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.