It is a shame my posts on these topics over many years are lost. In any case, here is a simple graph that shows the power of buying solid companies
The starting data is my last purchase of MA, comparing with SPY and QQQ.
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A shame indeed. Much needed context:
Author: Kingran
Subject: Modern Monopolies 2
Date: 5/6/2017Visa and Mastercard. The use of credit cards are only going to grow worldwide. This is just a network company, with no credit risk, similar operating margin, similar payout ratio and both shrinking float (shares through buyback) and both increasing dividend yields. There are newer payment solutions coming out. However, I view them as niche and V & MA will eventually play in those spaces too, because of their dominating presence and both has significant worldwide growth ahead. The PE’s are around 30. In this market profitable companies with slid moat, 10% growth, are not going to be cheap.
Good call!
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Thanks for finding this!!!
Master card (MA) is at the cusp of breaking out all time high and so is Visa.
The markets trend and right now, we are in a bull market. However, difficult it may be to accept. One can enter short-term trade here. Unfortunately I am almost out of cash and cannot even nibble here. Good luck to those who are buying here.
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The power of monopolies…
Visa and Mastercard are planning to increase fees that many merchants pay when they accept customers’ credit cards.
The fee increases are scheduled to start in October and April, according to people familiar with the matter and documents viewed by The Wall Street Journal. Many of the increases are for online purchases.
The changes could result in merchants paying an additional $502 million annually in fees, according to CMSPI, a consulting company that works with merchants.
From that post both MA & V moved up 10% however trailed SPY (20%). Separately, the below chart shows the growth of cards and the decline of checks.
The monopolies keep delivering. Both MA & V reported solid results and moved up. I stopped following these companies. They are just there in the portfolio, forgotten.
They may be industry leaders but they do have competitors including Discover, American Express and numerous other payment systems. Paypal, Block, Venmo, etc. And don’t Apple and Amazon have payment systems.
How is this a monopoly?
- First MA, V and AXP are not same. AXP actually lends money and the loans are on their balance sheet. MA & V are just network companies.
- My original purchase was in 2016, 2017, that’s when I started the monopoly thesis. Yes I identified $PYPL’s of the world as future competition and as the market matures I expected MA & V to play in those sandbox
- I have added $PYPL to MA&V, but if you look at MA, V margin vs these other companies, they are not in the same league.
- What good is competition, if it cannot impact the margins??
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