whether Visa breaks down those reports to reveal the diversity of itself by race, gender, ability, veteran status, and LGBTQ+ identity.

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>>> Mastercard vs Visa: Which Financial Giant Makes A More Compelling Investment?


Yahoo Finance

September 21, 2020


https://finance.yahoo.com/news/mastercard-vs-visa-financial-giant-090351615.html


The pandemic-led lockdowns and social distancing restrictions hurt spending on several discretionary goods, travel, entertainment and fuel, thus impacting payment network giants Visa, Mastercard, American Express and Discover. However, these companies are experiencing improved metrics with the easing of lockdowns.

Moreover, the pandemic has created an opportunity for payment networks due to a surge in e-commerce and the preference for contactless payment options. Last month, Mastercard revealed the results of its survey of small businesses across North America and said that 76% of these companies indicated that the pandemic prompted them to become more digital with 82% changing how they send and receive payments.

The TipRanks’ Stock Comparison tool will help us place Mastercard and Visa alongside each other and see which of these leading payment companies offers a better investment opportunity.

Mastercard (MA)

Leading financial services company Mastercard has a presence in over 210 countries and serves customers through 2.2 billion Mastercard branded cards and 417 million Maestro cards. COVID-19’s impact on consumer spending reflected in the company’s 2Q revenue, which declined 19% Y/Y to $3.3 billion and led to a 28% decline in adjusted EPS to $1.36.

However, one positive aspect in the second quarter was the 12% rise in other revenues to $1.1 billion due to growth in the company’s Cyber and Intelligence as well as Data and Services solutions.

As per Mastercard’s 3Q business update, the company is experiencing continued moderate improvements. Notably, switched transactions (reflects the number of transactions initiated, authorized, cleared and settled through Mastercard network), grew 5% in the week ending August 28 compared to 3% in the week ending July 21. Cross-border volume was down 35% in the week ending August 28 compared to a 40% decline in the week ending July 21.

Meanwhile, the company continues to pursue opportunities in priority areas such as open banking, real-time payments, cyber and intelligence Solutions and B2B themes. In June, Mastercard announced an agreement to acquire Finicity, a leading provider of real-time access to financial data and insights, to bolster its open banking platform.

Last month, Mastercard expanded its partnership with TransferWise to allow the issuance of cards in any country where Mastercard is accepted and TransferWise is licensed. Mastercard is also enabling checkout-free shopping through the rollout of its Shop Anywhere platform with several retailers from October.

Aside from Shop Anywhere, another frictionless solution that that company introduced is the AI Powered Drive Through platform, provided in partnership with SoundHound Inc. and Rekor Systems. This new platform will help fast-food and quick-serve restaurant brands speed up a drive-thru or drive-in interaction through vehicle recognition, voice ordering, and artificial intelligence.

Mastercard has also accelerated its Crypto Card Partner Program and has granted Wirex a principal membership license, making it the first native cryptocurrency platform to issue Mastercard payment cards. (See MA stock analysis on TipRanks)

On Sept. 11, Tigress Financial analyst Ivan Feinseth reiterated a Buy rating for Mastercard, stating “Near term COVID-19 pandemic-driven weakness will be overcome by an acceleration in electronic payment and service adoption, which will drive further acceleration in Business Performance trends.”

The Street is also bullish about Mastercard and has a Strong Buy consensus based on 22 Buys, 5 Holds and no Sell ratings. The stock has risen 12% so far this year and a possible upside of 6.8% lies ahead based on the average analyst price target of $358.


Visa (V)

Visa, the global payments industry leader with a vast presence in over 200 countries, could not escape the COVID-19 led weakness in transactions and posted a 17% decline in its revenue of $4.8 billion for the third quarter of fiscal 2020, which ended June 30. Adjusted EPS fell 23% Y/Y to $1.06.

Earlier this month, Visa reported a 7% Y/Y rise in its August US payments volume which was slower than the 8% growth in July, reflecting the impact of the expiration of the elevated unemployment benefits. Meanwhile, global processed transactions grew 3% in August compared to a 1% growth in July due to accelerating domestic transactions triggered by the easing of social distancing restrictions. Cross-border volume (excluding intra-Europe transactions) was down 43% in August compared to a 44% fall in July.

Meanwhile, Visa is capturing the demand for contactless payments amid the COVID outbreak through its tap-to-pay solutions. In the US alone, Visa added over 80 million contactless cards in the first six months of this year. It expects tap-to-pay to accelerate post-COVID when consumers start going back to the office and conduct smaller transactions for their commute, pay transit fares, and buy food and drinks.

Also, the rapid shift to e-commerce works well for Visa as its share of digital commerce is about three times greater than the physical point of sale.

The company has been entering into strategic partnerships to expand in key growth areas. It has partnered with UK-based fintech Conferma Pay to integrate Visa virtual cards in the Conferma Pay mobile app. The collaboration will allow companies to provision virtual Visa commercial cards to employees' digital wallets, enabling tap-to-pay and simplify expense reimbursement.

In January, Visa announced a $5.3 billion agreement to acquire fintech Plaid, which has products that enable consumers to share their financial information with many apps and services such as Acorns, Betterment, Chime, Transferwise and Venmo. Visa expects to complete this deal by the year-end.

To capitalize on the accelerated shift to digital payments amid the pandemic, Visa recently extended its global partnership with PayPal. The expanded partnership will enable consumers and small businesses to move their money faster through PayPal and Visa Direct capabilities. (See V stock analysis on TipRanks)

Last month, Mizuho analyst Dan Dolev initiated coverage of Visa with a Buy rating and a price target of $250. The analyst believes that card penetration is the key driver of Visa's volume growth, and channel work points to accelerating card penetration and a boost to US volume growth. He also believes that the long-term stability of the company's "best-in-class" terminal margins should merit mid-teens revenue multiples.

Likewise, the Street is bullish about Visa with 16 Buys, 2 Holds and no Sell ratings adding to a Strong Buy consensus. The stock has risen about 8% year-to-date and the average analyst price target of $222.33 reflects an upside potential of 10% in the coming months.

The better financial play

Both Mastercard and Visa have strong business models that stand to benefit in the digital world. They are on the path to recovery as economies are reopening- though COVID-related impact on travel and other businesses continues to be a major drag on cross-border volumes.

Mastercard has a dividend yield of 0.48% compared to Visa’s yield of 0.59%. Moreover, a lower valuation multiple and higher upside potential ahead as indicated by the TipRanks’ Stock Comparison tool make Visa a more attractive investment currently.

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Visa - >>> 3 Warren Buffett Stocks You Can Buy and Hold Forever

These three very different companies have one thing in common: Each can continue to grow for decades to come.


Motley Fool

by Danny Vena

Sep 16, 2020


https://www.fool.com/investing/2020/09/16/3-warren-buffett-stocks-you-can-buy-and-hold-forev/


Let's get this out of the way right up front: Forever is a very long time and it almost seems disingenuous to suggest it. In all honesty, nobody knows what will happen tomorrow or a year from now, let alone in five or ten years' time -- or forever.

That said, Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) CEO Warren Buffett has said, "Our favorite holding period is forever." And given his enviable track record, investors could do far worse than following his example. Since Buffett took the helm of Berkshire Hathaway in 1965, the company has had a compound annual growth rate of more than 20%, and by the end of 2019, its total returns have grown to a whopping 2,744,062%.

There are a number of criteria investors can use to increase the likelihood that a stock will still be successful decades from now. Buying a firmly entrenched industry leader, a company with a track record of innovation, or one with the ability to adapt to changing conditions can all improve your chances of success. Let's look at why Visa (NYSE:V), Amazon (NASDAQ:AMZN), and Apple (NASDAQ:AAPL) represent great "forever" stocks.


1. Payments titan Visa

When it comes to dominating the payments industry, Visa (NYSE:V) simply has no equal, accounting for more than 53% of U.S. credit card network purchase volume, totaling nearly $2 trillion in payments processed -- more than all three of its biggest competitors combined.

The company has another huge advantage over its chief rivals, particularly in times of economic uncertainty: While it processes payments, it's not a lender. Unemployment rates, while showing marked improvement in recent months, are still near record highs, raising the risk of credit delinquency and default.

Not content to rest on its laurels, Visa recently made a big bet on fintech, spending more than $5 billion to acquire financial technology provider Plaid. While the company wasn't a household name, many have used it without knowing it, as its technology secures users' financial information while connecting their bank accounts to a growing number of financial apps.

There's a whole big world out there and Visa still has international markets to conquer. The company estimates that cash is still used in annual purchases of more than $21 trillion and there are nearly 2 billion adults who don't yet have a payment account, showing the enormity of the opportunity that remains.

Buffett's still a believer, holding nearly 10 million Visa shares, worth almost $2 billion.


2. It's still Day One at Amazon

Amazon (NASDAQ:AMZN) dominates not one, but two industries: e-commerce and cloud computing.

While estimates vary, eMarketer contends that Amazon will account for 38% of online sales in the U.S. this year, while its nearest competitor Walmart will top out as less than 6%. Those estimates could prove conservative, as more consumers made the move to e-commerce in the midst of the pandemic. Amazon has also been working to increase its international penetration in recent years, so it too has worlds yet to conquer.

When it comes to cloud computing, Amazon popularized the notion and was among the first to recognize the massive opportunity. Being one of the first out of the blocks gave Amazon an advantage it still enjoys today. Amazon Web Services is still the undisputed leader in cloud computing, with a 33% share of the market -- more than its next three competitors combined, according to estimates by Synergy Research Group. It's also extremely lucrative, accounting for 25% of Amazon's sales and 65% of its operating income for the first half of 2020.

It may be the company's culture of innovation and expansion that makes it a forever stock, however. While Amazon began as an online bookseller, it has evolved into the "everything store." In addition to its e-commerce empire, the company has a sprawling logistics and delivery operation, a growing footprint in physical retail, leading streaming video and music offerings, and a massive artificial intelligence operation, including a growing ecosystem of Alexa-powered devices. Not to mention that Amazon has quickly become the third-largest digital advertiser in the country. And its Amazon Go stores -- which eliminate the need for cashiers -- are just getting started.

Buffett famously said that he regretted not investing in Amazon earlier. "I'm a fan [of Amazon], and I've been an idiot for not buying," Buffett said in an interview. It was one of Buffett's trusted money managers Todd Combs or Ted Weschler who eventually pulled the trigger.

That position has grown to more than half a million shares, valued at $1.66 billion.


3. Apple's prescient pivot

Apple is another company that has given new meaning to "industry-leading." While most companies would be happy with just one groundbreaking product, Apple has had several over the years. No competitor came close to the dominance of the iPod, a product Apple famously cannibalized with the introduction of the iPhone.

While the company has never been the global market share leader, iPhone has the distinction of gobbling up the majority of the profits. Apple captured about two-thirds of all profits in the global handset market last year, more than its next three competitors combined.

The company has other industry-leading products as well. The Apple Watch began as a sideline when it was introduced back in late 2014, but in just five short years, the device outsold the entire Swiss watch industry. Apple's wireless AirPods are another product line that dominates the market, accounting for nearly half of all sales in the category in 2019.

Apple is no longer counting on its fan-favorite products to fill its coffers. The company has worked to rapidly expand its services offerings over the past several years, with streaming music and video, mobile gaming, and digital payments, to name just a few. That strategy is bearing fruit, as services has grown to nearly 19% of Apple's trailing-12-month revenue, up from less than 12% just four years ago.

It's also worth noting that Apple is Buffett's largest holding, representing nearly half of Berkshire Hathaway's invested assets. "We bought about 5% of the company. I'd love to own 100% of it," Buffett said in a 2018 interview. "We like very much the economics of their activities. We like very much the management and the way they think." That's high praise indeed coming from one of the world's most successful investors.

But seriously, forever?

When it comes to investing, there are simply no guarantees, but choosing industry leaders with ongoing opportunities will certainly increase the likelihood of success. While Buffett's favorite holding period is forever, even the storied investor has sold distressed companies in beaten-down industries, with 2020 seeing his biggest turnover in years.

That said, it takes a certain caliber of company to become an industry leader, and it's even rarer to find those that simply dominate the competition. Each of these top-notch companies has what it takes to succeed for years and perhaps even decades to come.

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>>> Visa and PayPal Deepen Ties for Instant Money Transfer


Zacks

September 11, 2020


https://finance.yahoo.com/news/visa-v-paypal-deepen-ties-164304093.html


Visa Inc. V and PayPal Holdings, Inc. PYPL have expanded their partnership, which in turn, extends the latter’s Instant Transfer services to the global markets, thus enabling fast domestic and cross-border digital payments.

PayPal’s instant transfer services leverage Visa Direct’s real-time payment capabilities. The deal extension comes at a time when real-time money transfer and payment settlement became the need of the hour. This requirement came up in the wake of COVID-19 breakout, which left consumers as well as small businesses cash starved. In such circumstances, instant access to funds, which can restore financial flexibility to those in need, is of utmost significance.

Visa and PayPal’s deal will allow family members residing in two different countries to transfer funds instantly. Also, small businesses can pay and receive payments on a real-time basis.

The magnitude of the requirement of real-time payment capability can be gauged from the fact that 76% of U.S. SMBs reported struggling with cash flow shortages in the last few months. 91% of SMBs expressed interest in real-time settlement capabilities.

Also, Visa Direct experienced an almost 80% increase in transactions in the Person-to-person (P2P) payment category in the United States during third-quarter 2020, which reflects the popularity of real-time payments solution.

Via this deal extension, PayPal will be able to widen the global white label Visa Direct payout services through PayPal and its Braintree, Hyperwallet and iZettle product solutions. Moreover, eligible PayPal customers can pay and get paid by friends, family and businesses, and move money quickly from their PayPal, Xoom and Venmo accounts through Visa Direct to their eligible Visa cards.

The partnership between Visa and PayPal dates back to 2016 when both came together to provide an improved and a more seamless payment experience for Visa cardholders and offered greater choice to consumers to pay with the PayPal and Venmo wallets.

A couple of years later, in 2018, Visa and PayPal stretched their alliance to accelerate the adoption of digital and mobile payments in Canada.

The strengthened collaboration with PayPal underscores Visa’s efforts to tap a meatier market share of the payments space, which is undergoing digital transition. The global pandemic accelerated led to this change and the trend is expected to surge even after the health emergency dies down.

Last year, another company in the same space, Mastercard Incorporated MA, extended its pact with PayPal Holdings, which allowed the former to provide its Instant Money Transfer service in Singapore and across multiple markets in Europe.

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Visa - >>> 4 Unstoppable Stocks to Buy With $2,500


It's easy to build wealth when you own top-notch stocks like these.


Motley Fool

Sean Williams

Sep 14, 2020


https://www.fool.com/investing/2020/09/14/4-unstoppable-stocks-to-buy-with-2500/


Investing in 2020 should really come with a disclaimer. The past six-plus months have been one of the most volatile periods on record, with the benchmark S&P 500 losing 34% of its value in less than five weeks, then regaining everything that was lost (and some) in the subsequent five months. This year has undeniably taught investors how fruitless it is to try to predict short-term market movements.

But at the same time, it's been a great year for long-term investors to buy into great companies on the cheap. With volatility picking back up over the past week and change, opportunity has come knocking yet again for long-term investors looking to buy into the market's most unstoppable stocks.

Best of all, long-term investors don't need to be rich to eventually become wealthy. If you have $2,500 that you can spare, which won't be needed to pay bills or cover emergencies, you have more than enough to buy the following four unstoppable stocks.


Alphabet

If you can get any sort of meaningful discount on shares of Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL), the parent company of Google and YouTube, I strongly suggest you consider taking it.

As you can imagine, Alphabet has been clobbered by the coronavirus disease 2019 (COVID-19) pandemic. As an ad-based business, Alphabet has seen companies of all sizes pull back on their spending, which led the company to report its first year-on-year sales decline since going public.

However, long-term investors would be smart not to read too much into this data. As a whole, GlobalStats finds that Google has accounted for between 92% and 93% of all online internet search (on a monthly basis) over the trailing year. It's the clear go-to when it comes to search ad placement, which means it'll boast considerable pricing power during the many long periods of economic expansion.

Alphabet's cloud infrastructure segment, Google Cloud, is also a stealthy fast-growing segment. It's no secret that cloud subscription margins are much higher than ad-based margins. With Google Cloud raking in over $3 billion in the second quarter and accounting for nearly 8% of Alphabet's total sales, it's going to be responsible for a significant uptick in the company's operating cash flow in the years that lie ahead.


Facebook

You don't have to get cute and find the hidden gem in the social media space. Just consider buying Facebook (NASDAQ:FB), which is far and away the most unstoppable social media presence.

Like Alphabet, Facebook's business model is driven by ad revenue. But in Facebook's case, ads make up an even larger percentage of total sales. This means COVID-19 concerns and recent questions about Facebook's filtering of hate speech have adversely impacted the company's near-term results.

And yet, despite the worst quarter for the U.S. economy in decades, Facebook still logged an 11% year-on-year sales increase during the June-ended quarter. That should tell you something about how important Facebook and its family of social media assets are to the advertising world.

As of June 30, Facebook had 2.7 billion monthly users, as well as 3.14 billion family monthly active users (family accounts include owned assets Instagram and WhatsApp). There's simply nowhere else that advertisers can go where they're going to get access to at least 2.7 billion targeted eyeballs, and Facebook knows it.

Furthermore, the company has only monetized a portion of its assets. The vast majority of current sales are derived from ad revenue on Facebook and Instagram, with Facebook Messenger and WhatsApp not yet monetized in any meaningful way. When the company does monetize these platforms, as well as rolls out additional initiatives beyond Facebook Pay, we could witness sky-high sales growth from a megacap company.


Teladoc Health

If you're not closely watching Teladoc Health (NYSE:TDOC), you're missing the blossoming of an industry giant and a company on the cutting edge of precision medicine.

As the name implies, Teladoc is a leading telemedicine company in the healthcare sector. It was already seeing a boon in businesses well before the pandemic struck. However, keeping sick and immunocompromised people out of hospitals and doctor's offices has made virtual visits that much more important. After generating $20 million in full-year sales in 2013, Teladoc might hit $1 billion this year, and top $2 billion by 2023.

Additionally, you should understand that telemedicine visits are a benefit to all parties. It puts less time constraint on physicians, provides convenience for the patient, and happens to be cheaper than in-office visits for health insurance companies. We're really just scratching the tip of the iceberg after Teladoc registered 2.8 million visits during the June-ended quarter.

Also, don't overlook Teladoc's transformative cash-and-stock merger with applied health signals company Livongo Health (NASDAQ:LVGO). Livongo gathers copious amounts of data on patients with chronic illnesses and, using artificial intelligence as an aid, sends these folks tips and nudges to incite lasting behavioral changes. What Livongo is doing is clearly working, as the company has delivered three consecutive quarterly profits and continues to double its year-over-year Diabetes member counts.

When combined, this duo will be unstoppable in the healthcare space.


Visa

It's rare when payment-processing giant Visa (NYSE:V) isn't kicking tail and taking names, but when those short periods of time do occur, it's important for long-term investors to pounce.

About the only way this freight train can be slowed down is during a recession. Visa witnessed gross dollar volume on its network decline in 2009 from the previous year, and it'll likely face that same fate in 2020 with the coronavirus pandemic briefly pushing the U.S. unemployment rate to levels not consistently seen since the 1930s. But it's going to be impossible to keep this well-oiled money machine down for long.

Working in Visa's favor is the fact that its success is tied to U.S. and global economic growth. Even though economic contractions and recessions are a natural part of the economic cycle, periods of expansion tend to last considerably longer than recessions.

