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COVID-19's Impact On Fintech

May 01, 2020 9:16 AM ETV, MA, GPN, PYPL, SQ9 Comments


  • Saying "I don't know" isn't helpful.
  • Graham's "Mr. Market" lessons.
  • Defining risk and being prepared.
  • Contactless and mobile payments.
  • eCommerce and cash isn't king.

Manole Capital Management, April 2020

COVID-19s Impact on FINTECH


At Manole Capital, we focus all our time on FINTECH, or doing bottoms up, fundamental research on financial and technology companies. In this note, we highlight our thoughts on risk, being prepared for volatility and we have sprinkled in a few tidbits about some of the long-term ramifications, both positive and negative, for our FINTECH stocks.


Normal recessions do not just upend the economy, but they typically "clean out" any excesses. Our early read on this virus is that two of the overall winners will be technology companies, as well as high-quality growth companies. Luckily for us, these are heavily weighted in our portfolios.

Over the next several weeks, as companies begin to report 1st quarter results, it will be critical to listen to management teams and gauge whether or not they have a good grasp of their fundamentals. Do these management teams and companies have a plan forward? Do they have the capital needed to survive this downturn? How are they positioned for the next 3 months or the next 3 years?

Sell-side analysts crave insights from their covered companies. Anybody can build a model in Excel forecasting future results, but most outcomes and estimates fall in-line with company guidance and expectations. Right now, companies are dealing with the unknown and many companies are not being forthright. Some management teams will discuss earnings power and capital needs, while others will simply remove 2020 guidance and say, "We don't know."

We believe public companies should disclose to shareholders their plans and strategies for dealing with this crisis. SEC Chairman Jay Clayton recently said investors are "thirsting for information" and "companies should be telling the market where they stand from a capital needs perspective." This is a fundamental shareholder right, but many companies will shy away

This article was written by

Manole Capital Management is a boutique asset manager, based in Tampa, Florida. Launched in 2015, Manole Capital exclusively focuses on the emerging FINTECH industry. Warren joined Goldman Sachs Asset Management in 1994, following graduation from Lehigh University. On GSAM's Growth Equity team, Warren was a portfolio manager on various '40 Act mutual funds, as well as having primary responsibility for certain companies in the financial and technology sectors. After nearly 20 years at GSAM, Warren left and joined Logan Circle Partners in 2013. Leveraging his accounting background from Lehigh University, Warren received his Certified Public Accountant license in 1998. In 2004, Warren received the Chartered Financial Analyst designation.

Analyst’s Disclosure: I am/we are long V, MA, PYPL, SQ, GPN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (9)

What do you think of the toll booth operators V and MA?
Manole Capital Management profile picture
We have written up both V & MA several times:

Here's an article from 2017:
Manole Capital Management profile picture
Here's another article we did on the payment space, from last year:

Manole Capital Management profile picture
Thanks for the positive commentary. Please take a look at our 2nd Quarter 2020 Investor Newsletter, also published on Seeking Alpha. That note reviews our bigger picture thoughts on the new COVID-19 economy, the various stages we are dealing with, the Nike Swoosh vs a U or V-shaped recovery, gov't & Fed stimulus measures, the "Grand Re-Opening", unemployment, etc.
TheGreySquirrel profile picture
I haven’t used cash in seven weeks. I have used Cash App and credit cards extensively. Cash (and banks) will be like camera film in the next ten years— still around but very niche.
Allen Greathouse profile picture
banks make the credit cards
mikenh profile picture
and buy legislatures.
Fantastic article ... your absolutely right ... balance sheet strength is paramount

What are your thoughts on STNE? Do they have sufficient balance sheet strength?

I love their business model but I find the balance sheet a little difficult to decipher
Manole Capital Management profile picture
We like STNE, but the stock has been very volatile. Brazil has unfortunately been negatively impacted by COVID-19, but electronic payments should actually be a long-term positive (at the expense of cash).
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