Bookkeeping: Rebuilding Mastercard (MA)

Finally some relative bargains are appearing. Mastercard (MA) got whacked in the summer credit swoon and seems to be thrown into the 'financials' bucket - granted its a financial company but it is basically a transaction company, simple as that. Further, half of its revenue is overseas and I expect that to continue to grow as we get the middle class of Brazil, China, India, et al up and running. They love all things American so credit is the next step (who needs savings in this world anyhow?!)

There are also worries in this name that the stretched consumer is going to slow down but I'd argue that "could" be a positive or at worst neutral as a stretched consumer uses what when he/she doesn't have cash? Credit! I've already been reading how the worst off in the US are paying off their credit cards ahead of their mortgages (and Mastercard does not even have that risk which is another misconception - the banks offering their branded cards are the ones who carry the risk)

So you have a global brand, which will benefit from weakening dollar, with growth avenues in 3/4 of the world - and its getting throw out with the Citibank's of the world. Typical lemming behavior.

Technically, the stock has pulled back from a high of $169 a few days ago, to $155, or a 8% pullback. It is now sitting at its 20 day moving average and with the weakness in financials I would not be surprised to see a pullback to the 50 day which is just below $152 - not far from here. In the summer swoon the stock dropped to roughly $130 so I'd consider that the downside risk. (and be a massive buyer there). Earnings are at the end of the month and the stock loves to sell off after each earnings so we could have another buying opportunity there.

The stock is not cheap, but the reality is there are only 2 companies in the world in this niche (and no Discover or American Express are not the exact same) - and the other one (VISA) will be coming public at some point in the near future - so the market has deemed a 30 PE ratio to be fair value.

I added 50 shares today ($7800) to push the position back up to 1.5% of the portfolio. This stock won't rocket up 40% in a month but it's a solid bedrock type of stock for the portfolio. If we get more of a pullback, I'd be eager to add more.

My other major large cap financial, asset manager BlackRock (BLK) is simply on fire and won't pull back. Another company that is a stealth globalization play - that I sold down much too early. (note: that is BlackRock, not Blackstone (BX))

Long Mastercard, BlackRock in fund; no personal position