Also, understand that Visa's sole purpose is to aid in the facilitation of payments. Unlike some of its competition, it's not a lender. The big advantage of staying away from lending is that it means no direct exposure to rising loan delinquencies during periods of contraction or recession. This is why Visa's gross margin is often at or above 50%.

Visa has the highest credit card market share by network purchase volume in the U.S., and more than doubles the share of its next-closest competitor. It's absolutely unstoppable in the payments space.

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>>> Visa Strikes a Deal With a Fintech for Digital Wallet Rollout in Europe


The payment card giant is hooking into the Norwegian company Vipps' contactless payment system.



Motley Fool

by Eric Volkman

Sep 7, 2020


https://www.fool.com/investing/2020/09/07/visa-strikes-a-deal-with-a-fintech-for-digital-wal/


Visa (NYSE:V) continues to push more deeply into the jungle that is fintech. The world's dominant payment card processor has signed a deal with a Scandinavian company in the digital wallet sphere.

Through the arrangement, Visa said in a press release last week, "Visa's clients and partners will now be able to take advantage of the Vipps platform to create their own digital wallets and offer customers new ways to pay, be paid and manage their money."

This will apply to its cardholders in Europe; the company did not mention when and if the arrangement would be expanded to other parts of the world.

Neither the terms nor the price of the deal were made public.

Its timing seems appropriate. Contactless commerce -- either via online purchasing or with specialty cards that don't need to be swiped or read -- has surged during the coronavirus pandemic. This has added momentum to an existing global migration to digital means of payment. In its press release, Visa said that more than 75% of payments made through its branded cards are contactless these days.

Vipps' core product is an app that facilitates consumer payments; users can send and receive money to and from various sources. It launched in 2015, and according to Visa, currently has 85% market penetration. In its native Norway, it has 3.7 million users out of a total population of roughly 5.4 million.

"Today, the ability to pay digitally and make cashless payments in-stores, online, in-app, is no longer just a convenience but a necessity," Visa quoted Antony Cahill, its managing director for European regions, as saying. "As the leading payment brand, we are keen to make sure consumers and businesses have access to secure, digital commerce, regardless of where they live or what mobile device they have."

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>>> Apple’s Bet on a Cashless Future Could Pay Big Dividends for Investors, Analyst Says


Barron's

Aug. 28, 2020


https://www.barrons.com/articles/apples-bet-on-a-cashless-future-could-pay-big-dividends-for-investors-analyst-says-51598657910?siteid=yhoof2&yptr=yahoo


Apple’s Bet on a Cashless Future

Aug. 28: Like “jet packs” and “flying cars,” a frictionless future without physical money has been a staple of pundits’ and authors’ sci-fi speculations since the first ATMs were installed in 1969....

However, the fact remains: In 2020, cash is still very important to Americans’ everyday lives. According to Federal Reserve numbers, while 86% of people report using “plastic” at least sometimes, nearly 13% of economic activity in the U.S. is still in cash. That’s roughly $2.7 trillion dollars, and it’s “money on the table” for fintech innovators. Traditional credit-card companies and banks haven’t shown much interest in going after it.

But there’s a company with the vision to see this as a $2.7 trillion opportunity for the taking....I’m talking about Apple (ticker: AAPL). The iPhone is still very important—and could become more so with the 5G model on the horizon—but Apple’s Apple Pay fintech and its other innovations have become bigger and, indeed, more important contributors to Apple’s bottom line since about 2014. Apple watchers like me were excited earlier this month when the company spent $100 million to acquire a small start-up called Mobeewave. It didn’t generate many headlines, but in my view, this is a critical step on the road to another trillion in Apple’s market cap.

The Mobeewave tech that Apple now owns specializes in near-field communication, or NFC, a set of communications protocols that two electronic devices can use to talk over a distance of just 1.5 inches or less. It has an array of applications—it can be used for identification and authentication and keyless entry, for instance.

But perhaps its biggest and most important application is in the growing field of contactless payments. They are coming of age at an interesting time: a novel coronavirus pandemic. The digital-payment market is expected to more than double to $87.6 billion by 2023 and, beyond that, to $98 billion by 2027. A great deal of that business will go to companies like Apple and Square (SQ)....

A recent study by Visa, conducted during the pandemic, revealed the unsurprising result that two of every three American consumers would now prefer contactless, cashless transactions. It’s clear to me that these consumers and the businesses that serve them will practically beat a path to Apple’s door.

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Jack Henry & Assoc - >>> 1st United Credit Union Builds Relationship with Jack Henry


PR Newswire

August 27, 2020


https://finance.yahoo.com/news/1st-united-credit-union-builds-120000116.html


Credit union enhances its core and digital strategy to elevate the financial offerings, service experience available to members

MONETT, Mo., Aug. 27, 2020 /PRNewswire/ -- Jack Henry & Associates, Inc.® (NASDAQ: JKHY) is a leading provider of technology solutions and payment processing services primarily for the financial services industry. Its Symitar® division today announced that California-based 1st United Credit Union has selected Episys® as well as the Banno Digital Platform™ to deliver a personal, human-centered service that puts its members first.

1st United recognized the need for flexibility and customization beyond what its current core could offer. Being situated in the Silicon Valley area, the credit union's members have high expectations for financial services that are innovative, intuitive, and instantly ready to use. With Jack Henry, 1st United will gain a distinctly configurable platform technology that is open to integration through a single API gateway to provide better feature functionality at a faster speed that continuously evolves to make way for the future of banking.

Joanna Uhl, chief information officer at 1st United, said, "Jack Henry has the experience, stability and proven conversion successes to support our credit union's needs for the long term. The team is willing to do whatever it can to deliver on the products and services our members desire. That attitude pours into the technology. We know that Jack Henry will continue to invest in moving its platforms forward, taking us with them and never letting any feature functionality go stale. As we look toward the future, we know anything is possible as long as you have great solutions and the right people behind them."

The $1.2 billion-asset credit union will run its core through Jack Henry's private cloud environment. 1st United expects to see efficiency gains from day one for its team, which will directly translate into more offerings and enhanced service for its members. The credit union is particularly excited to engage in the PowerOn Marketplace® to create and share custom core content with other credit unions. Its conversion to Jack Henry will also provide a new level of integration, particularly across services like bill pay, which will help elevate adoption and usage among members.

For similar reasons, 1st United chose the Banno Digital Platform for the personal, member-centered experiences it wanted for its members. Uhl added, "There is a unique passion and foresight poured into this digital suite. The intuitive nature of it makes digital interaction easy and enjoyable. We have been trying to get more members engaged with us through various remote services while still providing the personal service we have become known for, and the availability of this platform will help advance that goal."

Shanon McLachlan, president of Symitar, commented, "Being in the financial services industry for more than four decades, we've accumulated valuable knowledge and resources that we're proud to share with our partners and client community. It's also shown us the need to constantly innovate and remain forward looking, delivering products and services that help credit unions build their membership and become future-ready."

About Symitar

Symitar, a division of Jack Henry & Associates, Inc.®, is the leading provider of integrated computer systems for credit unions of all sizes. Symitar has been selected as the primary technology partner by more than 800 credit unions, serving as a single source for integrated, enterprise-wide automation and as a single point of contact and support. Additional information is available at www.symitar.com.

About Jack Henry & Associates, Inc.

Jack Henry (NASDAQ:JKHY) is a leading provider of technology solutions primarily for the financial services industry. We are an S&P 500 company that serves approximately 8,700 clients nationwide through three divisions: Jack Henry Banking® supports banks ranging from community banks to multi-billion-dollar institutions; Symitar® provides industry-leading solutions to credit unions of all sizes; and ProfitStars® offers highly specialized solutions to financial institutions of every asset size, as well as diverse corporate entities outside of the financial services industry. With a heritage that has been dedicated to openness, partnership, and user centricity for more than 40 years, we are well-positioned as a driving market force in future-ready digital solutions and payment processing services. We empower our clients and consumers with the human-centered, tech-forward, and insights-driven solutions that will get them where they want to go. Are you future ready? Additional information is available at www.jackhenry.com.

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>>> Federal Bank Chooses Fiserv to Support Launch of Their First Independent Credit Card


Business Wire

August 12, 2020


https://finance.yahoo.com/news/federal-bank-chooses-fiserv-support-035600475.html


Proven platform, market-ready functionalities and business process outsourcing reduce the need for heavy capital investment and customization


Federal Bank (NSE: FEDERALBNK), a leading private sector bank in India, has chosen Fiserv, Inc. (NASDAQ: FISV), a leading global provider of payments and financial services technology solutions, to enable the digitization of the bank’s end-to-end card issuance and processing cycle, and support the launch of the Federal Bank credit card. The bank will also outsource associated operational processes to Fiserv.

With a strong retail and remittance business in India, Federal Bank was looking for a flexible and scalable technology and business process outsourcing (BPO) solution to support the launch and subsequent growth of its credit card business. The bank will utilize FirstVision™ from Fiserv, an end-to-end managed services solution that enables card issuing and processing with global economies of scale and integrated capabilities that span the card lifecycle. The integrated technology and BPO solution reduce cost of ownership and provide a seamless extension to the bank’s operations.

"At Federal Bank, we have a track record of deploying the best digital infrastructure to cater to our customers." says Shalini Warrier, Executive Director and Business Head - Retail at Federal Bank. "Fiserv supports our digital priorities and expansion plans. Their world-class technology platform and extensive local experience position us to offer an enhanced digital experience to our customers."

The service-oriented architecture and open APIs of FirstVision facilitate rapid application development, enabling new capabilities to be brought to market more quickly and at a lower cost, while helping to ensure local compliance.

For financial institutions looking for scalable and cost-effective technology and operational support as they grow, the combination of a software as a service (SaaS) solution and business process outsourcing offers a sustainable model in competitive market environments like India.

"The feature-rich card processing platform and operational tools provided by Fiserv help reduce the need for extensive up-front investments," said Nilufer Mullanfiroze, Country Head – Deposits, Cards & Personal Loans, Retail Banking at Federal Bank. "This allows us to stay agile and focus our resources on delivering relevant solutions and excellent services to our customers as we continue to grow the business."

"The partnership with Federal Bank reinforces our market leadership in providing locally relevant, digital-first solutions to financial institutions in India," says Ivo Distelbrink, EVP and head of Asia Pacific at Fiserv. "Financial institutions in India are undergoing rapid digital transformation, and have further accelerated their digital agenda during the current pandemic. Fiserv stands ready to provide the right combination of digital capability, infrastructure, personnel and security to help our clients adapt, differentiate and operate more efficiently."

In a world moving faster than ever before, Fiserv helps clients deliver solutions in step with the way people live and work today – financial services at the speed of life. Learn more at fiserv.com.

About Federal Bank

Federal Bank (NSE: FEDERALBNK) is a leading Indian private sector bank with a network of 1,263 branches and 1,937 ATMs/Recyclers spread across the country. The Bank’s total business mix (deposits + advances) stood at ? 2.76 Lakh Crore as at March 31, 2020 and it has earned a net profit of ? 1,543 Crore for FY20. Capital Adequacy Ratio (CRAR) of the Bank, computed as per Basel III guidelines, stood at 14.35%. Federal Bank has its Representative Offices at Dubai and Abu Dhabi that serve as a nerve centre for Non Resident Indian customers in the UAE. The Bank also has an IFSC Banking Unit (IBU) in Gujarat International Finance Tec-City (GIFT City). Federal Bank is transforming itself, keeping its principles intact, into an organization that offers services beyond par. It has a well defined vision for the future as a guidepost to its progress.

About Fiserv

Fiserv, Inc. (NASDAQ: FISV) aspires to move money and information in a way that moves the world. As a global leader in payments and financial technology, the company helps clients achieve best-in-class results through a commitment to innovation and excellence in areas including account processing and digital banking solutions; card issuer processing and network services; payments; e-commerce; merchant acquiring and processing; and the Clover® cloud-based point-of-sale solution. Fiserv is a member of the S&P 500® Index and the FORTUNE® 500, and is among FORTUNE World’s Most Admired Companies®. Visit fiserv.com and follow on social media for more information and the latest company news.

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>>> Apple Isn’t Just a Tech Stock. It’s a Play on Payments.


Barron's

by Daren Fonda

Aug. 12, 2020


https://www.barrons.com/articles/apple-isnt-just-a-tech-stock-its-a-play-on-payments-51597254156?siteid=yhoof2&yptr=yahoo


If you don’t own shares of Apple for its iPhones, iPads, wearables, or services, here’s one other reason to hold the stock: It’s becoming a player in fintech.

Apple (ticker: AAPL) is making inroads into financial services with its recently launched credit card, co-branded with Goldman Sachs Group (GS). Apple Pay is gaining traction as more consumers use their phones to pay for purchases in stores, avoiding handling cash in the pandemic. Indeed, Apple owns the platform and device that millions of people are increasingly using to send money and conduct e-commerce—making it an emerging competitor in financial services.

“I own Apple primarily because they’re becoming a large player in the payments space,” says Dave Ellison, manager of the Hennessy Large Cap Financial Fund (HLFNX), which has Apple as a top-10 holding. “Apple controls the phone and you want to buy stocks where business happens on the phone.”

Apple is one of several financial technology stocks that Ellison owns in his fund. His top 10 holdings consist almost entirely of fintech: PayPal (PYPL), Square (SQ), Visa (V), Mastercard (MA), and payment-processing firm Fidelity National Information Services (FIS). Only one big commercial bank, Citigroup (C), makes his list.

“I like the companies that are moving money around, rather than the guys that are buying and selling money,” Ellison said in an interview, referring to banks, whose primary business is taking deposits and making loans.

Fintech stocks aren’t for the value-minded. PayPal, one of the year’s hottest stocks, trades at 42 times estimated 2021 earnings. Square, another superstar, goes for 118 times. Visa and Mastercard haven’t performed as well this year—partly because transaction volumes are down and cross-border revenues have fallen sharply—but they still fetch 32 and 38 times, respectively. Apple is at 28 times estimated 2021 profits, and Fidelity National goes for 21 times forward earnings.

But steep valuations aren’t a deal breaker for Ellison, partly because he doesn’t see better alternatives in the financial sector. While he owns shares of large commercial banks, including Citi, JPMorgan Chase (JPM), and Bank of America (BAC), he calls them portfolio filler. The big banks have to worry about the credit cycle, Federal Reserve policy on interest rates, regulatory and Congressional oversight, and the yield curve, Ellison says. “If I own a PayPal or Square, I don’t have to worry about that.”

A major headwind for banks now is the Fed’s growing control over financial markets. The Fed’s balance sheet is nearly $7 trillion, up from $4.5 trillion in early 2015. And it now includes everything from mortgage-backed securities to repurchase agreements, corporate bonds, exchange-traded funds, and assets held through its Main Street Lending Program.

Banks are directly affected by the size of the Fed’s balance sheet, rate decisions, asset purchases, and other policy actions. With rates being held at record lows, bank lending margins are being compressed. Banks are also reluctant to lend to consumers and businesses, partly because the U.S. could be entering a downturn in the credit cycle, pressuring the value of mortgage loans and other assets on their books.

“The banks are all in the same bucket, making loans, taking deposits on the margins, there’s no difference with them, and there are so many of the stocks that it dilutes the real benefit of owning the stocks,” Ellison says.

Fintech stocks aren’t immune to these issues, but they are far less directly affected, acting as the conduits and rails of the system. The stocks benefit from scarcity value and the tailwind of e-commerce gaining traction in the pandemic economy. The risk is that valuations are unforgiving: They would fall hard and fast if growth slows.

That’s a bet Ellison is willing to take. “I’m not really concerned about Square’s valuation,” he says. “The payment processors are the runway to the future for equity performance. The equity value in balance-sheet companies like banks is just not there anymore.”

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Jack Henry & Associates - >>> 3 Top Stocks That Aren't On Wall Street's Radar


Some of the top stocks to own aren't the ones that make for splashy headlines.


Motley Fool

by James Brumley

Aug 18, 2020


https://www.fool.com/investing/2020/08/18/3-top-stocks-that-arent-on-wall-streets-radar/


How do you find stocks to buy? Is your approach a from-the-ground-up process rooted in results that narrows a wide list of names down until you're only left with the best of the best? Or do you gravitate toward the media's most-watched and most-discussed stock names and follow the crowd? The latter happens more often than you think.

With that as the backdrop, here's a closer look at Jack Henry & Associates (NASDAQ:JKHY), Generac Holdings (NYSE:GNRC), and Ciena (NYSE:CIEN) -- three prospective purchases that aren't on Wall Street's radar but that have the right stuff for potential investment all the same.


1. Businesses just can't quit Jack Henry

Jack Henry & Associates isn't just a name that's off Wall Street's radar. It's a name most investors may have never even heard of. The $15 billion software company helps retailers process payments, helps banks manage their financial details, and even has solutions for factories, insurers, and healthcare outfits. It's likely you've benefited from its wares without even realizing it.

It's an arena that includes higher-profile players like Visa, ServiceNow, and DocuSign, just to name a few. Software-as-a-Service (SaaS) has exploded in recent years, and the market is quick to fall in love with an organization that promises to revolutionize the idea with the product or service the world didn't know it was missing. That's not Jack Henry. It's been around for decades and has carved out a nice niche for itself by doing things that were fairly predictable.

That low profile, however, may ultimately be working to its advantage now. Its software may be such an integral part of its customers' daily routines that they can't afford to stop using it now. Jack Henry & Associates' revenue for the quarter ending in March was up 13% year over year, despite the COVID-19 headwind that was in place by the time the quarter ended. Sales and earnings growth is expected to slow for this full year, and next, but growth's in the cards all the same in an environment that's proving tough for plenty of companies.


2. Generac is powering up

A top tech name is one thing it isn't. But don't discount the potential of an old-school industrial name like Generac Holdings that solves an ever-expanding problem.

Generac makes a variety of goods, ranging from portable liquid pumps to pressure washers to mobile heaters. Its claim to fame, however, is electricity generators for the home and institutional markets.

The need for such solutions hasn't always been apparent. In recent years, though, the failings of the utility industry have prompted the search for self-sufficiency. For instance, the Camp Fire wildfires that ravaged more than 150,000 acres and destroyed nearly 19,000 structures in California in 2018 also caused power outages in undamaged areas. Some power customers in New York and New Jersey have also experienced the inconvenience of power outages related to this year's uncharacteristically hot temperatures that were exacerbated by damage done by Tropical Storm Isaias. Hurricanes hitting the United States are not only seemingly more frequent, but more powerful than they've been in the past, knocking out electrical service to greater numbers of customers, and for longer.

End result? The few analysts that cover Generac Holdings are collectively calling for a 7% improvement in this year's top line despite the impediment of the coronavirus contagion, and are modeling a reacceleration of top-line growth to a pace of nearly 11% next year. That growth will extend an unfettered growth streak that goes all the way back to 2013.


3. Ciena is a 5G centerpiece

Finally, add Ciena Corp. to your list of stocks to think about even though most folks on Wall Street aren't.

That's not to suggest Wall Street (or Main Street, for that matter) is entirely unaware of the $9 billion organization. About 20 analysts follow it and collectively rate it at a little bit better than a buy. That's just shy of deeming it a strong buy. The consensus price target of $61 is also a tad above the stock's present price of just under $60 per share. The pros hardly hate the stock.

They are arguably not paying enough attention to it, though, causing investors to do the same.

