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  • Visa and Mastercard: The Mortgage Brokers of the Credit Card Industry
    Adesai,

    I totally agree with you about the positives. The problem is that people like Sean and Joanne are arguing short term and we are arguing long term. The Asia market is not yet fully developed but is being created as we blog, therefore the results are not yet factored in. This is a long term strategic plan for the company. Also, the paradigm shift from cash/checks to cards is also taking place. We could anticipate an steady increase or growth in the card(s) usage. The short term credit market is a concern (short term) and does pose a risk that can not be ignored. So while I too appreciate the negative write-ups about Visa, I would rather they take a long term point of view. This is why I constantly ask Joanne and Sean for a long term opinion. They haven't answered because, objectively, if you look long term this is a good buy. The most significant risk I see long term is not the credit markets or the competitors but rather government intervention and regualtion. This will hurt V and MA the most.

    I also agree that V issued way too many shares. I would love for them to buy back some of the shares which would create more shareholder value. Unfortunately the pre-planned buy back is for shares from Visa Europe and other V subs. Not sure if they have any plans to buy back Class A shares.

    I hope they beat the forecast on April 28th!!
    Apr 17 18:07 pm |Rating: 0 0 |Link to Comment |View article
  • Visa and Mastercard: The Mortgage Brokers of the Credit Card Industry
    Sean,

    So if I understand, you don't have an opinion on what a correct or reasonable valuation is for this stock but all you know is that it is trading at a high PE ratio. And with the weak credit market, you are wondering if why it has not come down.

    Have you thought that maybe it isn't at a high PE ratio? I mean what are you comparing it to? What is your benchmark? Are you using financial stocks or the overall stock market? Bank stocks aren't a valid benchmark and really they have not peer pure plays. AMEX and Discover aren't either. What to do?????

    PE ratios are all realtive in determing valuation and are not alway the best or only way to determine valuation. It is a good indicator and historically a proven ratio but there are other circumstances that warrant analyst to look at "other" factors.

    There are so many companies today that trade pubically that have negative earnings. There PE ratio would be negative and therefore based on this one ratio the impirical valuation would be $0. But yet they are actively traded, have probably inflated market caps and people are buying these stocks.

    What I am trying to say is that I see what you are saying with the deteriorating credit markets and what this could mean for V and MA earnings but you have to look at the big picture and there are other ways to measure value, afterall it is a very subjective measurement for large companies. And PE is not the only way, plus you have to add the whole "potential" intangible aspect to this equation.

    Now you are also working under the assumption that the markets are efficient and should price in the looming dark credit outlook in a lower price and therefore by simple math the PE ratio should therefore be lower.

    This again is assuming that the credit crunch has negatively affect both V and MA, also, as we can see the market is not really being reasonable or predictable right now. Well we haven't heard the earning call just yet so we don't know what the outcome of the credit crunch has been to date.

    Again, I ask you, what happens to this stock when the credit crunch is over, the credit market improves, liquidity comes back, default and delinquencies come down and we are in normal (if there is such a thing) market. Now at that point, is V or MA a good stock?
    Apr 16 19:28 pm |Rating: 0 0 |Link to Comment |View article
  • Visa and Mastercard: The Mortgage Brokers of the Credit Card Industry
    Sean,

    All your arguments have been short term external factors. When I say short term I am not making light of the current economic situation, but eventually the economy, stock market, housing market will improve since all these are cyclical in nature.

    What happens in 1,2 or 3 years?

    Also, what stocks WOULD you buy now? Easy to bash but harder to actually put your neck out there and pick a stock or 2.
    Apr 15 17:39 pm |Rating: 0 0 |Link to Comment |View article
  • Visa and Mastercard: The Mortgage Brokers of the Credit Card Industry
    Sean,

    This is the 3rd time I am asking both you and Joanne. Since both of you have an opinion (negative, which is your opinion) on this stock, how about you give us what you THINK it is actually worth? Almost every stock publically traded is a deal at a specific price. What is your price for Visa that you would buy it?

    You talk about the negatives, what do you think this stock is actually worth today? Most analyst will give an opinion based on their assumptions which are subjective, but they will usually have a best-case and worse-case scenario. All you have is the worse-case, when is this stock a buy, $40, $50, $60?????

    Your article, similar to Joanne's article points to the weak economy, recession, tightening credit, delinquencies, as the reason why this stock is not a good buy and grossly over-valued.

    Here are a few questions for you.

    1. How long do you think this recession will last?
    2. What happens to Visa stock once the recession is done and we are in a bull market?
    3. What would you say is the low stock price or, in your opinion, the right valuation of this stock?
    4. What would you speculate is an appropriate value and target price for the the stock in 1 year?
    5. Would you ever buy Visa, if so, at what price?

    I am trying get a feel for your outlook. I understand the negative forecast but at some point if you are anlyzing this stock you have to point to a positive. If not the perception is that this stock is not a buy at all and I would think any reasonable person could argue against that. But again if you don't think Visa is a buy at all, let us know why long term you would not buy it.
    Apr 15 17:35 pm |Rating: 0 0 |Link to Comment |View article
  • Mastercard, Visa: Q1 Earnings May Be Fine, But Guidance Will Be Weak
    Sean,

    Joanne never did answer a question I had regarding the "recession". Her article, similar to your article, has the recession, tightening credit, delinquencies, weak economy as the reason why this stock is not a good buy.

    Here's my question to you.

    1. How long do you think this recession will last? (joanne thinks forever)
    2. What happens to Visa stock once the recession is done and we are in a bull market?
    3. What would you say is the low stock price or, in your opinion, the right valuation of this stock?

    I agree with you on one thing, in a prolonged recession environment, Visa and MC earnings will decrease but they are still better positioned then stocks like Google, Apple in a long recession. If the recession and weak economy last a short time, there will be very little negative impact or none, especially since people tend to survive on credit cards when times are tough. Also, not everyone is affected by the weak economy and not everyone is defaulting on a mortgage or credit card. In fact the majority are NOT.

    I think you are going to lose the April 28th earnings release and I would have to side with buyv.

    Lastly, it would help greatly if Visa bought back some shares but I know they won't. They are going to buy back Visa Europe shares but that doesn't count. The high number of shares has dampened the price run that MA has seen. This is causing the PE ratio to be high, thus creating a very high valuation. If they only released 200-300 million we would see the same type of run as MA. However, I still fully expect a decent run because of the strong earnings, strong future growth and the short term shield from the recession.
    Apr 11 15:48 pm |Rating: 0 0 |Link to Comment |View article

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