Visa
It’s Everywhere You Want To Be

Visa. Love every day. (Europe)
Visa. All it takes (Asia-Pacific campaign)
Visa. All you need. (Canada)
Wherever it takes you, the future takes Visa (Europe)

Visa is the only growth stock that I decided to keep in my portfolio over the past several months. Countless people wrote to me asking “why” I was still holding the stock after I mentioned it in False Markets in October, even though it had violated the 50-d moving average and was trending down. I didn’t have a technical answer and I honestly wasn’t following any rules. I fell victim to a greater power that told me to hold, regardless of everything else. Technically speaking, it was and still is the wrong thing to do and goes against all sell rules on this blog.

My reasons were more fundamental than technical, especially due to what was happening on the street. I explained my reasons in both of these posts:

• VISA (V) set to Launch
• Anticipating the VISA IPO

Why do I like VISA’s potential?

• $1o Billion would represent the second largest IPO ever!
• Revenues are expected to grow steadily as consumers continue to use their cards
• VISA processed 44 billion transactions totaling $3.2 trillion in 2006 (Mastercard processed 23.4 billion transactions totaling $1.9 trillion)
• VISA has made $771 million on $3.7 billion in revenue during the first nine months of 2007
• VISA makes their money from the fees it charges to card users and merchants using its network

BEST OF ALL:

• Because it acts as an intermediary, Visa doesn’t sustain losses when consumers don’t repay the debts run up on credit cards bearing its brand. Those liabilities instead fall to the banks that issue the cards and set the terms of repayment
• Most of Visa’s major stockholders are banks. They include: J.P. Morgan Chase & Co., which owns 23.3 percent of the company’s Class B Stock; Bank of America Corp., 11.5 percent; National City Corp., 8 percent; Citigroup Inc., 5.5 percent; U.S. Bancorp, 5.1 percent; and Wells Fargo & Co., 5.1 percent.

Now, Visa is back above the 50-d m.a. but something is still wrong, volume is lacking on the upside. I want to see a surge in volume and I also want to see the govenment to butt-out. Banks may fail but Visa is not the one on the hook. I could be playing this all wrong and as I have already said, I am not playing by the rules but I see Visa coming out on top after the skies clear. I am still long Visa.

Who knows, maybe it’s another lesson in a long line of lessons I thought I had already learned.

I am going to disclose the holdings in my growth portfolio because I have been receiving questions as to what I am currently investing in (during the so-called bear environment). Readers ask what I actually own and want to know why I present stocks that I do not own.

So, to answer some of these questions and requests:

• I will disclose my growth portfolio which consists of stocks that I anticipate will provide a rate of return greater than the general market averages and 90% of all listed stocks. I have owned shares in a couple of these stocks for a lengthy period of time. However, I will note that the size of the positions in MA, JASO and EDU have changed just as the market environment has changed. I have both added-to and sold-out of shares over the past 6-12 months.
• This blog is treated as an educational and equity research site. I am providing a portion of my own research in public while trying to help others based on the knowledge I have accumulated in the market. I research and study hundreds of stocks every week but I only buy a handful over the course of a year.

Anyway, the six stocks below are all currently positions in an account I consider my growth portfolio (stocks can be held from a few weeks to a year). This account buys young innovative growth stocks that have the potential to provide returns greater than the vast majority of the equity market. It’s a long portfolio. I have other portfolios that buy options, ETF’s, value plays and short from time to time but this portfolio most closely resembles my research and writing style on chrisperruna.com.

If you are wondering about this year’s losing trades (closed trades), most of them were sold prior to leaving for Mexico in late March (and I had several across the portfolios).

I am disclosing the positions because I am reevaluating the holdings while looking for new potential buys. Visa is the latest purchase and is up over 16% since accumulating my first batch of shares. I would like to buy additional shares in Visa once I determine how to reallocate the funds within the portfolio. Some new faces are popping up on my research scans and may be worthy of consideration versus the longer holdings and rebound plays.

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