See, this networking and wireless-tech company is quietly responsible for helping to shape the 5G landscape as we know it. It's understood for some time that for 5G speeds to be possible in the number of deployments planned, conventional connectivity like fiber optics has to be part of the mix. That's why Ciena has been working on the solutions that fellow Fool Harsh Chauhan described last month, including 5G-optimized routers and 5G network automation software that serve as the backbone of a product line Ciena simply refers to as Adaptive IP.

Middlemen have already taken notice of Ciena's solutions. Earlier this month, Windstream announced it had tapped Ciena to supply the backbone of its planned National Converged Optical Network, or NCON. More such deals are apt to be in the cards too. Before the COVID-19 pandemic upended the world, 2020 was frequently touted as the year 5G would become the new normal in terms of wireless broadband speeds. We're now starting to see glimmers of a renewed effort to make that happen.

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>>> Jack Henry & Associates, Inc (JKHY). provides technology solutions and payment processing services primarily for financial services organizations in the United States. The company offers information and transaction processing solutions for banks ranging from community to multi-billion-dollar asset institutions under the Jack Henry Banking brand; core data processing solutions for various credit unions under the Symitar brand; and specialized financial performance, imaging and payments processing, information security and risk management, retail delivery, and online and mobile solutions to financial institutions and corporate entities under the ProfitStars brand. It also provides a suite of integrated applications required to process deposit, loan, and general ledger transactions, as well as to maintain centralized customer/member information; and complementary products and services that enable core bank and credit union clients to respond to evolving customer/member demands. The company's Jack Henry Banking business brand offers SilverLake, a robust primarily designed for commercial-focused banks; CIF 20/20, a parameter-driven, easy-to-use system for banks; and Core Director, a cost-efficient system with point-and-click operation. Its Symitar business brand provides Episys, a robust designed for credit unions; and CruiseNet, a cost-efficient system designed primarily for credit unions. In addition, the company offers electronic payment solutions; purchases and resells hardware systems, including servers, workstations, scanners, and other devices; and provides implementation, training, and support services. Jack Henry & Associates, Inc. was founded in 1976 and is headquartered in Monett, Missouri.

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>>> Repay Holdings Corporation (RPAY) provides integrated payment processing solutions to industry-oriented markets. Its payment processing solutions enable consumers and businesses to make payments using electronic payment methods. The company offers a range of solutions relating to electronic payment methods, including credit and debit processing, automated clearing house processing, and instant funding. It provides payment processing solutions to customers primarily operating in the personal loans, automotive loans, receivables management, and business-to-business verticals. The company sells its products through direct sales representatives and software integration partners. Repay Holdings Corporation was founded in 2006 and is headquartered in Atlanta, Georgia. <<<

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Visa, Amazon - >>> 2 Robinhood Stocks to Buy and Hold Forever


These companies from the site's top 100 have strong moats and long-term growth prospects.


by Will Ebiefung

Aug 25, 2020


https://www.fool.com/investing/2020/08/25/2-robinhood-stocks-to-buy-and-hold-forever/


Long-term investing is the key to success in the stock market. It's a hard lesson for many new investors to learn -- especially on Robinhood, where low-quality penny stocks can often steal the limelight. Fortunately, Robinhood investors are also high on some stocks that are set up for sustainable success because of their large competitive moats and long-term growth drivers.

The first I'm highlighting today is Visa (NYSE:V), the global payments processor that is a rock-solid bet in this increasingly consumption-driven economy. The second is Amazon (NASDAQ:AMZN), the e-commerce giant that's pivoting toward cloud computing and healthcare. Both companies are listed in Robinhood's top 100 with analyst buy ratings above 80%.

Visa

In retail electronic payments, Visa enjoys undisputed market leadership in the United States through its ubiquitous branded debit and credit cards. With household consumption making up 68% of the country's GDP, Visa stock is an investment in the long-term strength of the American economy. But the investment thesis here doesn't stop with America. The company's international expansion and the increasing prevalence of e-commerce will also be significant growth drivers.

Visa's latest earnings release, which covers the quarter ending June 30, reflects the full impact of the coronavirus pandemic, which dramatically reduced consumer spending due to lockdowns and travel restrictions in the U.S. and internationally. Net revenue fell 17% on lower transaction volume, and earnings fell 22% to $1.07 per share.

But Visa is poised to bounce back. Consumer spending is rebounding as countries relax their restrictions. And online shopping, a major driver of credit and debit card use, remains elevated. Management also has a wide array of projects to expand Visa's footprint outside North America and Europe.

Recently, Visa started working with Facebook to introduce a new payment feature on WhatsApp in Brazil that will let users purchase items or send money to family and friends through the popular messaging app. The company has also renewed its partnership with OCBC Bank, Singapore's second-largest debit issuer.

Amazon

Amazon has evolved from an online bookseller into a massive e-commerce platform. The company's market dominance and compelling pivot to cloud computing and healthcare make it another popular Robinhood stock that will stand the test of time. And unlike Visa, Amazon's latest quarterly results showed phenomenal performance.

Net sales jumped 40% to $88.91 billion while operating income soared 89% to $5.84 billion due to increased stay-at-home shopping during the pandemic. Amazon's cloud computing service, Amazon Web Services, made up $3.36 billion (58%) of the company's operating income and is poised for continued growth due to the megatrend of business computing moving from traditional data centers to the public cloud.

Amazon is also making an aggressive push into healthcare, an arguably limitless industry where it may have a competitive edge because of its extensive logistics infrastructure and investments into artificial intelligence.

In August, Amazon's India division launched a pilot pharmacy delivery program in the city of Bengaluru (also known as Bangalore) amid the pandemic. Amazon is also making significant healthcare investments in the United States through the $753 million acquisition of drug distributor PillPack in 2018. And it's reportedly working on a vaccine for the common cold, an illness that costs the U.S. economy at least $40 billion a year.

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Bill.com Holdings (BILL) - >>> 19 of the Best Stocks You've Never Heard Of

Kiplinger

by Jeff Reeves

6-23-20


https://www.kiplinger.com/slideshow/investing/t052-s001-19-of-the-best-stocks-youve-never-heard-of/index.html


Bill.com Holdings

Sector: Information technology
Market value: $6.1 billion
Dividend yield: N/A

Silicon Valley firm Bill.com Holdings (BILL, $81.86) does exactly what the name implies: It offers payments processing services such as ACH transfers, virtual credit cards and digital checks for small businesses.

It's a much-needed service that is particularly important in 2020 as companies have to figure out how to do business digitally. And Bill.com is sure to stick with many of its newer clients who are proving out the value of this web-based payments portal over their old accounting methods.

At least, that's what Wall Street seems to think.

Increased adoption rates and better monetization across the start of the year has analysts quite pleased; Piper Sandler, Needham, KeyCorp, BofA and Jefferies all labeled the stock a Buy or boosted their price targets in May, suggesting it's one of the best stocks to buy among mid-caps.

Those positive forecasts came on the heels of a stellar earnings report that included 46% revenue growth as subscripts and transactions surged 63% over the prior year. In other words, the recent optimism is backed by impressive numbers.

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>>> Bill.com Holdings, Inc. (BILL) provides cloud-based software that digitizes and automates back-office financial operations for small and midsize businesses worldwide. It offers artificial-intelligence (AI)-enabled financial software platform. The company provides software-as-a-service, cloud-based payments products, which allow users to automate accounts payable and accounts receivable transactions, as well as enable users to connect with their suppliers and/or customers to do business, manage cash flows, and enhance office efficiency. It also offers onboarding implementation support, as well as ongoing support and training services. The company serves customers operating in the accounting and accounting software companies, and financial institutions. Bill.com Holdings, Inc. was founded in 2006 and is headquartered in Palo Alto, California.

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>>> American Express JV gets final approval to launch operations in China


Reuters

6-13-20


https://www.reuters.com/article/us-china-finance-pboc-idUSKBN23K07K


SHANGHAI (Reuters) - China’s central bank has given the final nod to a network clearing license for an American Express (AXP.N) joint venture, allowing it to be the first foreign credit card company to launch onshore operations in China.

The approval comes against a backdrop of high Sino-U.S. tensions, with disagreements over trade and Beijing’s imposition of a national security law for Hong Kong.

The People’s Bank of China (PBOC) said in a statement Saturday that it had approved the license for Express (Hangzhou) Technology Services Co., a joint venture between American Express and LianLian DigiTech Co Ltd. It said the move reflected China’s continued opening up of its financial industry.

The PBOC said in January that it had received American Express’s application to start operations in China.

In a statement, American Express said it expects to begin processing transactions later this year.

“This approval represents an important step forward in our long-term growth strategy and is an historic moment, not only for American Express but for the continued growth and development of the payments industry in mainland China,” Stephen J. Squeri, chairman and chief executive officer of American Express, said.

The PBOC has also approved an application by Mastercard’s (MA.N) China joint venture to conduct bank card clearing operations in the country, but the company has not yet received a network clearing license.

Card giant Visa (V.N) submitted its application in early 2018 and is still awaiting approval.

China is opening its local currency payments market to foreign companies after a decade of lobbying by foreign players seeking direct access to what is expected to soon become the world’s biggest bank card market.

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>>> 4 ETFs For Investing In FinTech And The Payments Industry


Nasdaq.com

by Prableen Bajpai

JUL 8, 2019


https://www.nasdaq.com/articles/4-etfs-for-investing-in-fintech-and-the-payments-industry-2019-07-08


Technological advancements are disrupting various industries, challenging traditional players to make timely adaptions in order to remain relevant. The payments industry is no exception. The innovations based artificial intelligence, cloud and biometrics coupled with demand for fast and secure cashless transactions, use of smart devices, internet penetration, increasing adoption of e-commerce and changing consumer demographics is bringing in a wave of digital transformation.

Here’s an overview of the payments industry and a look at the exchange traded funds (ETFs) providing an investment opportunity in this space.

Global revenue from payments surpassed $2 trillion in 2018 and is set to approach $3 trillion within the next five years. While cash continues to be king, the potential for digital payments is immense. The Digital Money Index of 84 countries that track the development of digital money readiness shows an improvement of 5.5% over the last five years.

China continues to lead the movement away from cash with the share of electronification increasing by more than ten-fold over the last five years, according to a McKinsey report. In terms of regions, North America is the first region to execute more than half of its transactions electronically. India is pushing its initiative dubbed as ‘Digital India’ which highlights “faceless, paperless, cashless” as one its professed roles.

Several studies recommend the potential benefits of digitized payments, ranging from time savings among consumers, increased sales revenues among businesses, reduced government administrative costs and higher tax collections. A research by Citi shows that “a 10% increase in digital money adoption by countries (constituting the index) would deliver a $150 billion lift in consumer spending, which raises business revenues, while digital payments also cut cash handling costs for services and businesses by $100 billion. Meanwhile, governments pocket $100 billion more in taxes and savings of $200 billion by digitizing disbursements. In total, up to $1 trillion of new flows would enter the formal economy.”

Here’s a look at some exchange traded funds which invest in companies that are a part of the transformation that’s underway.


The ETFMG Prime Mobile Payments ETF (IPAY) is a one of the oldest exchange traded funds providing exposure to stocks in the payments industry which is experiencing a shift from credit card and cash transactions to digital and electronic methods. The fund was launched in 2015 and has Prime Mobile Payments Index as its underlying benchmark index. In terms of geographies, the ETF has majority exposure to the U.S. with smaller exposure towards France, Netherlands, Germany and Japan. The ETF has a portfolio of around 40 stocks with the top ten holdings adding up to 48.62%.

The top ten holdings in its portfolio are:

Mastercard
Visa
American Express
PayPal Holdings
Fidelity National Information
Worldpay
FinServ
Square
First Data
Discover Financial Services


The ETF has $680.43 million as assets under management, 0.75% as expense ratio and has posted 35.14% year-to-date (YTD) returns.


Tortoise Digital Payments Infrastructure Fund (TPAY) is one of the recent ETFs, launched in 2019 providing access to the payments space. The ETF tracks the Tortoise Global Digital Payments Infrastructure Index represents 53 companies which are a prominent part of the global digital payments landscape. The ETF has $4.58 million as assets under management and an expense ratio of 0.40%. In the last three-months, it has given 8.93% returns.

The top holdings have a 45.62% allocation and comprise of companies such as:

Fleetcor Technologies
Square
First Data
FinServ
Worldpay
Fidelity National Information
American Express
MasterCard
Total System Services
Wirecard


Next is the Global X FinTech ETF (FINX). Launched in 2016, the ETF seeks to invest in companies that are on the leading edge of the emerging financial technology sector and are looking at industries such as insurance, investing, fundraising, and third-party lending through unique mobile and digital solutions. The ETF tracks the Indxx Global Fintech Thematic Index. The country-wise break-up reflects 70% exposure to the U.S., followed by countries such as Switzerland, Germany, Australia, New Zealand, Demark and Brazil.

With $415.58 million as assets under management and an expense ratio of 0.68% as expense, the fund has delivered 33.82% YTD returns. The ETF has close to 40 stocks in its portfolio with top ten holdings that combine to almost 55% of the portfolio.


First Data
FinServ
Fidelity National Information
Wirecard
Intuit
Square
PayPal Holdings
Adyen
Guidewire Software
Black Knight


ARK Fintech Innovation (ARKF) is another ETF has been launched in 2019. ARKF is an actively managed ETF with a focus on companies engaged in the theme of fintech innovation. The ETF holds a portfolio between 35-55 stocks with a large-cap bias. The ETF has posted 4.93% YTD returns. It has $72.09 million as assets under management and an expense ratio of 0.75%.

The top ten holdings of the ETF are:

Square
Tencent
Apple
Zillow
com
Alibaba
PayPal
Rakuten
LendingTree
Line


Final Word

Global investment in financial technology ventures more than doubled in 2018, to $53.3 billion. A major part of it came for a single record funding round worth $14 billion in Ant Financial, best known for its mobile payments service Alipay.

Juniper Research projects that the number of people using digital wallets touch nearly 50% of the world’s population by 2024, pushing wallet transaction values up by more than 80%. Overall, the global digital payments market is expected to reach $7.64 trillion by 2024, recording a CAGR of 13.7% (2019-2024).

With the advancement in payments industry and colossal scope for growth, these ETFs are a favorable way to be a part of the digital journey, which has begun across the globe.

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Visa, Mastercard - >>> 3 Stocks the World's Best Investors Just Bought

Want to invest like Buffett or Einhorn? Check out what they're buying.



Motley Fool

John Bromels

May 22, 2020


https://www.fool.com/investing/2020/05/22/3-stocks-the-worlds-best-investors-just-bought.aspx


If you want to invest like a pro, there's no better way to learn than by watching the pros. On May 15, some of the world's best investors -- including the "Oracle of Omaha," Warren Buffett himself -- had to file their quarterly 13F forms with the Securities and Exchange Commission.

The 13F form is a quarterly statement of stock holdings that's required of all institutional investment managers with assets of $100 million or more. It offers a window into what top investors have been buying, selling, and leaving alone. And sometimes, these filings contain quite a few surprises.

Here are three stocks that top investors have recently been buying, and some reasons why you might want to do the same.

Banking on banks

It's worth noting that 13F forms have some shortcomings as investment tools. First of all, because they're filed 45 days after the end of a quarter, the trades they contain are at least a month and a half old, and they could be as much as four and a half months old by the time you ever see the data. Another problem: Companies are only required to report their long positions, but may actually be hedging some of those buys with short positions that aren't reported.

That said, it's clear from the 13Fs that there was a lot of focus on the banking industry during the first quarter. That's not surprising, considering that the Federal Reserve cut its benchmark federal funds interest rate to zero, which caused banking stocks to tumble. David Einhorn's Greenlight Capital picked up shares of Goldman Sachs, while Leon Cooperman's Omega Advisors bought JP Morgan Chase, possibly on the cheap after the rate cut.

Buffett, on the other hand, unloaded shares of both. In fact, during Q1, his Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) did a lot more selling than buying. Its biggest buy, though, was also a bank: PNC Financial Services Group (NYSE:PNC). Buffett bought more than 500,000 shares, bringing his total position in the bank to about 9.2 million shares.

What does Buffett like about PNC? Well, he may believe that recently reduced capital and liquidity requirements for big regional banks like PNC will give it a leg up on its Big Bank peers. The opportunistic PNC also has a history of making big acquisitions during downturns, like its 2008 purchase of National City. Rumors are already swirling that PNC is planning something big, and it's possible Buffett wanted to boost his position before it happens.

Buffett's not buying: Better buy Buffett

If Buffett isn't buying right now, what are other big investors doing with their money? Buying Buffett, of course! Or rather, buying shares of Berkshire Hathaway.

Many big funds already hold shares of Berkshire, but several prominent investors picked up additional shares during the first quarter, including Einhorn and Bill Ackman of Pershing Square Capital. And why wouldn't they? Berkshire Hathaway is a reliable business with an excellent track record of success.

Berkshire's core insurance businesses -- which include GEICO and MedPro Group -- churn out gobs of reliable cash, which Buffett and his lieutenants can then invest in stocks of other companies ... or in just buying companies outright. Berkshire directly owns numerous stalwart businesses including Duracell, Dairy Queen, and Fruit of the Loom. It also owns big stakes in other big, reliable companies like Coca-Cola and Apple.

In uncertain economic times, Berkshire looks like a safe place to park your money.

Plastic without the plastic

Even though Buffett didn't pick up any shares of payment processor Visa (NYSE:V) last quarter, Berkshire already owns more than 10.5 million shares of the company. Add to that the company's 4.9 million shares of Mastercard and the nearly 13 million shares it owns of American Express, and it's safe to say that Buffett is a fan of payment processing companies.

Other top investors, though, grabbed plenty of Visa stock recently, including Kenneth Griffin's Citadel Advisors, which added more than 1.5 million shares to its stake, and Stephen Mandel's Lone Pine Capital, which opened a new position of 3.3 million shares.

With hundreds of millions of Americans largely staying at home due to the coronavirus, e-commerce sales have exploded, even in categories like groceries and prescription drugs, which up until now had primarily been purchased through face-to-face transactions. Since you can't use cash or written checks for e-commerce, payment processors like Visa have seen their e-commerce transactions skyrocket, even as traditional "card-present transactions" have declined.

"We're seeing a massive acceleration toward e-commerce adoption," said Visa Chief Product Officer Jack Forestell in a recent interview with MarketWatch. If consumers who have been forced to try e-commerce or use it in ways they haven't previously done decide they like its convenience, they may keep shopping that way after social-distancing mandates are eased and businesses reopen, which would benefit payment processors like Visa.

Although Visa's business is likely to suffer in the short term, it looks like a long-term buy.

Be your own Buffett

Blindly buying the same stocks as master investors like Buffett, Einhorn, and Ackman isn't necessarily going to make you a top investor -- especially given the time lag between when they act and when you can see what they've bought. But studying their picks can help you figure out what industries might be promising places to put your money and which stocks to keep on your watch list.

Right now, regional banks like PNC, stalwarts like Berkshire Hathaway, and payment processors like Visa all look like smart bets for your portfolio too.

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>>> Play These ETFs on Visa-Plaid Deal


Zacks

by Sanghamitra Saha

January 14, 2020


https://finance.yahoo.com/news/play-etfs-visa-plaid-deal-193007795.html


Visa Inc. V is set to take over U.S.-based fintech company Plaid in a deal worth $5.3 billion — almost double the start-up’s last private valuation. Plaid raised $250 million in a 2018 Series C funding round that set its valuation at $2.7 billion. The Visa-Plaid deal is expected to be finalized in the next three to six months, pending regulatory approval.

