Visa IPO? Priceless

If you missed the Mastercard (MA), you will get a second chance with VISA - however I think the cat is out of the bag and I expect the 2nd biggest IPO in US history to open with a huge premium. Therefore the only people who benefit are those connected folk who get the IPO price. (this is why I need a real mutual fund)

• Visa Inc., the world's largest card payments processor, filed plans for a $10 billion initial public offering late Friday, following its main rival MasterCard Inc., which went public in May 2006.
• Visa said it generated net income of $771 million in the first nine months of this year and operating revenue of $3.73 billion. Last year, the company made $437 million on $3.91 billion in sales.
• Visa said it has the potential to grow as people, companies and governments change from paper-based to electronic payment. Global card purchase transactions are set to grow 11% a year from 2006 to 2012, with particularly strong growth in Asia, Latin America, the Middle East and Africa.

All the same reasons I outlined to favor Mastercard [Rebuilding Mastercard], apply to VISA.

Disclosure: Long Mastercard in fund; no personal position

Comments

[sunrises]

Hi,
How can someone buy an Initial Public Offer? By definition its offered for the public; yet, it's only given to the "big/connected Folks" for purchase. Isn't this undermining the principal or our democracy? Is there anyway to purchase an IPO? Also, There are many of us ready to invest in usa companies to support and prevent a recession, yet which companies offers similar growth & return as emerging markets?

Other questions, FTO has a good forward growth yet it's price hasn't increased as much? MON, us based company, has a strong growth and stats; however, it is moving slowly? DIG, oil fund, covers all the toppers of oil. What is your or another pro's opinion?

2007 Nov 13 04:48 PM

[sunrises]

In addition, VMW is one of a kind, in virtual solutions, similar to GOOG. Other competitors may aim to copy, yet isn't this the only company which has the largest market space & growth in virutual solutions? Any opnion please. Today’s market is up, yet how long will it take to return as before the last four days?

2007 Nov 13 06:07 PM

[TraderMark]

Hi Sun,
You are correct - the small guy is pretty much left out of the IPO game - he/she has to buy at the open the first day and many times missed many many % of gain that the big guys "connected" folks get. Unless you have an established broker relationship (I mean with a real broker not an Etrade account) and a lot of money you usually never have a chance. But that is par for the course in America, no? :)

FTO will do well if crude drops and/or gasoline rises - I expect crude to drop to low 80s in time. Its a very crowded trade and if oil were not priced in dollars I'd expect more like 70s ... but the dollar deprection keeps the price of crude up.

MON is already very pricey, >40x earnings last I checked (forward earnings!) so its tough to go much higher. It can. but its expensive. Hence I prefer fertilizer plays.

DIG - I have actually been in DUG which is short DIG :) But thats a near term call. I think oil is a bit stretched and needs to come back in, when it falls a bit more than something like DIG might be interesting

VMW I was going to write a piece about it but have not had time. I am laughing at all the so called competition. There is 1 real competitor. I bought VMW on this dip. It is very expensive but is unique. Every company is trying to get into virtualization, Oracle, Microsoft, Dell, blah blah. They are a year/years behind. Only 1 small company is really competing.

2007 Nov 13 08:42 PM

[sunrises]

Hi Mark:

Agree. Yet, there are always new solutions in america. Perhaps, there is a way; and just maybe, a route to buy a Public offering for the little folks.

Thanks for sharing about FTO. I actually bought some after your review. MON agree is pricey yet its 5 yr growth is 40% thus I bent towards the crop preserver. Does the 40% growth outweigh? DIG- thanks - still will have to wait to sell. VMW - is very good and will have to wait some time for the competitor's product.

2007 Nov 13 11:52 PM

[sunrises]

Hi Mark:
Further question. As the market keeps declining... keep getting deeper in the hole that has been DUG by DIG. Bought in one of previous market lows at ~109 thereafter fluctuates in the 90s and low 100s. Is there any recovery in the near future or even a gain? Quite a few stocks appear to remain in there low rather than recovery to some mean. How does one invest if the loss keeps increasing rather gaining? Otherwise, wouldn't the incremental increase of fear factor keep investors farther away from buying.

2007 Nov 15 06:37 PM

[jonreagan]

Hi there,
One famous (infamous?) TV show host suggested that the VISA IPO will adversely impact MA. Somehow, I just don't see the logic. It's as if he was suggesting that there's a fixed pool of money which can be invested in credit card/payment processor stocks. Would like your take; thanks.

2007 Nov 13 10:49 PM

[TraderMark]

Jon, I saw that and found it a bit ridiculous. Just as you stated, its as if there is only so much money out there and it has to go one or the other

if anything, if you need financial exposure there are few areas of safety and these 2 offer them. That said, I think VISA will pop very quickly to a similar valuation to MA. MA had the advantage of being the first, with no pure peer so it was underpriced at first.

2007 Nov 16 04:15 PM

[sunrises]

Hi Mark:
When do you think Visa will be offered to the public?
Thanks for your view.

2007 Nov 26 02:30 AM

[sunrises]

Hi Mark:
When do you think Visa will be offered to the public?
Thanks for your view.

2007 Nov 26 02:30 AM

[sunrises]

Hi Mark:
When do you think Visa will be offered to the public?
Thanks for your view.

2007 Nov 26 02:30 AM

[sunrises]

Hi Mark:
When do you think Visa will be offered to the public?
Thanks for your view.

2007 Nov 26 02:31 AM