Travis Johnson

Deconstructing Mastercard

While there are various lockup periods for small holders, I think, and one of those just expired last week, the main lockup period requires some significant patience: The big holders have a lockup on about 60 million shares for four years, so 3-1/2 years to go. And of course, they may not want to sell even then.

I'm inclined to be somewhat concerned about the MA valuation, too, as noted by the FIG trader, but if all else was equal and I didn't have the concerns about competition and antitrust issues I think global cashless payment growth could easily justify the high valuation. In other words, if I was convinced that Visa and MC could maintain their shared duopoly of international cashless payments without cutting their rates, I'd buy in a heartbeat even if I didn't think MA could take market share -- the pot will be big enough that the way its split will be less important.

Thus, the fence I'm on. I haven't looked in as much detail at COF or AXP, I just like the sector in general -- so thanks for the valuation comments.