“Plaid’s API software lets start-ups connect to users’ bank accounts.” Plaid has been working with Venmo, a mobile payment service owned by PayPal PYPL, mobile investing app Robinhood and cryptocurrency exchanges Coinbase and Gemini, per CNBC.

Plaid’s customer base doubled from 2017 to 2018 and has expanded to the U.K. and Canada, per CNBC. As of December 2019, Plaid said 25% people in the United States with bank accounts have connected to the fintech company through an app.

The start-up acquired Quovo two years ago to expand its presence beyond banking, and step into broader financial services and investments. The line of business makes it clear why Visa, which operates retail electronic payments networkglobally,chose Plaid as a compelling acquisition candidate.

Visa CEO said Plaid has been seeing a CAGR of about 100% since 2015. The deal would prepare Visa for the technological disruption in the next decade. Visa also expects the deal to inject as much as 100 basis points to net revenues by 2021.

Visa’s shares 0.81% on Jan 13 and also added gains after hours. However, Visa has a Zacks Rank #3 (Hold) and an ESP of -1.08%. The negative ESP lowers chances of a beat in the to-be-reported earnings, slated to be released on Jan 29.

Investors, who want to bet on the Visa-Plaid deal but are having second thoughts due to negative ESP, may play the below-mentioned Visa-heavy ETFs. A basket approach always minimizes stock-specific risks.

iShares U.S. Financial Services ETF (IYG)

Visa takes the second spot in the fund with about 9.79%. The fund has a Zacks Rank #3 (read: Should You Bet on Bank ETFs Before Earnings Release?).

ETFMG Prime Mobile Payments ETF (IPAY)

Visa takes the fourth position in the fund with about 6.05% exposure (read: ETFs to Invest in Mobile Payments and Drone Economy).

iShares U.S. Financials ETF (IYF)

The Zacks Rank #3 fund invests about 5.64% in the stock, taking the third position.

SPDR SSGA Gender Diversity Index ETF (SHE)

Visa takes the top spot in the fund with about 5.28% focus.

Technology Select Sector SPDR Fund (XLK)

The Zacks Rank #1 (Strong Buy) fund puts 5.19% in Visa (read: Apple at All-Time High, Poised for an Upbeat Q1: ETFs to Benefit).

Invesco S&P 500 Quality ETF (SPHQ)

The fund invests about 5.14% in the stock (read: Should You Invest in Factor & Smart Beta ETFs?).

iShares Edge MSCI USA Momentum Factor ETF (MTUM)

Visa takes the second spot in the fund, with about 5.14% exposure (read: Bet on These Momentum ETFs to Gain From Wall Street's Rally).

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>>> Don’t Leave Fintech ETFs Out of the Best New 2019 ETFs


ETF Trends

December 20, 2019


https://finance.yahoo.com/news/don-t-leave-fintech-etfs-170905787.html


The conversation about what makes new ETFs successful almost always leads to dollars, meaning assets under management, but that topic should be discussed in relative terms. For instance, some rookie ETFs addressing refined market segments or disruptive niches can take a while to catch investors' eyes.

On that basis, the ARK Fintech Innovation ETF (ARKF) , which debuted in February, is off to a stellar start. The first actively managed ETF in the fintech space, ARKF already has $72 million in assets under management.

ARKF invests in equity securities of companies that ARK believes are shifting financial services and economic transactions to technology infrastructure platforms, ultimately revolutionizing financial services by creating simplicity and accessibility while driving down costs.

ARKF can hold between 35 and 55 stocks and as of Dec. 19, the fund was home to 43 names, led by Square (SQ) and Apple (AAPL) with that duo combing for over 15% of the fund's weight. Integral to the ARKF thesis is the fact that ARK sets credible standards for defines a fintech investment.

“A company is deemed to be engaged in the theme of Fintech innovation if (i) it derives a significant portion of its revenue or market value from the theme of Fintech innovation, or (ii) it has stated its primary business to be in products and services focused on the theme of Fintech innovation,” according to the issuer.

Primed For Growth In 2020

ARK is higher by nearly 11% in the current quarter, indicating it could be ready for more upside in 2020. Fortunately, that thesis is bolstered by credible fundamental factors.

“The global fintech market was valued at about $127.66 billion in 2018 and is expected to grow to $309.98 billion at an annual growth rate of 24.8% through 2022,” according to a recent Business Research report.

ARKF's active management style has been a boon as the fund has averted lagging fintech lenders, such as Elevate Credit (ELVT), Enova (ENVA), FlexShopper (FPAY), LendingClub (LC), and OnDeck Capital (ONDK) , Each of those names was spotted trading below their initial public offering prices earlier this month.

Likewise, if ARK's team sees opportunities in those names or areas of the fintech market, it can exploit those odds more effectively than index-based rivals because ARKF isn't constrained by a benchmark.

In terms of fintech niches on more solid ground, the booming mobile payments could again be a catalyst for ARKF in 2020.

Payments are increasingly going digital with a number of start-ups seeing venture capital seed money to help facilitate online purchases. According to the research company Pitchbook, data shows that investors put $18.5 billion into the payment processing sector in 2018--an increase of five times the previous year.

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Mastercard - >>> 3 Stocks to Hold for the Next 20 Years


Investors need to look for companies with a track record of stability and resilience as key attributes.


Motley Fool

Royston Yang

May 21, 2020


Ideally, as an investor you should consider holding stocks over years, even decades. The magic of compounding will provide you with a substantial nest egg to enjoy your golden years, while a growing income stream from dividends provides a hedge against inflation. However, it's important not to buy and own the wrong companies. Doing so will result in poor or even negative returns and may destroy your capital over time.

So, what attributes do great companies have? They should have a strong competitive advantage, market share, and a high level of resilience. These attributes will allow them to weather crises over the years and yet emerge unscathed or even stronger. Companies with such attributes are usually large, with a long track record of growth and stellar financial performance. Size confers an advantage as it allows them to dominate the industry they are in and continue to lead the pack.

Here are three examples of stocks that you can hold for the next two decades.


Mastercard

Mastercard (NYSE:MA) is a market leader in the financial services and payments industry. The company acts as an intermediary between banks and end customers by providing a secure platform for transaction and payments processing. For the first quarter of the fiscal year 2020, the company processed a gross dollar volume of $1.56 trillion worth of transactions, up 8% year over year. The number of cards in circulation grew 5% year over year to 2.6 billion.

Mastercard is a market leader in cashless transactions. With more countries modernizing and shifting to paperless transactions, the future looks bright for the company despite the short-term effect of the COVID-19 pandemic. Because of the pandemic, the company has temporarily suspended its share repurchase program. Dividend per share has been maintained at $0.40 per quarter as the business continued to generate strong operating cash flow of $1.9 billion. With strong tailwinds for its business and a robust balance sheet, Mastercard is a company you can own for the long term without losing sleep.


Nike

Nike (NYSE:NKE) is a market leader in the design and manufacture of sports footwear and apparel. The company has retail stores located around the globe and reported growth in revenue and net income of 7% and 10% respectively for the first nine months of the fiscal year 2020.

Though Nike has had to temporarily close stores in China, North America, and other parts of the world due to COVID-19-related lockdowns, the company has managed to tap on its digital sales platform to sell its products. Digital sales were up 36% year over year during the quarter , and CEO John Donahoe has reiterated the company's commitment to invest in the Nike Direct online platform and the Nike app. Digital is the company's fastest-growing channel, and owned and partnered digital sales represent more than 20% of overall revenues.

Nike is also famous for its innovation in running shoes. A few months ago, the new Nike ZoomX Vaporfly NEXT% was touted as one of the best running shoes ever made, with people going so far as to claim it gives athletes an unfair mechanical advantage. The company has just devised a new self-lacing shoe called HyperAdapt 1.0 that electronically adjusts to the contours of your foot and offers style in addition to comfort.

Investors can rest assured that the company's innovative culture and loyal fan base make the company an attractive one to own for the long term.


American Tower

American Tower (NYSE:AMT) is an owner and operator of a portfolio of roughly 180,000 communication sites that are leased to wireless service providers and communication companies. The company is incorporated as a real estate investment trust and is mandated to pay out 90% of its annual taxable income as dividends.

Over the years, American Tower's dividend has grown impressively by around 22.8% per annum over the last seven years, from $0.90 per share in 2012 to $3.78 in 2019. The company has achieved this through acquisitions of cell towers in emerging markets and by increasing the number of tenants using the same tower (thereby improving the return on investment for each tower).

With the expected investment by telecommunication companies in the development of 5G network technology, American Tower can expect an extended period of solid growth. This catalyst can allow the company to grow for many more years, and investors can look forward to continually growing dividends.

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>>> Some Globetrotting Helps This Fintech ETF


ETF Trends

February 18, 2020


https://finance.yahoo.com/news/globetrotting-helps-fintech-etf-171057934.html


The fintech theme is soaring to start 2020 and one of its standouts is the ARK Fintech Innovation ETF (ARKF) , which is higher by nearly 13% year-to-date after vaulting to another record high last Friday.

ARKF invests in equity securities of companies that ARK believes are shifting financial services and economic transactions to technology infrastructure platforms, ultimately revolutionizing financial services by creating simplicity and accessibility while driving down costs .

One potent ingredient with ARKF is that its active management style doesn't confine the ETF to the domestic fintech space. Rather, the fund features ample international exposure, which is important considering the broad adoption and reach of fintech outside the U.S.

Argentina's Mercadolibre (MELI) and Brazil's StoneCo (STNE) , the former of which is a major ARKF component, are among the attractive ex-US fintech names.

Fintech companies looking to carry over their wave of disruption, especially in the online payments space can look to Latin America for potential opportunities. This, in turn, could create interest in fintech-focused ETFs looking to add to their core portfolios of financial disruption companies by looking outside of developed markets.

In Latin America, online payments is still a relatively new concept as opposed to more developed economies where they have become standard fare.

“MELI and STNE are lesser known companies with similar businesses and similar charts. MELI is mostly known as an e-commerce firm — something of a cross between Google and Amazon.com. But the Argentine company is also becoming a financial-service provider by providing loans and financing to millions of small businesses in Latin America,” according to TradeStation.

American Names Help, Too

The payment processing space is seeing a growing number of big bets placed by venture capitalists, which could give financial technology ETFs a boost. It’s a $1.9 trillion industry that the largest tech firms are trying to tap into

“Stocks like Square (SQ) and PayPal (PYPL) not only stand at the crossroads of the new digital economy. They’ve also outperformed the S&P 500 and Nasdaq-100 by a wide margin so far in 2020,” according to TradeStation. “Two Latin American firms, MercadoLibre (MELI) and StoneCo (STNE) make the list as well. That kind of strong price action is a classic sign of investor rotation, a process of large institutions shifting capital into certain industries. The fact it’s happening early in the year is another sign of accumulation by new buyers.”

Square, Mercadolibre and PayPal combine for nearly 20% of ARKF's weight.

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>>> An ETF for Fintech Innovation


MoneyShow

March 10, 2020


https://finance.yahoo.com/news/etf-fintech-innovation-100000061.html


Financial technology, or fintech, is a relatively new and growing part of the market, explains Jim Woods, exchange-traded fund expert and editor of The Deep Woods.

It features interesting companies that transform the way in which we engage in transactions, as well as how financial processes are handled on a business-to-business level. One way to gain exposure to this theme is through the actively managed exchange-traded fund ARK Fintech Innovation ETF (ARKF).

This fund seeks to be on the cutting edge of new technology in this space. According to ARK Invest, fintech innovation companies include those involved in transaction innovations, blockchain technology, risk transformation, frictionless funding platforms, customer-facing platforms and new intermediaries, among other areas.

All these themes, of course, have the potential to create hugely profitable ventures. While the blockchain craze has largely died down, there still are companies that are legitimately engaged with the technology as a source of profit.

Financial technology may be a more interesting theme than companies that have, as was popular a few years ago, simply appended “blockchain” to their names to attract investors.

The largest position in this fund by far is Square (SQ), the maker of small card readers for small businesses. The company’s technology has become ubiquitous over the past few years, and shareholders have profited handsomely.

This fund is up by about 20% over the last year. It currently trades at a small premium to net asset value (NAV), as usual, and has an expense ratio of 0.75%.

With assets under management of just $83 million, this fund falls below my recommended threshold for investment, but its strategy is an interesting one that merits bringing to your attention. ARKF has powered upward since October, leaving its moving averages in the dust.

Top holdings for this fund include Square, Tencent Holdings (TCHEHY), Apple (AAPL), MercadoLibre (MELI), 4.48% and PayPal Holdings (PYPL).

New investment themes for investors to consider are always interesting. If you believe that the frontier of fintech is a promising source of further upside, ARK Fintech Innovation ETF (ARKF) may be a fund worth considering for possible investment.

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>>> How To Cash In On Money's Coming Makeover


Investors Business Daily

MATT KRANTZ

12/19/2019


https://www.investors.com/etfs-and-funds/sectors/fintech-stocks-invest-in-money-cash-technology/?src=A00220&yptr=yahoo


Money is about to get a face-lift. And investors are looking to which fintech stocks will cash in.

Everything about money — from the way it's spent, stored and invested — is up for new forms of digitization. Investors see a massive opportunity.

Nearly $25 billion in venture capital funding poured into financial technology firms this year through the third quarter, says industry tracker CBInsights. The latest deluge of funding comes just one year following a record-breaking $40.6 billion put into the industry in 2018. And this year's haul is more than the $18.8 billion invested in all of 2017.

These are private companies. But leading public fintech stocks are up big too this year. Which fintech stocks let investors play the future of money now?

There are three primary ETFs to help you buy into the public companies leading the fintech charge -

ETFMG Prime Mobile Payments ETF (IPAY) is the largest with assets of $782.8 million.

The ETF owns 40 publicly traded companies at the epicenter of payment services and processing. The ETF's largest holding, at 7.5%, is Global Payments (GPN). The company processes digital, credit card and check payments. It operates not only in North America, but also Europe and Asia.

Shares of Global Payments are up 75% this year as investors applaud its robust growth. The company's revenue jumped more than 29% in the third quarter to $1.1 billion. Analysts are looking for the company's revenue to grow 62% in 2020 and earnings per share to rise 22% to $7.55.

Such strong fundamentals and chart action explain why Global Payments carries a sky-high 97 IBD Composite Rating.

What makes ETFMG Prime Mobile somewhat unique is its large stakes in credit card processors, says Todd Rosenbluth, director of ETF and mutual fund research at CFRA. The ETF, for instance, puts a more than 18% combined weighting in Visa (V), Mastercard (MA) and American Express (AXP).

The credit card companies have performed strongly this year and are turning into important plays to get into fintech stocks. Visa, the largest company of the three, has seen shares jump 41% this year. The credit card stocks are among the top performers in the S&P 500 this year.

ETFMG Prime Mobile Payments charges 0.75% annually. It's up 41.6% this year through Dec. 17, 2019.

A Narrower Fintech Stock ETF

Another major player in the fintech ETF space is -

Global X FinTech ETF (FINX). The ETF, with assets of $414 million, owns 34 stocks.

The Global X FinTech ETF's largest holding, at 14%, is Fiserv (FISV). Shares of the payment processing provider are up nearly 60% this year.

There are strong fundamentals to back up Fiserv's stock price gains, too. The company's profit this year is on track to rise nearly 30% to $4.02 a share. And in 2020? Analysts are calling for an annual profit of $4.91 a share, up 22% from 2019.

The Global X FinTech ETF charges 0.68% annually. And it's up 35.8% this year through Dec. 17.

Another Approach

ARK Fintech Innovation ETF (ARKF) is a new entrant in the industry. It traces its inception to Feb. 4, 2019. It brings an active selection process to find ways to buy into new products or services "that potentially (change) the way the financial sector works."

The fund is still small, with assets of roughly $82 million. But it's looking to differentiate itself from the larger options. The ETF's top holding is payment services provider Square (SQ) at 9.5% of the portfolio. But the ETF adds shares of companies working different angles than other fintech stocks.

For instance, the ETF's second-largest holding after Square is Apple (AAPL) at 6.1%, followed by China's Tencent (TCEHY).

And that's why Rosenbluth, when looking at the fintech ETFs, warns: "Despite similar sounding names what's inside these thematic funds and their performance records in 2019 are quite different."

Dave Nadig, managing director of ETF.com, has a larger warning. He points out these ETFs are limited to publicly traded firms. That's a big drawback in fintech, he says. "The vast majority of interesting fintech companies are still private, so this is probably money chasing already richly valued, public companies," he said.

Three Ways To Play Fintech Stocks

ETF Symbol YTD % Ch. Assets ($ millions) Expense Ratio


ETFMG Prime Mobile Payments ETF IPAY 41.6% 782.8 0.75%

Global X FinTech ETF FINX 35.8% 414.4 0.68%

ARK Fintech Innovation ETF ARKF 18.4% 81.7 0.75%

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>>> Eight Stocks Give Warren Buffett A Headache (They're Not Airlines)


Investor's Business Daily

MATT KRANTZ

05/14/2020


https://www.investors.com/etfs-and-funds/sectors/sp500-stocks-give-warren-buffett-big-headache-they-are-not-airlines/?src=A00220&yptr=yahoo


Warren Buffett finally bailed out on S&P 500 airline stocks. But his portfolio is still full of stocks giving him giant headaches.

Berkshire Hathaway (BRKB) this year lost $1 billion or more, and at least 20%, on eight of its 47 U.S.-listed public holdings like financials Bank of America (BAC) and Wells Fargo (WFC) plus consumer staples stock Coca-Cola (KO). This is according to an Investor's Business Daily review of Buffett's latest holdings data from S&P Global Market Intelligence and MarketSmith. Only stocks primarily listed on U.S. exchanges were included.

Big losses in the famed Buffett portfolio persist even after he unloaded massive airline losers. And it's showing the dangers of chasing after value-priced stocks — the ones Buffett tends to prefer — in this coronavirus market. Learn how to find breakaway growth-stock winners instead on Leaderboard.

Shares of Berkshire Hathaway are down 22% just this year alone, dragged down by a host of lagging stocks. The S&P 500 is only down 13% and the growth-focused Nasdaq 100 is up 2.6%. Buffett alone lost $21.8 billion this year on his 16% stake in the company. No other top individual owner has lost anywhere near that much on an S&P 500 stock this year.

No wonder Berkshire just posted the largest-ever loss by an S&P 500 company.

Warren Buffett Snared By S&P 500 'Value Trap'

Much of Buffett's pain centers around his tilt toward S&P 500 value stocks. It's ironic as "cheap" stocks are supposed to offer safety in downturns with dividends and stability. But that's not happening in the coronavirus stock market.

The Vanguard Value ETF (VTV) is down a crushing 22% this year, nearly identical with Berkshire Hathaway's drop. But growth stocks are faring much better as they are showing more resilience in the coronavirus-inflicted world. The Vanguard Growth ETF (VTV) is down just 1.2% this year.

What's hurting the value stocks group? Exactly the kinds of stocks investors want nothing to do with in a pandemic.

S&P 500 Financials: Still A Pain Point

A trio of financials are now handing Berkshire Hathaway its biggest losses.

Berkshire Hathaway is down $13.6 billion just on one stock this year: Bank Of America. The bank's brutal 41% drop this year hurts as Berkshire Hathaway owns nearly 11% of the company. Wells Fargo is down even more: 58%. That's wiped nearly $11 billion from Berkshire's portfolio. And then there's American Express (AXP), off 37%, costing the portfolio nearly $7 billion.

Now that Buffett sold his airline stocks, the financials are Buffett's biggest problem. Six of Berkshire's worst eight losses are all financials. Savvy investors can actually make money betting against banks Buffett owns, like Wells Fargo.

Berkshire Hathaway holds 17 publicly traded financials. That's more than any other sector in the portfolio, says S&P Global Market Intelligence. And Berkshire Hathaway's public holdings in financial stocks account for a third of his portfolio. In contrast, the financials sector accounts for just 13% of the S&P 500 and just 19.5% of S&P 500 value indexes.

Being heavy on S&P 500 financials is a big drag for Buffett and other value investors. The Financial Select Sector SPDR ETF (XLF) is down 33% this year. That's the second-worst loss of the 11 sectors after only the energy sector's 40% wipeout. And that's saying something.

Not Even Coke Is Giving Buffett A Smile

Consumer staples are supposed to shine in recessions. Packaged foods gain popularity when money's tight. One 69-year-old actually scored more than $100 million on Campbell Soup stock this year. The Consumer Staples Select Sector SPDR ETF (XLP) is down this year 9.4%, holding up better than the S&P 500.

But no such luck with Buffett's favorite consumer staples stock: Coca-Cola. The beverage maker is down twice that of the sector, 21%, this year. Buffett owns 9% of the company so the drop bubbles into a $4.6 billion loss this year.

And unlike other consumer staples companies seeing bumps in their business, Coke's earnings are predicted to fall 11% this year, says S&P Global Market Intelligence. No wonder it sports a low 66 IBD Composite Rating. Compare that with the 99 Composite Rating of rival beverage maker, Monster Beverage (MNST), which is a growth stock. Monster shares are up 2.5% this year.

Certainly, value stocks might return to favor — one day. Large value stocks returned an average 10.37% annually since 1928, says Index Fund Advisors. That edges slightly past the 9.77% annualized gain of the S&P 500.

But do you and Buffett want to bet on them returning anytime soon?

Warren Buffett's Costliest Mistakes This Year

Most big losses are from S&P 500 financials

Company Ticker % Of Company Owned By Berkshire Sector YTD Stock % Ch. Berkshire's YTD Loss ($ Billion) Composite Rating


Bank of America (BAC) 10.9% Financials -40.7% $13.6 42

Wells Fargo (WFC) 8.4% Financials -58.1% $10.8 6

American Express (AXP) 18.8% Financials -37.3% $7.0 62

Coca-Cola (KO) 9.3% Consumer Staples -20.6% $4.6 66

U.S. Bancorp (USB) 10.0% Financials -50.3% $4.5 21

JPMorgan Chase (JPM) 2.0% Financials -39.7% $3.3 44

Bank of New York Mellon (BK) 10.0% Financials -35.4% $1.6 61

General Motors (GM) 5.2% Consumer Discretionary -41.4% $1.11 56

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>>> DocuSign, Inc. (DOCU) provides cloud based software in the United States. The company offers e-signature solution that enables businesses to digitally prepare, execute, and act on agreements. The company sells its products through direct, partner-assisted, and Web-based sales. It serves enterprise businesses, commercial businesses, and small businesses, such as professionals, sole proprietorships and individuals. The company was 2003 and is headquartered in San Francisco, California. <<<

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>>> PayPal Holdings, Inc. (PYPL) operates as a technology platform and digital payments company that enables digital and mobile payments on behalf of consumers and merchants worldwide. Its payment solutions include PayPal, PayPal Credit, Braintree, Venmo, Xoom, and iZettle products. The company's payments platform allows consumers to send and receive payments, withdraw funds to their bank accounts, and hold balances in their PayPal accounts in various currencies. It also offers gateway services that enable merchants to accept payments online with credit or debit cards, as well as digital wallets. PayPal Holdings, Inc. was founded in 1998 and is headquartered in San Jose, California. <<<

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>>> Square, Inc. (SQ) provides, together with its subsidiaries, payment and point-of-sale solutions in the United States and internationally. The company's commerce ecosystem includes point-of-sale software and hardware that offers sellers to payment and point-of-sale solutions. It provides hardware products, including Magstripe reader, which enables swiped transactions of magnetic stripe cards; Contactless and chip reader that accepts Europay, MasterCard, and Visa (EMV) chip cards and Near Field Communication payments; Square Stand, which enables an iPad to be used as a payment terminal or full point of sale solution; Square Register that combines its hardware, point-of-sale software, and payments technology; Square Terminal, a portable payments device that replaces keypad terminals, which accepts various payment types, such as tap, dip, and swipe, as well as prints receipts; and managed payments solutions. The company also offers various software products, including Square Point of Sale; Square Virtual Terminal; Square Appointments; Square for Retail; Square for Restaurants; Square Invoices, Square Online Store; Square Loyalty, Marketing, and Gift Cards; and Square Dashboard. In addition, it offers developer platform, which includes application programming interfaces and software development kits. Further, it provides managed payments, instant transfer, Square Card, Square Capital, and payroll. Additionally, it provides Cash App, which enables to send, spend, and store money; and Weebly that offers customers website hosting and domain name registration solutions. Square, Inc. was founded in 2009 and is headquartered in San Francisco, California.

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>>> 4 ETFs For Investing In FinTech And The Payments Industry


Nasdaq.com

by Prableen Bajpai

JUL 8, 2019


https://www.nasdaq.com/articles/4-etfs-for-investing-in-fintech-and-the-payments-industry-2019-07-08


Technological advancements are disrupting various industries, challenging traditional players to make timely adaptions in order to remain relevant. The payments industry is no exception. The innovations based artificial intelligence, cloud and biometrics coupled with demand for fast and secure cashless transactions, use of smart devices, internet penetration, increasing adoption of e-commerce and changing consumer demographics is bringing in a wave of digital transformation.

Here’s an overview of the payments industry and a look at the exchange traded funds (ETFs) providing an investment opportunity in this space.

Global revenue from payments surpassed $2 trillion in 2018 and is set to approach $3 trillion within the next five years. While cash continues to be king, the potential for digital payments is immense. The Digital Money Index of 84 countries that track the development of digital money readiness shows an improvement of 5.5% over the last five years.

China continues to lead the movement away from cash with the share of electronification increasing by more than ten-fold over the last five years, according to a McKinsey report. In terms of regions, North America is the first region to execute more than half of its transactions electronically. India is pushing its initiative dubbed as ‘Digital India’ which highlights “faceless, paperless, cashless” as one its professed roles.

Several studies recommend the potential benefits of digitized payments, ranging from time savings among consumers, increased sales revenues among businesses, reduced government administrative costs and higher tax collections. A research by Citi shows that “a 10% increase in digital money adoption by countries (constituting the index) would deliver a $150 billion lift in consumer spending, which raises business revenues, while digital payments also cut cash handling costs for services and businesses by $100 billion. Meanwhile, governments pocket $100 billion more in taxes and savings of $200 billion by digitizing disbursements. In total, up to $1 trillion of new flows would enter the formal economy.”

Here’s a look at some exchange traded funds which invest in companies that are a part of the transformation that’s underway.


The ETFMG Prime Mobile Payments ETF (IPAY) is a one of the oldest exchange traded funds providing exposure to stocks in the payments industry which is experiencing a shift from credit card and cash transactions to digital and electronic methods. The fund was launched in 2015 and has Prime Mobile Payments Index as its underlying benchmark index. In terms of geographies, the ETF has majority exposure to the U.S. with smaller exposure towards France, Netherlands, Germany and Japan. The ETF has a portfolio of around 40 stocks with the top ten holdings adding up to 48.62%.

The top ten holdings in its portfolio are:

Mastercard
Visa
American Express
PayPal Holdings
Fidelity National Information
Worldpay
FinServ
Square
First Data
Discover Financial Services


The ETF has $680.43 million as assets under management, 0.75% as expense ratio and has posted 35.14% year-to-date (YTD) returns.

Tortoise Digital Payments Infrastructure Fund (TPAY) is one of the recent ETFs, launched in 2019 providing access to the payments space. The ETF tracks the Tortoise Global Digital Payments Infrastructure Index represents 53 companies which are a prominent part of the global digital payments landscape. The ETF has $4.58 million as assets under management and an expense ratio of 0.40%. In the last three-months, it has given 8.93% returns.

The top holdings have a 45.62% allocation and comprise of companies such as:

Fleetcor Technologies
Square
First Data
FinServ
Worldpay
Fidelity National Information
American Express
MasterCard
Total System Services
Wirecard


Next is the Global X FinTech ETF (FINX). Launched in 2016, the ETF seeks to invest in companies that are on the leading edge of the emerging financial technology sector and are looking at industries such as insurance, investing, fundraising, and third-party lending through unique mobile and digital solutions. The ETF tracks the Indxx Global Fintech Thematic Index. The country-wise break-up reflects 70% exposure to the U.S., followed by countries such as Switzerland, Germany, Australia, New Zealand, Demark and Brazil.

With $415.58 million as assets under management and an expense ratio of 0.68% as expense, the fund has delivered 33.82% YTD returns. The ETF has close to 40 stocks in its portfolio with top ten holdings that combine to almost 55% of the portfolio.

First Data
FinServ
Fidelity National Information
Wirecard
Intuit
Square
PayPal Holdings
Adyen
Guidewire Software
Black Knight


ARK Fintech Innovation (ARKF) is another ETF has been launched in 2019. ARKF is an actively managed ETF with a focus on companies engaged in the theme of fintech innovation. The ETF holds a portfolio between 35-55 stocks with a large-cap bias. The ETF has posted 4.93% YTD returns. It has $72.09 million as assets under management and an expense ratio of 0.75%.

The top ten holdings of the ETF are:

Square
Tencent
Apple
Zillow
com
Alibaba
PayPal
Rakuten
LendingTree
Line


Final Word

Global investment in financial technology ventures more than doubled in 2018, to $53.3 billion. A major part of it came for a single record funding round worth $14 billion in Ant Financial, best known for its mobile payments service Alipay.

Juniper Research projects that the number of people using digital wallets touch nearly 50% of the world’s population by 2024, pushing wallet transaction values up by more than 80%. Overall, the global digital payments market is expected to reach $7.64 trillion by 2024, recording a CAGR of 13.7% (2019-2024).

With the advancement in payments industry and colossal scope for growth, these ETFs are a favorable way to be a part of the digital journey, which has begun across the globe.

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>>> BlackRock Becomes Key Player in Crisis Response for Trump and the Fed


Bloomberg

By Annie Massa

April 17, 2020


President sought advice from Larry Fink in coronavirus fallout

World’s largest asset manager also helped in ‘08 crisis


https://www.bloomberg.com/news/articles/2020-04-17/blackrock-takes-center-stage-with-trump-seeking-to-calm-markets?srnd=premium


As President Donald Trump grappled with the coronavirus outbreak last month, he boasted at a press conference of tapping a secret weapon for advice: Larry Fink.

The chief executive of BlackRock Inc. provided insight to Trump on coping with the fallout from the pandemic -- and once again put his firm at center of a white-hot economic emergency.

BlackRock is no stranger to stepping in during a financial crisis cleanup. It played a similar role in 2008. But back then, it was a smaller firm with a focus on fixed income, closer to Pacific Investment Management Co., which had renowned money managers Mohamed El-Erian and Bill Gross at the helm.

More than a decade later, the investing landscape has shifted. BlackRock has a premiere role in helping the Federal Reserve stabilize markets. The central bank has hired the firm to help manage its economic relief efforts. Beyond U.S. borders, the Bank of Canada has called on the asset manager as it shapes its response to the meltdown.

BlackRock’s government connections reflect the dominance it has achieved in the asset management arena since the last financial crisis. It became the world’s largest asset manager with $6.5 trillion in assets -- a size and breadth that make the firm an essential player on Wall Street, in Washington, and beyond.

That may be an advantage amid the current tumult. “The companies that are going to come out in better shape are going to be the big businesses,” said Greggory Warren, an analyst at Morningstar Inc.

Financial crises can mark inflection points in investor preferences. After 2008, inexpensive index-based investing took off, buoying BlackRock, which holds about two-thirds of its assets in passive funds. Scale allows a massive firm like BlackRock or competitor Vanguard Group Inc. to offer prices that were once unheard of in the industry. Think U.S. stock-tracking funds that cost a few cents for every $100 invested.

“The one thing that rules in this world is cheap,” said Eric Balchunas, an analyst at Bloomberg Intelligence.

The economic recession following the 2008 crash helped set that tone. In the trenches of that contraction, investors became more comfortable using exchange-traded funds, which are tethered to indexes and can be bought or sold at any time in the trading day. Those funds hold about $4 trillion in the U.S., compared to about $531 billion in 2008, according to data compiled by Bloomberg.

BlackRock owes much of its dominance to a well-timed bet on those products. The firm got its start as a bond-focused shop, and had about $1.3 trillion in assets at the end of 2008. Today it is a formidable giant, overseeing about five times that sum. BlackRock first moved into ETFs with its purchase of Barclays Global Investors in 2009, a defining moment in the company’s history. The British bank sold the prized unit after rejecting U.K. government bailout money.

Moving into passive investing put BlackRock’s growth “on steroids,” Warren said. It is the world’s largest global issuer of ETFs today.

BlackRock’s government advisory business also cemented some crucial relationships in the fallout from 2008. BlackRock scored mandates to manage portfolios of toxic assets from Bear Stearns Cos. and American International Group Inc., playing to Fink’s roots in structuring mortgage-backed securities.

Today, BlackRock’s role is even more expansive. The Fed enlisted the New York-based firm to shepherd three debt buying programs. Canada’s central bank is bringing in BlackRock as an adviser in purchases of commercial paper, a form of short-term debt companies use to fund day-to-day expenses like payroll.

Beyond Covid-19-related mandates, the firm also won a contract to help incorporate sustainability into the European Union banking system.

“I do believe it’s going to continue to bring opportunities for us,” Fink said on an earnings call on Thursday, referring to BlackRock’s government assignments. He added he’s “very proud of” such work.

Another giant located across the country, Pimco, is reprising a role it played in the 2008 financial crisis too. The Fed once again called on Pimco as the investment manager for its purchases of commercial paper.

The Newport Beach, California-based firm oversaw $1.8 trillion at the end of the first quarter. In the intervening years since the last financial collapse, it has stuck to its original ethos as an active fixed income investment company.

Along with the rest of the active fund management industry, Pimco faced some challenges in an era when belief in star fund managers began to fade. One of the most dramatic examples of that arc was investing legend Bill Gross.

Gross, Pimco’s former chief investment officer, founded the Pimco Total Return Fund in 1987 and turned it into a behemoth. The fund had almost $300 billion in assets at its peak in 2013, and generated annualized returns of 7.8% from inception through his last day.

But when Gross left for Janus Henderson Group Plc in September 2014, an investor exodus followed. The fund suffered total redemptions of more than $100 billion in the 12 months after he departed.

Pimco spokesman Michael Reid responded to a request for comment on Gross by pointing to remarks from Morningstar analyst Eric Jacobson. “The firm didn’t flinch,” Jacobson said. “Pimco managed to keep performance competitive or better in most cases despite the outflows.”

“As an active manager, Pimco’s defensive positioning and liquidity management enabled us to navigate unprecedented market volatility,” Reid said in a statement. “We now see some extremely attractive long-term value in higher-quality segments of the investment-grade credit and mortgage markets as well as in more resilient areas of emerging markets.”

Gross was also known for his discursive investor letters that touched on topics like his dead cat and the eroticism of sneezing. In recent years, Fink’s annual missives have attracted similarly broad industry attention, albeit with a more staid style.

Proponents of active management argue that the industry gains additional edge in times of volatility. Though cheap index funds are easy to love when markets rise, active managers say they’re better suited to pick through the rubble after a downturn. (BlackRock has significant resources in active funds of its own, with $1.8 trillion in such strategies.)

Size and ties to governments put firms like BlackRock and Pimco, which is owned by German insurance giant Allianz SE, on stronger footing as the world navigates the unprecedented changes brought by the pandemic, said John Morley, a Yale University Law School professor who studies the regulation and structure of investment funds.

“The small asset managers may not have the resources to weather the storm,” he said.

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Visa, Mastercard, Fiserv - >>> How can the companies that help us pay for goods survive a coronavirus shutdown?


MarketWatch

April 14, 2020

By Emily Bary


https://www.marketwatch.com/story/how-can-the-companies-that-help-us-pay-for-goods-survive-a-coronavirus-shutdown-2020-04-14?siteid=bigcharts&dist=bigcharts


The payments industry in the age of COVID-19: PayPal and Square look for new opportunities, while Visa and Mastercard look to survive a new kind of economic downturn

As the COVID-19 outbreak curtails consumer spending, some younger payment-processing companies are getting creative, while the stalwarts are betting their resilient business models can withstand the latest economic downturn.

PayPal Holdings Inc. PYPL, +3.26% and Square Inc. SQ, +6.57% are among a handful of financial-technology companies that have been approved to distribute small-business loans through their platforms as part of the Paycheck Protection Program, as well as to help disburse stimulus payments to individuals.

Despite new opportunities like those, there are still concerns about how the payments industry will fare as the COVID-19 crisis shakes the global economy. Industry giants Visa Inc. V, +4.38% and Mastercard Inc. MA, +5.35% have survived many recessions, but there’s little historical parallel for an event that makes wide swaths of the population afraid to leave their homes. The credit-card networks will be relying on their high margins and enhanced e-commerce exposure to carry them through.

Business in the age of COVID-19: Read how other large companies will be affected by the coronavirus

Though shoppers might be eager to stock up on canned goods, toilet paper and other essentials during the crisis, that can’t make up for the many areas where spending has all but dried up. Retail store closures mean that fewer people are buying discretionary items, restaurants can only do so much business by selling takeout to a wary public, and tourism is virtually nonexistent.

Because payments companies touch so many aspects of the economy, it’s unclear when their businesses could return to normal. No one knows how long or how deep a coronavirus-driven recession would last, which could pressure spending until consumers feel more certain about the economic landscape. Some areas, like travel, may be especially stubborn until a vaccine becomes widely available.

Of course, e-commerce is far more prevalent now than it was a decade ago, giving payment providers a bit of a cushion even as surging unemployment and general unease about the economy prove tougher hurdles to spending. Analysts say PayPal, which conducts nearly all of its business online, could withstand COVID-19 better than most.

While the major players are likely to feel the sting now, a heightened awareness of germ spread could help ultimately accelerate plans by Visa and Mastercard to grow adoption of contactless payments in the U.S.

How the stocks are reacting

Mastercard shares dropped 19% in the first quarter, while Visa shares fell 14%, PayPal shares decreased 11%, and Square shares declined 16%. The S&P 500 SPX, +2.67% was off 20% in the first quarter, while the Dow Jones Industrial Average DJIA, +2.99%, which counts Visa as a component, fell 23%.

Analysts are overwhelmingly bullish on Visa, Mastercard, and PayPal shares, and while Square remains the most controversial of the four, sentiment has become more bullish in recent months as the stock pulled back. Of the 40 analysts who cover the stock, 19 rate it a buy as of April 14, while 19 rate it a hold and two rate it a sell. There were 18 buy ratings, 16 hold ratings, and six sell ratings in late December.

The companies and their numbers

Visa: The card giant has seen “a rapid deterioration of cross-border travel-related spending,” according to a March 30 filing in which the company issued its second profit warning since Visa’s late-January earnings report. Visa told investors in this latest update to brace for mid-single-digit March-quarter revenue growth, below its initial forecast of low double-digit growth. Areas that had seen the greatest negative impacts over the course of March included travel, restaurants, entertainment and fuel.

Revenue and earnings estimates have fallen for Visa’s fiscal second quarter, which ended in March. Analysts tracked by FactSet modeled $5.79 billion in revenue and $1.36 a share in earnings as of late March, down from estimates of $6.11 billion and $1.46 a share, respectively, as of late December.

For the full fiscal year ending in September, the consensus forecast called for $23.41 billion in revenue and $5.57 a share in earnings as of late March, below late-December forecasts of $25.43 billion and $6.21 a share, respectively.

Mastercard: While the company argued back in January that its e-commerce business provided a “natural hedge” on the coronavirus outbreak in China, Mastercard has since acknowledged more risks. The company has issued two revenue warnings since its January earnings report, with the latest one on March 24 calling for low- to mid-single-digit net revenue growth in the first quarter. That’s down from an initial forecast of low-teens growth. While it faces a challenging consumer-spending landscape, Mastercard also highlighted weakness in business spending, pressuring an emerging-growth area for the company as it tries to capture more commercial volume.

Analysts surveyed by FactSet modeled $4.08 billion in first-quarter revenue as of late March, down from an estimate of $4.39 billion at the end of December. Earnings estimates declined to $1.78 a share as of the end of March from $2.02 a share at the end of December.

For the full year, analysts modeled $17.42 billion in revenue as of late March, down from their December estimate of $19.17 billion. They were looking for $7.83 a share in full-year earnings, below their December forecast of $9.05 a share.

PayPal: Unlike Visa, Mastercard, and Square, the company generates nearly all of its revenue from online sales, which was the focus of its Feb. 27 business update. At that point, the company disclosed in a press release that its “business trends remain strong” though cross-border e-commerce had been negatively impacted by the outbreak. PayPal told investors to expect revenue “toward the lower end” of its previously issued forecast of $4.78 billion to $4.84 billion. The company announced April 10 that it was approved to offer access to Paycheck Protection Program loans through the Small Business Administration.

The FactSet consensus reflects that new disclosure, as analysts modeled $4.79 billion in first-quarter revenue as of the end of March, below the $4.84 billion they were projecting as of late December. They also called for 77 cents in adjusted earnings per share, below their late-December projection of 82 cents.

For the full year, analysts expected $20.61 billion in revenue and $3.39 a share in earnings as of late March, below the $20.74 billion and $3.49 a share, respectively, that they had been calling for at the end of 2019.

Square: The company, which has heavy exposure to small- and medium-sized businesses, disclosed on a March 24 investor call that payment volume during the prior 10 days was off 25% from a year earlier, with greater declines in areas that were early to issue shelter-in-place orders. The company also lowered its first-quarter outlook and pulled its full-year forecast. It has been offering tools to sellers that enable them to do business online and offer curbside pickup. Square Capital Lead Jackie Reses tweeted April 13 that the company has been approved for Paycheck Protection Program lending through the SBA.

While revenue estimates for Square’s first quarter have actually increased since December, rising to $1.3 billion from $1.21 billion, they’ve fallen for the second quarter and the full year. Analysts modeled $5.35 billion in full-year revenue as of March 31, down from their estimate of $5.68 billion in late December.

Analysts predicted 13 cents a share in first-quarter adjusted EPS as of March 31, below the 16 cents a share they were calling for in late December. Full-year estimates fell to 64 cents from 96 cents.

Other payments companies to watch: Shopify Inc. SHOP, +12.15% , Global Payments Inc. GPN, +9.84% , Fiserv Inc. FISV, +5.11% and Fidelity National Information Services Inc. FIS, +4.04% .

What analysts are saying

• “A recession coincident with the coronavirus-related social distancing measures could be meaningfully worse for Visa and Mastercard than the [global financial crisis] (because of sizable impact on travel & discretionary spend).” — Bernstein analyst Harshita Rawat, who rates both stocks at outperform with a $190 price target for Visa and a $300 price target for Mastercard.

• “Amid the severe business disruptions caused by the coronavirus pandemic, investors have become highly sensitive to the consequences of companies across various industries accepting government support… Importantly, we do not believe Visa, Mastercard, or PayPal will require government bailouts and do not expect them to face future limitations on share repurchases as a result.” — Instinet analyst Bill Carcache, who has buy ratings on all three stocks.

• “It seems like a definite messaging opportunity for some of the large wallet providers as well as the big card issuers and payments companies like Visa to promote the sanitary aspects of contactless payments,” — Jordan McKee, the research director at S&P Global Market Intelligence’s 451 Research, told MarketWatch.

• “We believe PayPal will be one of the lesser affected companies in our universe because of the heavy weighting of online payment transactions, and we believe PayPal will grow revenue through this period.” — William Blair analyst Robert Napoli, who rates the shares at outperform.

• “Square’s unique and now challenged exposure will make the stock a proxy for some of the most vulnerable businesses, where federal response will be crucial.” — Citi analyst Peter Christiansen, who downgraded Square’s stock to neutral from buy on March 18 while cutting his target price to $50 from $99.

• “We think PayPal and Square are likely to earn the majority of lender origination fees” — Barclays analyst Ramsey El-Assal, who said that lenders will receive 5% from the SBA for loans below $350,000, which he thinks will represent the bulk of PayPal’s and Square’s lending. He expects the program fees to “contribute high margins.”

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>>> Mom and Pop Are On Epic Stock Buying Spree Fueled by Free Trades


Bloomberg

By Lu Wang and Vildana Hajric

February 21, 2020


https://www.bloomberg.com/news/articles/2020-02-21/free-stock-trades-are-stirring-an-epic-mom-and-pop-buying-frenzy?srnd=premium


Ameritrade’s million-trade days in quarter exceeds all of 2019

Brokerage volume explodes as hot stocks like Tesla lure money

Small investors are back. In a big way.


Their fingerprints are on Apple Inc.’s staggering rally. They piled into Tesla Inc. as it tripled, and turned speculative fliers like Virgin Galactic Holdings Inc. into some of the most heavily traded shares in the country. Why the enthusiasm? Some see a link to decisions by brokerages to cut commissions on trades to nothing.

While it’s tough to know what’s causing what -- bull markets are fueled by new converts but also lure them -- trading volume at online and discount brokers has exploded. TD Ameritrade Holding Corp., which started offering free trading in October, has seen million-trade days multiplying at a record pace.



Discount brokerages' trading volume explode

Along with E*Trade Financial Corp., daily average revenue trades -- a standard industry metric that may be a bit of a misnomer now since buying and selling is free -- have almost doubled to an all-time high since last September, data compiled by Sundial Research showed.

“When you take a bull market and juice it with zero commission trading, we can expect it to generate interest among retail accounts. That, it did,” said Jason Goepfert, president of Sundial. “Retail traders have become manic.”

Individual investors were seen as indifferent participants for much of the 11-year bull market. No more. The latest leg of their emergence times closely with October, when E*Trade, Charles Schwab and TD Ameritrade slashed commission fees to zero. Not that it’s firm proof of anything, but since the start of that month, the S&P 500 is up 13% and the Nasdaq 100 has surged 24%.

Conversations with a handful of clients found lots of praise for zero-commission trades but mostly conservative purchases -- index funds and blue chips. Matt Hermansen, 23, who works for a concrete company in Oakland, California, said the absence of fees makes him more willing to trade.

“I’ll invest smaller amounts. Before I never really invested anything less than $1,000, $500 minimum,” he said in a phone interview. “Now if I have enough to buy an extra share, I’ll do it. I’ll do like $300.”

At TD Ameritrade, the number of days where the amount of trades topped 1 million reached 38 during the fiscal first quarter ended Dec. 31, according to Steve Boyle, interim president and chief executive officer. That compares to 23 such days in all of fiscal year 2019.

It’s “a new world in discount brokerage where price no longer clouds the comparison for trades,” Boyle said in an earnings statement on Jan. 21. By that date, the firm’s monthly volume had already risen 40% from a year ago, averaging 1.4 million trades per day.

At Charles Schwab, similar trends has played out. Daily average revenue trades have increased 74% since the firm’s fee cut, Sundial’s data showed.

Randy Frederick, a vice president of trading and derivatives at Charles Schwab, says the surge in trading also reflects a growing confidence in the bull market. Indeed, from the coronavirus outbreak to Apple’s sales warning, nothing has been able to stop shares from marching higher.

“It’s partially driven by free commissions, but I don’t think it’s just that, because not everyone is offering free commissions,” Frederick said. “The fact that we have been in a bull market for a long time, people are just optimistic. Things are going up and they continue to go up.”

U.S. households are turning more optimistic on the stock market. According to the latest sentiment reading from the Conference Board, the share of respondents expecting stocks to rise in the next year advanced to 43.1% in January, the highest since October 2018.



More Americans think stocks will rise over the next 12 months

Hot stocks get the most attention. At TD Ameritrade, Apple, Microsoft Inc., Tesla and Virgin Galactic have been among the highly traded this year, according to JJ Kinahan, the firm’s chief market strategist. Shares of the two tech giants have climbed at least 9%, double the S&P 500’s gain. Tesla, Elon Musk’s automaker, and Virgin Galactic, Richard Branson’s space-tourism company, have done even better, with triple-digit advances. Virgin Galactic, in particular, has seen retail investors talking up their positions on message boards like r/wallstreetbets on Reddit.

“A lot of our millennial clients over the past six months were buyers of Tesla,” Kinahan said. “Younger people buy products they are familiar with, or more importantly, think are going to be viable products down the road,” he added. “It does make sense to say that some of these, maybe Virgin Galactic, may be a product that makes sense in 10 years.”

For Peter Cecchini, chief global market strategist at Cantor Fitzgerald LP, affection among retail investors for both tech stocks and loss-making companies is creating flashbacks to the internet frenzy in late 1990s.

“There’s sometimes no fundamental reason for it. It just is based on perception -- a perception based on narratives that run only an inch deep,” he said in note. “Let’s see how much longer it persists. This kind of activity often unwinds much faster than the wind up.”

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>>> Morgan Stanley to Buy E-Trade, Linking Wall Street and Main Street

The $13 billion deal will give a powerful Wall Street firm control of a major presence in the world of online brokerage firms.


The New York Times

By Michael J. de la Merced, Kate Kelly and Emily Flitter

Feb. 20, 2020


https://www.nytimes.com/2020/02/20/business/morgan-stanley-etrade.html


Morgan Stanley is betting its future on Main Street.

The Wall Street giant moved further from its investment banking origins on Thursday with an agreement to buy the discount brokerage firm E-Trade for about $13 billion, the biggest takeover by a major American lender since the 2008 global financial crisis.

The addition of E-Trade would allow Morgan Stanley to tap into a new source of revenue: the smaller-volume trades of the country’s so-called mass affluent, people who are wealthy enough to have some savings but not rich enough to buy into hedge funds or seek out a money manager. If it goes through, the deal will put Morgan Stanley, which does not have retail bank branches to draw in new asset-management customers, on firmer footing with competitors like Bank of America and Wells Fargo.

It would also give Morgan Stanley a big share of the market for online trading, an additional 5.2 million customer accounts and $360 billion in assets.

Morgan Stanley’s chief executive, James P. Gorman, said the merger would disrupt neither E-Trade clients nor Morgan Stanley customers, but ultimately result in more services for all.

The deal highlights the increasing convergence of Wall Street and Main Street: Elite bastions of corporate finance are seeking to cater to customers with smaller pocketbooks, and online brokerage firms that once hoped to overthrow traditional trading houses are instead suffering from a price war that has slashed their profits.

It also reflects a continuing shift in strategy for Morgan Stanley, which long relied on fees from high-finance services like mergers, stock offerings and massive trading desks but has lately embraced steady fees over bigger paydays and bigger risks.

Under Mr. Gorman, who has led the bank for a decade, Morgan Stanley has de-emphasized the businesses of jet-setting investment bankers and aggressive Manhattan traders, preferring the predictable and less costly realm of wealth management. It’s a strategy playing out all along Wall Street: In the dozen years since the start of the financial crisis, major financial firms from Credit Suisse to Goldman Sachs have embraced what are considered lower-risk business lines.

“This continues the decade-long transition of our firm to a more balance-sheet-light business mix, emphasizing more durable sources of revenue,” said Mr. Gorman, whose most transformative deal at Morgan Stanley before Thursday was its acquisition of Smith Barney’s retail brokerage firm in 2012.

E-Trade was an enticing target: It has struggled as brokerage firms slashed fees in a fight that peaked last fall when Charles Schwab eliminated fees for the trading of stocks and exchange-trade funds, and later agreed to buy TD Ameritrade for $26 billion.

Michael McTamney, who researches banks for the ratings agency DBRS Morningstar, said the deal accelerated Morgan Stanley’s growth plans. The bank already had a strong high-net-worth client base, he said, and now “they’ll be able to bring in this next generation of wealth via the E-Trade platform.”

If the deal goes through — it needs the approval of E-Trade shareholders and regulators — more than half of Morgan Stanley’s pretax profits will come from wealth and investment management, compared with 26 percent a decade ago.

Morgan Stanley’s $2.7 trillion in assets are largely tied to big companies and wealthy individuals. The E-Trade deal would expand its access to the comparatively well heeled, a group that encompasses more than 20 million households in the United States.

But Morgan Stanley could face a challenge luring this sort of investor toward its higher-touch investment management services.

Many E-Trade customers manage their own investments because of their intense distaste for the old-fashioned brokerage business. Others are hobbyists, trading a chunk of their retirement portfolios or some mad money. Both types have benefited greatly from decades of price wars that have made it possible for customers to pay nothing to maintain a brokerage account. Morgan Stanley will raise those fees at its peril.

But the addition of E-Trade offers another way to make money from those customers. Morgan Stanley could use the brokerage firm as the vehicle for delivering other products and services, such as shares of initial public offerings it has underwritten.

In Mr. Gorman’s words, the combination would unite Morgan Stanley’s “full-service, adviser-driven model” with E-Trade’s “direct-to-consumer and digital capabilities.”

Morgan Stanley is betting that regulators in Washington will approve what is perhaps the most consequential acquisition by a so-called systemically important American bank — the too-big-to-fail variety of financial institution — since 2008.

Under the Obama administration, officials at the Federal Reserve fretted about the nation’s biggest banks growing through mergers. Daniel Tarullo, a former Fed governor, said in a 2012 speech that the central bank should have a “strong, but not irrebuttable, presumption of denial” for takeovers by America’s banking titans.

But the Fed has become more industry friendly during the Trump administration, particularly with the addition of officials like Vice Chairman Randal K. Quarles, a former bank lawyer who is helping reassess the rules put in place after the financial crisis. The central bank recently approved the combination of BB&T and SunTrust, paving the way for the creation of the sixth-largest U.S. commercial bank.

The acquisition could look attractive to regulators from a financial stability perspective: The deal would infuse the Wall Street bank with stable deposits and reliable revenue streams. But it will also make Morgan Stanley more of a behemoth.

Morgan Stanley doubtless hopes an E-Trade deal goes more smoothly than a past effort to pull in retail clients. Its merger with Dean Witter Reynolds two decades ago foundered amid a clash between Morgan Stanley’s Wall Street aristocrats and Dean Witter’s more down-market brokers. Since then, however, the bank has been steadily shifting toward asset management — one of a number of approaches major banks have been trying to court Main Street.

Morgan Stanley’s traditional rival, Goldman Sachs, created a retail-focused lending arm, Marcus, in 2016 and teamed up with Apple last year to offer a credit card. Last month, Goldman said it intended to expand its retail deposit base to $125 billion, and its consumer loan and card balance to $20 billion, over the next five years.

Investors seem to be more taken with Morgan Stanley’s continuing shift than with Goldman’s, at least based on the Wall Street scoreboard of stock prices. Shares in Morgan Stanley have climbed nearly 33 percent over the past 12 months, while those in Goldman have risen about 19 percent.

Late last year, JPMorgan Chase — already known for its enormous banking operations in both the consumer and the institutional areas — established a new platform that is meant to combine financial advisory services within its bank branches with wealth-management and online brokerage offerings.

And Bank of America, whose acquisition of Merrill Lynch during the financial crisis made it a heavyweight in the wealth-management business, has moved to court less-wealthy clients as well.

Under the terms of the deal announced on Thursday, Morgan Stanley will buy E-Trade using its own stock. Its offer is worth about $58.74 a share as of Wednesday’s market close, a 30 percent premium on the value of the online brokerage’s shares.

E-Trade’s chief executive, Michael Pizzi, would continue to run the business upon the deal’s closing, which is expected by year’s end.

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Morgan Stanley Buys E*Trade for $13 Billion


>>> Morgan Stanley Dives Deeper Into Retail With E*Trade Deal


Bloomberg

By Sridhar Natarajan

February 20, 2020


https://www.bloomberg.com/news/articles/2020-02-20/morgan-stanley-to-buy-e-trade-for-13-billion-in-all-stock-deal?srnd=premium


Takeover follows Schwab’s planned takeover of TD Ameritrade

Clients are demanding more digital services, CEO Gorman says

Morgan Stanley agreed to buy discount brokerage E*Trade Financial Corp. for $13 billion, pushing further into the retail market in the biggest acquisition by a Wall Street firm since the financial crisis.

The all-stock takeover adds E*Trade’s $360 billion of client assets to Morgan Stanley’s $2.7 trillion, the companies said Thursday in a statement. Morgan Stanley also gets E*Trade’s direct-to-consumer and digital capabilities to complement its full-service, advisory-focused brokerage.

“Our clients increasingly want digital access and digital banking, and their clients want wealth-management advice,” Chief Executive Officer James Gorman said in an interview. “It’s the continuing evolution of Morgan Stanley into a stable, well-diversified business.”

In reshaping the firm since the financial crisis, Gorman has been emphasizing Morgan Stanley’s wealth-management powerhouse. Purchasing E*Trade helps him add clients who are less wealthy than its traditional customers. The New York-based company has lost some business to the retail brokerages in recent years as those firms invested heavily in their web platforms.

“Wall Street banks continue to covet Main Street customers,” Greg McBride, an analyst at Bankrate.com, said in an email. The acquisition “gives them access to brokerage customers, employees with company stock, and the lifeblood of financial services -- low-cost retail bank deposits.”

The retail-brokerage industry is being reshaped by price wars and consolidation. In early October, Charles Schwab Corp. eliminated commissions for U.S. stock trading, spurring other brokerages to follow suit and sweeping away an important revenue stream.

The following month, Schwab agreed to buy rival TD Ameritrade Holding Corp. for about $26 billion and create a mega-firm with $5 trillion in assets, forcing smaller brokerages like E*Trade to contend with a much more formidable competitor.

‘Hefty Price’

Stockholders in E*Trade, which posted worse-than-expected earnings last month, will receive 1.0432 Morgan Stanley shares for each of their shares, valued at $58.74 based on Wednesday’s closing price.

“It’s a pretty hefty price,” said Alison Williams, an analyst at Bloomberg Intelligence. The deal is consistent with Morgan Stanley’s strategy to dive deeper into the mass-affluent market, she said.

Shares of Morgan Stanley slumped 4.1% to $54.01 at 9:34 a.m. in New York, the biggest intraday decline in six months. E*Trade surged the most in almost 11 years, gaining 24% to $55.90. Gorman said he expects Morgan Stanley shares to rebound once investors start valuing the stock at a higher multiple over the long term.

For Morgan Stanley, the deal “deepens the ‘safe’ wealth-management franchise -- rich in fees and stability,” credit analyst David Havens at Imperial Capital wrote in a note to clients. “It reduces reliance on the more mercurial trading and markets businesses.”

E*Trade, founded in 1982, was one of the early players in the discount-brokerage industry. Its reach with self-guided traders online gives Morgan Stanley access to a broader customer base, including those who may have less to invest than its current clients.

Morgan Stanley will keep the E*Trade brand in some way, Gorman said on a conference call with analysts. “It’s something I think you’d be completely nuts to get rid of,” he said, comparing the brand’s worth to how valuable Merrill Lynch is to Bank of America Corp. and the Chase name is for JPMorgan Chase & Co.

Long seen as a potential takeover target for the likes of TD Ameritrade, E*Trade was left looking for ways to reinvent its image and lure more customers in the wake of its rival’s merger with Schwab. In a signal that it was on the hunt for acquirers, a January filing boosted compensation for executives in the event of a change in control.

JPMorgan served as the lead financial adviser to E*Trade, and Skadden, Arps, Slate, Meagher & Flom LLP was external legal counsel.

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>>> The People’s Mutual Fund Manager Dips a Toe Into Private Equity


Low-cost index fund specialist Vanguard turns to the world of complex, expensive investments.


Bloomberg

February 14, 2020


https://www.bloomberg.com/news/articles/2020-02-14/vanguard-dips-a-toe-into-private-equity?srnd=premium


Vanguard Group, which manages $6.2 trillion in assets, unveiled plans on Feb. 5 to offer a private equity fund. The move represents a surprising convergence of two very different investing worlds. The Malvern, Pa., company showed millions of investors that they could beat many Wall Street pros by keeping things simple using low-cost index funds and exchange-traded funds. PE funds are the opposite of simple: They charge high fees for opaque portfolios and can lock up cash for years—which is why the U.S. Securities and Exchange Commission has long kept smaller investors out of them.

Vanguard is just dipping a toe in for now. Its offering, which will be managed by an outside firm called HarbourVest Partners, will be available only to institutions such as endowments and nonprofit foundations. But Vanguard intends to move beyond that. Chief Executive Officer Tim Buckley said in a release that for individual investors, the company’s move into private equity will eventually “present an incredible opportunity—access and terms they could not get on their own.”

Private equity funds buy up entire private companies or take public companies private. They can use borrowed money to try to juice their returns, and they can also make venture capital investments in startups or own private loans. The prospect of broader access to such investments may not be good for many investors, says Charles Rotblut, vice president of the American Association of Individual Investors. “It sounds prestigious, it sounds like they’re getting some kind of advantage,” he says. “But for a lot of individuals, getting that basic mix of stocks, bonds, and cash is hard enough.”

Vanguard has broached the idea before. In 2001 it announced a deal with Hamilton Lane Advisors, based in Bala Cynwyd, Pa., to create a fund of funds—a pool that invests in private equity funds, aimed at institutions and high-net-worth individuals. It dropped the arrangement a year later during the dot-com bust, saying it couldn’t attract enough assets.

In more recent years the PE industry has swelled, driven by investors’ hunger for higher returns in a low-yield environment and a sense that many of the best investments are outside public markets. So much money has poured in that PE firms held almost $1.5 trillion in unspent capital at the end of 2019. Even so, private equity firms have been making the case to the SEC that they should have more access to smaller investors—and the fees they would pay. At a time when some index funds have zero expenses, a PE fund can still charge as much as 2% of assets a year, along with a share of profits.

Vanguard will bring its traditional concern with costs to private equity, an area where “investor needs are growing,” says Kaitlyn Caughlin, the firm’s head of product management. But expenses shouldn’t be the only test of an investment, says Fran Kinniry, its head of private investments: “What we really need to focus on is, what does the client get to keep?” The fund industry’s concern with low fees, he says, has reached a fever pitch, with “all these zeroes and everything else—we’ve gotten so fixated.”

Proponents of private equity argue that it can improve diversification, especially as the number of public companies shrinks. “Risk means having all your eggs in one basket,” says James Waldinger, founder and CEO of Artivest, a platform for buying alternative investments such as private equity.

Vanguard’s edging in might be a sign that PE is “at the top of a market cycle,” says Kelly DePonte, a managing director at Probitas Partners, which helps raise money for private equity funds. He worries about what happens if access eventually widens beyond institutional and affluent clients. “If things go bad, you are going to have a number of unsophisticated retail investors getting into this business for the first time who don’t understand how it really works and are going to get burned.”

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>>> Visa Is Planning the Biggest Changes to Swipe Fees in a Decade


Bloomberg

By Jennifer Surane

February 4, 2020


https://www.bloomberg.com/news/articles/2020-02-04/visa-is-planning-the-biggest-changes-to-swipe-fees-in-a-decade


Rates will be lower for some businesses, including real estate

Merchants pay more than $100 billion a year in such fees


Visa Inc. is planning the biggest changes in a decade to the rates U.S. merchants pay to accept its cards, hoping to persuade more people to abandon checks and adjusting its fees for new businesses such as ride-hailing services.

The company’s interchange rates -- fees charged every time a consumer uses a card -- will go up or down depending on the merchant and the way a consumer pays for their purchases, according to a document Visa sent to banks that outlines the changes. Higher rates are looming for transactions on e-commerce sites, while retailers in certain services categories, such as real estate and education, will see fees decline.

“The U.S. credit interchange structure has been largely unchanged for the past 10 years,” Visa said in the document, which was seen by Bloomberg. “Based on the most recent review in the U.S., Visa is adjusting its default U.S. interchange rate structure to optimize acceptance and usage and reflect the current value of Visa products.”

While the changes amount to just a few cents on every transaction, those pennies add up. Swipe fees are already a flashpoint between merchants, banks and payment networks such as Visa and Mastercard Inc. Retailers have long complained about the more than $100 billion they spend each year to accept electronic payments, a figure that’s grown in recent years as fees increase and consumers flock to premium cards, which carry higher interchange rates.

Paying for Payments
Retailers are spending more to accept electronic payments

Payment processors are updating their systems and readying merchants for the new rates, which will be rolled out in April and October, according to the document. San Francisco-based Visa planned the two-part implementation as a way to give processors more time to implement the changes, according to a person familiar with the network’s thinking who asked not to be named because the matter is private.

Visa and Mastercard are the intermediaries that facilitate more than $6.5 trillion in card payments in the U.S. each year. While they set the rates that merchants are charged, those fees are technically paid to the bank that issues the card. The bank then passes along a portion of the fee to the network involved in the transaction.

Visa declined to comment on the changes proposed in the document. Mastercard, which has its own interchange policies, had no immediate comment on whether it’s proposing changes of its own.

With Visa’s changes, the interchange rate for so-called card-not-present transactions, which include those made online or over the phone, will increase. For a traditional Visa card, the fee on a $100 transaction will climb to $1.99 from $1.90. For premium Visa cards, the fee will rise to $2.60 from $2.50.

On a premium-card transaction of $50 for the category that includes large supermarkets, the interchange fee will drop 33%, to 77 cents from $1.15.

The changes proposed in the document apply to Visa’s so-called published rates. Banks and payments networks can negotiate one-on-one deals with retailers for lower pricing.

For banks, the $91.2 billion in fees they earn on credit-card portfolios is now more than the interest they charge on the loans. Swipe fees contribute the largest portion -- $52 billion -- of the fee income that banks collect, according to data compiled by consultancy R.K. Hammer.

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>>> StoneCo Ltd. (STNE) provides financial technology solutions that empower merchants and integrated partners to conduct electronic commerce across in-store, online, and mobile channels in Brazil. It distributes its solutions, principally through proprietary Stone Hubs, which offer hyper-local sales and services; and technology and solutions to digital merchants through sales and technical personnel and software vendors. As of December 31, 2018, the company served approximately 267,000 clients, which included digital, and brick-and-mortar merchants, primarily small-and-medium-sized businesses; and 108 integrated partners, such as global payment service providers, digital marketplaces, and integrated software vendors. The company was founded in 2000 and is headquartered in São Paulo, Brazil.

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>>> Plaid’s Founders Are Latest Fintech Royalty With Visa Deal


Bloomberg

By Julie Verhage and Tom Metcalf

January 14, 2020


https://www.bloomberg.com/news/articles/2020-01-14/plaid-founders-become-latest-fintech-royalty-after-visa-deal?srnd=premium


Zach Perret and William Hockey sell company for $5.3 billion

Dozens of venture capital firms had initially snubbed the duo


When Plaid Inc.’s co-founders were starting out in their early 20s, they hid their graduation dates on their LinkedIn profiles to avoid scaring off potential investors who might have been wary about their youth.

As fortune would have it, the relative lack of experience didn’t hold them back.

This week Zach Perret, 32, and William Hockey, 30, announced the sale of their company to Visa Inc. for $5.3 billion, making them the latest founders to join Silicon Valley’s increasingly youthful roster of fintech tycoons.

Plaid Technologies Inc.

The pair met while they were working as consultants for Bain & Co. They began incubating the idea of more easily connecting apps to bank accounts in 2012 while living in New York. Once the idea started to take off and they needed more employees and funding, they relocated to Silicon Valley, the tech capital. By late 2018, Plaid had garnered a valuation of $2.65 billion.

Read more: Visa to buy Plaid for $5.3 billion in bid to reach startups

The firm now has more than 200 million accounts linked on its platform, according to an investor presentation. About 25% of people with U.S. bank accounts have used Plaid to connect to the roughly 11,000 financial institutions it works with, according to a statement Monday announcing the deal. Visa’s purchase will help the payments processor -- which largely connects banks and merchants -- to also link banks to financial startups that now have millions of customers.

The idea wasn’t always so popular with investors.

Dozens of venture capitalists snubbed the Plaid founders. Money was so tight that Hockey was sleeping on a friend’s couch while Perret moved in with a girlfriend. They finally got a yes from Spark Capital, which led Plaid’s first big funding round.

While the size of the duo’s holdings in Plaid hasn’t been disclosed, they’ll probably reap hundreds of millions of dollars -- at least -- from the sale, which the companies expect to be completed within three to six months. The deal -- most of it in cash -- makes Hockey and Perret among the most successful fintech founders in the Bay Area.

The pair didn’t merely get lucky exiting at such a high valuation, said Rick Yang, a general partner at New Enterprise Associates, an early investor in Plaid.

“I don’t think this is a one-off,” he said. “You have a lot of traditional financial institutions that are starting to think about: What is our software strategy? How do we stay relevant? How do we continue growing like a software company?”

Read more: Logging in to your bank account is now a $3 billion business

Hockey and Perret join an already youthful cohort. In May 2018, Robinhood Markets Inc. co-founders Vlad Tenev and Baiju Bhatt -- then 31 and 33, respectively -- became billionaires thanks to the soaring valuation of their electronic stock brokerage. Last year, Stripe Inc.’s John Collison, 29, and brother Patrick Collison, 31, became Ireland’s richest entrepreneurs with an estimated net worth of $4.2 billion apiece after their online payments processor was valued at $35 billion.

See also: Stripe brothers become richest self-made Irish billionaires

Still, those tech founders are practically middle-aged compared with Brex Inc.’s Henrique Dubugras, 23, and Pedro Franceschi, 22. Their startup was valued at $2.6 billion last year, giving each a net worth of about $425 million, according to calculations by Bloomberg.

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FNMA, FMCC - >>> Trump 2020 Polls Bode Well for Fannie and Freddie, Height Says


Bloomberg

By Felice Maranz

December 31, 2019


https://www.bloomberg.com/news/articles/2019-12-31/trump-2020-polls-bode-well-for-fannie-and-freddie-height-says?srnd=premium


Analyst sees capital raise, conservatorship exit under Trump

Fannie, Freddie common shares soared in 2019 on hope for shift


Polls showing an upswing for President Donald Trump’s re-election chances against top potential Democratic candidates favor housing finance and mortgage giants Fannie Mae and Freddie Mac, according to Height Capital Markets.

Under a continued Trump administration, the Federal Housing Finance Agency is likely to allow Fannie and Freddie to raise capital and exit conservatorship in 2021 and 2022, Height analyst Edwin Groshans wrote in a note. He cited polls, including a Dec. 16 USA Today survey, showing Trump leading Democratic rivals.

“In 2020, we expect significant progress” on both administrative and legal fronts, Groshans said, including ending the so-called “net worth sweep” of Fannie and Freddie’s profits to the Treasury. “While the process is taking significantly longer than we initially projected, the momentum continues to be positive,” he said.

Investors bet change is coming for the companies

Earlier, Cowen & Co. senior policy analyst Jaret Seiberg flagged the Senate confirmation of Mark Calabria as FHFA director in a note on the year’s dominant policy issues. Seiberg said that Calabria has “done more in six months to advance the recap and release of Fannie and Freddie from conservatorship” than all his predecessors combined. “Recap and release” refers to the process of bolstering the companies’ ability to absorb losses and then returning them to private ownership.

Common shares in Fannie Mae have soared 188% this year, and Freddie Mac by 175%, on optimism that change is coming to the housing finance system. Fannie gained as much as 1.7% in Tuesday trading; Freddie rose as much as 2.1%.

Height’s Groshans maintained a buy rating on all series of the junior preferred shares of Fannie and Freddie. He rates the common shares of both hold.

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>>> Indexing Was Huge in 2019 But the Real Money Was in Index Stocks


Bloomberg

By Claire Ballentine and Vildana Hajric

December 31, 2019


https://www.bloomberg.com/news/articles/2019-12-31/indexing-was-huge-in-2019-but-the-real-money-was-in-index-stocks?srnd=premium


Stock prices of S&P and MSCI have outperformed S&P 500 Index

Shift to passive lifted benchmark providers, not fund managers


As money managers bemoan the fees lost to passive investing, there’s one sector of the financial world just fine with the shift: The companies that create the indexes tracked by trillions of dollars in assets.

S&P Global Inc., the creator of financial benchmarks including the S&P 500 Index, is up 60% this year, more than double the return of its flagship gauge of U.S. stocks. Meanwhile, rival MSCI Inc. has jumped 74%, its best yearly gain in a decade.

MSCI, S&P Global outpaced S&P 500 this year

Such eye-popping performances show just how transformative the meteoric rise of indexed investing can be for the companies at its heart. Although passive strategies have been luring cash from actively managed approaches for some time, this year assets in U.S. indexed equity mutual funds and ETFs topped those in active stock funds for the first time ever. The providers of the gauges underpinning those funds earn a slice of every dollar tracking their benchmarks.

“There’s this big secular growth because of the movement to passive,” said Hamzah Mazari, a managing director at Jefferies in New York. “Over time, that will continue to be a pretty strong tailwind for these companies.”

Cost savings are a key driver of that shift, with passive equity funds charging an average 10 cents per $100 invested in the U.S., versus about 70 cents for active funds.

However, companies that provide indexes and benchmarks have benefited from the trend because they typically charge a licensing fee based on how much money is pegged to their gauges. So, the more money that is passively managed, the more revenue they bring in.

S&P Global reported a 9% increase in revenue in the third quarter from a year earlier, led by growth in its ratings and index divisions. MSCI’s share price jumped at the end of October after results showed a rise in operating revenue, driven in part by a 10% increase in its index segment.

A spokesman for S&P described 2019 as an exciting year for the company, highlighting S&P’s recent acquisitions of Kensho Technologies to boost its artificial intelligence expertise, and RobecoSAM’s ESG ratings business. A representative for MSCI was not immediately available to provide a comment.

But while index companies’ share prices have skyrocketed, the asset managers that license their benchmarks aren’t generating the same enthusiasm. A gauge of fund companies and custody banks has lagged the broader market, rising 22%. And BlackRock Inc. -- the world’s largest issuer of exchange-traded funds -- has returned slightly less than the S&P 500’s 28% advance.

“Every fund manager is benchmarking against the S&P 500 or MSCI and it’s very, very tough to replace that,” said Mazari. “These index providers have a very big moat around their business.”

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>>> Big Tech Is Coming for Banking: Experts Predict Fintech’s 2020


Bloomberg

By Julie Verhage and Jennifer Surane

December 23, 2019


https://www.bloomberg.com/news/articles/2019-12-23/big-tech-is-coming-for-banking-experts-predict-fintech-s-2020?srnd=premium


Facebook, Google and Apple could step up fintech ambitions

Experts also expect more mergers, and more government scrutiny


Financial technology startups will enter the next decade with a little more street cred than the last time around.

Nearly 60 upstarts focusing on financial services -- from Stripe Inc. to Chime Inc. to Plaid Inc. -- have garnered valuations of more than $1 billion in recent years, according to CB Insights. Personal loans -- a category popularized by fintechs like GreenSky Inc. or Affirm Inc. -- are now the fastest growing form of debt in the U.S., Experian data says. And Robinhood sparked a movement toward free stock trading that has shaken the business models of the likes of Charles Schwab Corp. and E*Trade Financial Corp.

Still, analysts and experts say there’s more to come. Sweeping mergers and acquisitions have transformed some of the industry’s largest incumbents in payments, who are gearing up for a bigger fight for market share with newcomers. And regulators are looking to have more say over how technology companies venture into financial services.

Here’s our annual list of the most important trends, challenges and companies to watch in the New Year.

Exit Strategies

Mergers and acquisitions have historically been small and rare in the fintech space, but that changed in a big way in 2019. Fiserv Inc., Fidelity National Information Services Inc. and Global Payments Inc. did a series of deals that transformed payment processing in the U.S. More recently, PayPal Holdings Inc. made its largest acquisition ever and Charles Schwab announced it would buy TD Ameritrade Holding Corp. for about $26 billion. That frenzied pace of deal-making might continue through (at least some of) 2020.

Lindsay Davis, senior intelligence analyst, CB Insights: “Wealth management will likely see more consolidation from incumbents, who are under pressure to compete for next-gen customers and an army of virally growing fintech apps who have abstracted the client relationship away from the old guard. Charles Schwab buying TD Ameritrade is just the beginning of more strategic consolidation to come.”

Matt Harris, partner, Bain Capital Ventures: “I think there is a window during the first half of the year for IPOs, but once summer hits people will be fundamentally distracted by the election. I certainly don’t think it will be fast and furious.”

Regulatory Scrutiny

Memorably, in 2019 Mark Zuckerberg defended Facebook Inc.’s plan to overhaul the world banking system in front of Congress. (Legislators were not amused.) Our experts think there’s plenty more government scrutiny ahead for financial technology players. That’s even though regulators including the Federal Reserve and the Federal Deposit Insurance Corp. have sought to encourage banks to work with newer technologies like alternative data in their underwriting in an attempt to bring more people into the financial services ecosystem. Companies will need to adjust their strategies accordingly.

Alyson Clarke, principal analyst, Forrester: “Regulators are going to start taking a closer look and scrutinizing artificial intelligence. The whole Apple Card and the supposed gender bias -- I think we’ll see more things like this surface. Transparency in AI is critical and ethics in AI is critical and it needs regulatory oversight.”

Vanessa Colella, Chief Innovation Officer, Citigroup Inc.: “We want to make sure the people who are transacting are who they say they are. As we get to 40 billion devices online, you can see it’s not just about KYC, or Know Your Customer, it’s KYM, or Know Your Machine -- and being sure that, as these transactions are happening at the edge, that you’re able to validate what the machine is, and whether the machine has the permission and the capability to make that transaction.”
The Rise of Digital Banks

Chime, the leading U.S. digital bank, is now valued at $5.8 billion. That makes it more valuable than some of the country’s largest banks, including New York Community Bancorp, CIT Group Inc. or Synovus Financial Corp. It’s part of a new class of entrants, known as “challenger banks” or “neo-banks,” that’s raised more than $3 billion in venture funding in the first three quarters of this year. With that has come millions of customers. Will they remain loyal? Or will traditional lenders be able to win them back?

Frank Rotman, founding partner, QED Investors: “While these neo-banks can’t yet match the complete suite of banking products that a traditional branch-based bank can, this doesn’t matter to the typical consumer because they rarely, if ever, use any of the hundreds of products that are in a bank’s arsenal. So we’ll be talking about challenger banks in 2020 and in 2021 and in 2022 and eventually the ‘challenger’ title will be dropped because they’ll be major players in the ecosystem.”

Mitch Siegel, principal, KPMG: “I do believe 2020 is an arms race: You’re going to see a lot of people launching digital banking initiatives. Personalization is what’s changed that game. Cross-selling without personalization seems sleazy but if you can personalize offers, and give me things that are high probability that I actually want them, I’m OK with you trying to sell me other products and services. Make it easy. Know me. Value me. Protect me.”

The Bank of Apple? Big Tech Moves In

If you’ve read this annual post before, you’ll be no stranger to predictions that the technology giants of the world will move deeper in to finance. The pace of those moves accelerated this year, however, with Apple launching a credit card with Goldman Sachs Group Inc., Alphabet Inc. announcing a checking product with Citigroup, and Facebook attempting to make a new global currency.

Matt Harris: “I think this is inevitable. Tech companies, large and small, will be looking to incorporate payments, lending and insurance in their business models in the coming years, and the smartest and most capable banks will want to be part of that movement. I do think this raises the stakes for pure fintech startups.”

Frank Rotman: “The trend is broader than ‘tech getting into finance.’ It should be seen as ‘customer-facing organizations’ offering their customers banking products. Many customer-facing organizations have built up trust with their customers -- as evidenced by high engagement and high net promoter scores -- but don’t want to, nor see the need for, officially becoming a bank. Instead, they can partner with banks that are willing to co-brand or white label their services and offer great banking products to their loyal customers.”

Lindsay Davis: “Netflix could also leverage financial services to compete and enable gig-economy workers and freelancers in the film and TV industry, which have been traditionally too niche to serve, and have a unique set of pain points.”

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>>> Repo Oracle Zoltan Pozsar Expects Even More Turmoil


The Credit Suisse analyst foresaw the recent trouble in the financial system’s plumbing. He says it’s not over.


Bloomberg

December 20, 2019


https://www.bloomberg.com/news/articles/2019-12-20/repo-oracle-zoltan-pozsar-expects-even-more-turmoil?srnd=premium


In September an often overlooked but vital part of the global financial system short-circuited. It’s called the overnight repurchase agreement, or “repo,” market, and when it seized up, the interest rate that institutional borrowers had to pay for very short-term loans went (briefly) through the roof.

In the aftermath, people in the market sought answers—to understand both what had gone wrong and the risk of it happening again. Many have turned to a Credit Suisse Group AG analyst named Zoltan Pozsar, who predicted the breakdown with almost eerie accuracy in an August research note.

Pozsar has some bad news: There’s more trouble ahead. Despite the Federal Reserve’s recent move to pump almost $500 billion into the repo market to prevent a yearend funding squeeze, deep-rooted problems remain.

U.S. Dollar Overnight General Collateral Repurchase Agreement Rate
Last price

The extent of those problems could become clear before the close of 2019, as banks scramble to get their books in order for regulators. “If the yearend is less of a problem because of the repo bazooka we got from the Fed, and if the message of my report played a part in getting that bazooka, then that’s a nice way to be proven wrong,” Pozsar says. “But now we’re getting into a point in the year when balance-sheet problems are going to flare up, and I think the system will get gummed up again.”

If he’s right, it means there’s something amiss in a more than $2 trillion market that lubricates the gears of finance. The repo market is where the cash-rich of the financial system lend to the cash-poor, with banks, money-market funds, hedge funds, broker-dealers, asset-managers, and others borrowing and lending to each other short-term. While borrowers in this system have plenty of longer-term assets, on a day-to-day basis they may not have the liquidity they need. Repo lets them borrow cash against those assets to tide them over.

In finance, a lack of liquidity “kills you quick,” says Perry Mehrling, a Boston University economics professor who co-authored a 2013 paper with Pozsar. “How do you not get killed by liquidity? By rolling it over. By saying, ‘I can’t make the payment today. I’ll make it tomorrow.’ That’s basically what overnight repo does.”

On Sept. 17, throughout Wall Street, fund managers were suddenly hurting for this short-term cash, and big banks seemed unwilling or unable to provide it. At the heart of Pozsar’s argument is the idea that two grand experiments—one in monetary policy, the other in regulation—have collided to make the repo market more prone to clogging up in this way.

The monetary experiment is quantitative easing. After the financial crisis, the Fed began stimulating the economy by buying bonds. The money it spent to do so added to the excess reserves held by banks. After years of QE, big banks became accustomed to always having cash to lend in the repo market—they were swimming in excess reserves.

But then the Fed began tapering off QE, buying fewer bonds and reducing the excess reserves in the system. There’s still a lot, but this is where the regulatory experiment comes in. To prevent a repeat of the 2008 crash, bank watchdogs have tightened rules in such a way that the biggest lenders feel they have to keep more reserves on hand. So falling reserves and banks’ desire to hold on to more began to pinch.

At the same time, other financial players were starting to rely more on the repo market. “There’s been a very sharp increase in the demand for funding in the last 12 months, in particular from levered investors such as hedge funds,” says Joseph Abate, money-market strategist at Barclays Plc. In September all these forces combined with a few other quirky events—such as corporations needing cash to settle quarterly tax bills—to create a brief systemwide shortage of ready cash.

“He’s like a spider in the middle of the web, where he can gather this information and then try to make sense of it”

Pozsar says another squeeze is likely. The potential results? Pain for hedge funds that use the repo market as a source of cheap money and a potential ripple effect on assets such as stocks and bonds as investors are forced to cut back on positions. His boldest prediction is that the Fed could push more liquidity into the system by buying longer-term Treasuries again. Pozsar says that would amount to a new round of QE.

In this case, the goal would be to keep things running smoothly, not to stimulate the economy. Some analysts say the central bank is already on top of the situation. “The Fed has been very proactive in addressing the liquidity concerns that emerged in September,” says Jerome Schneider, head of short-term bond portfolios at Pacific Investment Management Co. The issue, he says, “is not that there won’t be enough liquidity, but what the cost of that liquidity will be.”

Pozsar’s warnings get attention on Wall Street because he has a big-picture view of this complex market and can explain it well—at least to those fluent in the language of repoland. “I think he has every short-term interest-rate trader in the world on his speed dial,” Mehrling says. “He’s like a spider in the middle of the web, where he can gather this information and then try to make sense of it.”

Born in Hungary, Pozsar moved to the U.S. in 2002 and began his career at research company Economy.com. In 2008, shortly before the collapse of Lehman Brothers, he went to work at the Federal Reserve Bank of New York, where he became known for creating a map of the financial system that included repo and “shadow” banks outside of traditional lending. It’s so detailed that anyone viewing it on a computer has to zoom in seven or eight times to read any part of it. A poster version was pinned up in the New York Fed’s briefing room. Pozsar encouraged co-workers to stop by to review it, saying otherwise they’d be looking at only “10% of the picture.”

After a stint at the U.S. Treasury Department, he landed at Credit Suisse in 2015, where he began writing research notes about the mechanics of the Fed’s coming interest-rate hike. Pozsar has an MBA but not an economics degree, and his analytical approach differs from that of other bank interest-rate strategists. He focuses more on the human behavior inside banks. “Finance is anthropological,” he says. He thinks it’s important to understand that every bank has a different business model, and how that shapes people’s decisions to lend—or not. Even at a time when the numbers say they have plenty of money.

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HSBC - >>> Hong Kong Turmoil Threatens Banking Giant


BY JAMES RICKARDS

NOVEMBER 27, 2019


https://dailyreckoning.com/hong-kong-turmoil-threatens-banking-giant/


Hong Kong Turmoil Threatens Banking Giant


Most investors recall how the global financial crisis of 2008 ended. Yet how many recall the way it began?

The crisis reached a crescendo in September and October 2008 when Lehman Bros. went bankrupt, AIG was bailed out and Congress first rejected and then approved the TARP plan to bail out the banking system.

The bank bailout was greatly magnified when the Fed’s Ben Bernanke and other bank regulators guaranteed every bank deposit and money market fund in the U.S., cut rates to zero, began printing trillions of dollars and engineered more trillions of dollars of currency swaps with the European Central Bank to bail out European banks.

This extreme phase of the crisis was preceded by a slow-motion crisis in the months before. Bear Stearns went out of business in March 2008. Fannie Mae and Freddie Mac both failed and were taken over by the government and bailed out in June and July 2008.

Even before those 2008 events, the crisis can trace its roots to late 2007. Jim Cramer had his legendary, “They know nothing!” rant on CNBC in August. Treasury Secretary Hank Paulson tried to bail out bank special purpose vehicles in September (he failed). Foreign sovereign wealth funds came to the rescue of U.S. banks with major new investments in December.

Still earlier, in June 2007, two Bear Stearns-sponsored hedge funds became insolvent and closed their doors with major losses for investors.

Yet even those late-2007 events don’t trace the crisis to its roots.

For that you have to go back to Feb. 7, 2007. On that day, banking giant HSBC warned Wall Street about its Q4 2006 earnings. Mortgage foreclosures had increased 35% in December 2006 compared with the year before. HSBC would take a charge to earnings of $10.6 billion compared with earlier estimates of $8.8 billion.

In short, the 2008 financial crisis began in earnest with a February 2007 announcement by HSBC that unforeseen mortgage losses were drowning the bank’s earnings. At that time, few saw what was coming. The warning was considered to be a special problem at a single bank. In fact, a tsunami of losses and financial contagion was on the way.

Is history about to repeat? Is HSBC about to lead the world into another mortgage meltdown?

Of course, events never play out exactly the same way twice. Any mortgage problem today does not exist in the U.S because mortgage lending standards have tightened materially including larger down payments, better credit scores, complete documentation and honest appraisals.

HSBC’s mortgage problem does not arise in the U.S. — it comes from Hong Kong.

Almost overnight, Hong Kong has gone from being one of the world’s most expensive property markets to complete chaos. The social unrest and political riots there have generated a flight of capital and talent. Those who can are getting out fast and taking their money with them.

As a result, large portions of the property market have gone “no bid.” Sellers are lining up but the buyers are not showing up. At the high end, owners paid cash for the most part and do not have mortgages. But HSBC has enormous exposure in the midrange and more modest sections of the housing market.

High-end distress also has a trickle-down effect that puts downward pressure on midmarket prices.

IMG 1

Your correspondent during my most recent visit to Hong Kong. Behind me are the hills of Hong Kong leading up to “the Peak,” the highest point in Hong Kong. Homes on the hills below the Peak are among the most expensive in the world. Due to recent riots, they are in danger of becoming “stranded assets” with no buyers due to capital flight and fear of worsening political conditions.

It’s important for investors to bear in mind that mortgage losses appear in financial statements with a considerable lag once the borrower misses a payment. Grace periods and efforts at remediation and refinancing can last for six months or more. Eventually, the loan becomes nonperforming and reserves are increased as needed, a hit to earnings.

Property price declines and mortgage distress that started last summer as the Hong Kong riots worsened will not hit the HSBC financials in a big way until early 2020. The HSBC stock price may be floating on air between now and then. But the reckoning with a burst bubble in Hong Kong will be that much more severe when it hits.

Another threat to the HSBC stock price comes from Fed flip-flopping on monetary policy. Throughout 2017 and 2018, the Fed was on autopilot in terms of raising short-term interest rates and reducing the base money supply, both forms of monetary tightening.

Suddenly, in early 2019, the Fed reversed course, lowered interest rates three times (July, September and October) and ended its money supply contraction.

The result was that a yield-curve inversion (short-term rates higher than longer-term rates) that emerged in early 2019 suddenly normalized. Short-term rates fell below longer-term rates. That is extremely positive for bank earnings and bullish for bank stock prices.

Now the Fed may be ready to flip-flop again. In their October 2019 meeting, the Fed’s FOMC indicated that rate cuts are on hold. This means that short-term rates may stop falling, but longer-term rates will continue to fall for other reasons including a slowing economy. The yield curve may invert again. This is a negative for bank earnings and a bearish signal for bank stocks including HSBC.

Will history repeat itself with a mortgage meltdown at HSBC leading the way to global financial contagion?

Right now, my models are telling us that the stock price of HSBC is poised to fall sharply.

This is due to the anticipated mortgage losses (described above), but also to an inefficient management structure, repeated failures to reform that structure and management turmoil as a new interim CEO, Noel Quinn, attempts to repair past blunders without the job security or support that comes with being a permanent CEO.

When Noel Quinn accepted the job of interim chief executive of HSBC in August, he had one condition. He told Chairman Mark Tucker he did not want to be a caretaker manager who would keep the bank chugging along until a permanent successor was appointed, according to people briefed on the negotiations.

Instead, Mr. Quinn, a 32-year veteran of HSBC, has embarked on a major restructuring of Europe’s largest bank.: He wants to rid the lender of its infamous bureaucracy while reducing the amount of capital tied up in the U.S. and Europe, where it makes subpar returns. To do so, he will have to slash thousands of jobs.

Investors are understandably skeptical. This is the third time the bank has attempted a big overhaul in a decade, following similar efforts in 2011 and 2015. But returns still lag behind global peers such as JPMorgan despite HSBC’s unparalleled exposure to high-growth markets in Asia, which accounts for about four-fifths of profits.

The stock has declined 11% in a year when stock markets were rallying robustly. Most of the drawdown occurred in August and was a direct response to the worsening political situation in Hong Kong.

While this drawdown is notable, it mostly reflects political anxiety and is not reflective of the mortgage losses that are just beginning to enter the picture. Once the reserves for mortgage losses are expanded to meet the rising level of nonperformance, look out below.

So I repeat the question: Is HSBC about to lead the world into another mortgage meltdown?

We might have an answer sometime next year.

Regards,

Jim Rickards

for The Daily Reckoning

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>>> Schwab Nears Deal to Buy TD Ameritrade in Industry Overhaul


Bloomberg

By Annie Massa and Matthew Monks

November 21, 2019


Acquisition could be announced Thursday: person familiar

Schwab last month eliminated fees for U.S. stock trading


https://www.bloomberg.com/news/articles/2019-11-21/schwab-to-buy-td-ameritrade-in-reshaping-of-online-brokerages?srnd=premium


Charles Schwab Corp. is nearing a deal to buy TD Ameritrade Holding Corp, according to a person familiar with the matter, reshaping a beleaguered online brokerage sector that’s seen fierce competition from new entrants amid price pressure and alternative ways to invest for clients.

A transaction could be announced as early as Thursday, the person said, asking not to be identified because discussions are private.

Scwhab’s purchase would create a $5 trillion titan that would be better positioned to weather the challenges facing today’s brokerages, which include price conscious customers and a low interest rate environment.

Schwab, TD Ameritrade have lagged far behind the market

A deal between the two companies “would expand Schwab’s roster of active traders and solidify its leading position serving independent advisers,” wrote David Ritter, an analyst at Bloomberg Intelligence, in a note on Thursday.

The deal would be worth $26 billion, Fox Business reported earlier, citing unidentified people familiar with the situation.

An acquisition would come at a time of transition for TD Ameritrade. The Omaha-based brokerage said in a surprise announcement in July that Chief Executive Officer Tim Hockey would leave no later than the end of February 2020, rekindling questions of whether it would pursue a deal. Hockey denied that his departure had anything to do with M&A at the time.

It would be the second time Schwab has made a radical move in the space of two months, after it announced zero fees for trades last month.

The move to eliminate commissions swept away a revenue stream and rekindled speculation that online brokerages might have to cut deals to survive the increased industry pressure. TD Ameritrade relied more on commissions than some competitors, drawing 36% of its net revenue from commissions in 2018, compared to 7% at Schwab.

Shares of Schwab were up 9.8% at 8:35 a.m. in pre-market trading in New York. The companies didn’t immediately respond to emails and phone calls seeking comment.

Brokerage Commissions as a percentage of net revenue, 2018

Schwab 7%
E*Trade 17%
Interactive Brokers 41%
TD Ameritrade 36%


Schwab last month announced plans to eliminate commissions for U.S. stocks, exchange traded funds and options. The move forced other brokerages to follow suit and triggered a slump in the shares of such firms, with TD Ameritrade among the hardest hit.

TD Ameritrade has lost 11% since then, valuing the company at $22 billion. Schwab gained 7% in the same period, giving it a stock market value of $57 billion.

Todd Rosenbluth, director of ETF research at CFRA Research, said that a tie-up of the two firms could help address the burn of zero commissions with increased scale.

“It would reduce the likelihood that investors bounce around,” he said. “They’d have a go-to destination.”

He added that the same principle would apply for independent advisers, who increasingly choose between the two firms for clearing and trading services. “There’s scale benefits for them to provide,” he said.

CNBC also reported earlier the firms were in talks, with a deal likely as soon as today.

(Updates throughout.)



Schwab last month announced plans to eliminate commissions for U.S. stocks, exchange traded funds and options. The move forced other brokerages to follow suit and triggered a slump in the shares of such firms, with TD Ameritrade among the hardest hit.

TD Ameritrade has lost 11% since then, valuing the company at $22 billion. Schwab gained 7% in the same period, giving it a stock market value of $57 billion.

Todd Rosenbluth, director of ETF research at CFRA Research, said that a tie-up of the two firms could help address the burn of zero commissions with increased scale.

“It would reduce the likelihood that investors bounce around,” he said. “They’d have a go-to destination.”

He added that the same principle would apply for independent advisers, who increasingly choose between the two firms for clearing and trading services. “There’s scale benefits for them to provide,” he said.

CNBC also reported earlier the firms were in talks, with a deal likely as soon as today.

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>>> Tradeweb Markets Inc. (TW) builds and operates electronic marketplaces in the United States and internationally. The company's marketplaces facilitate trading in a range of asset classes, including rates, credit, money markets, and equities. It offers pre-trade data and analytics, trade execution, and trade processing, as well as post-trade data, analytics, and reporting services. The company provides flexible order and trading systems to institutional investors in 37 markets across 24 currencies. It also offers a range of electronic, voice, and hybrid platforms to approximately 300 dealers and financial institutions on electronic or hybrid markets with Dealerweb platform; and trading solutions for financial advisory companies and traders with Tradeweb Direct platform. The company serves a network of approximately 2,500 clients in the institutional, wholesale, and retail client sectors. Its customers include asset managers, hedge funds, insurance companies, central banks, banks and dealers, proprietary trading companies, retail brokerage and financial advisory companies, and regional dealers. The company was founded in 1996 and is headquartered in New York, New York. Tradeweb Markets Inc. is a subsidiary of BCP York Holdings. <<<


>>> Tradeweb Markets (TW): $1,552.96

Share price on April 3, 2019: $27
Share price on Oct. 22, 2019: $41.93


https://www.msn.com/en-us/money/topstocks/what-dollar1000-invested-in-snap-lyft-and-other-unicorn-ipos-is-worth-today/ss-AAJTj6j#image=16


Tradeweb operates global marketplaces to facilitate the trading of fixed-income securities and derivatives, offering more than 40 products in over 60 countries around the world. The company’s IPO raised more than $1 billion and investors pushed the stock price up 27% from the IPO price the moment they started trading. After peaking in July 2019 at around $50 a share, the stock has fallen back about 20%. Unlike many other recent IPOs, however, Tradeweb is profitable, reporting quarterly net income of $24.8 million in its Aug. 8, 2019, earnings release.

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