Viking Global Decreased Its Position in Visa

Highlights of Viking Global Investors’ 4Q14 Positions (Part 15 of 17)

(Continued from Part 14)

Viking Global and Visa 

Viking Global decreased its position in Visa (V) by over $ 407 million. It sold 2,119,013 shares in the stock. It represented 1.7% of the total portfolio in 4Q14.

About Visa

Visa is a global payments technology company. It provides fast, secure, and reliable electronic payments. The company also provides a wide variety of payment solutions. It offers a growing suite of innovative digital, eCommerce, and mobile products and services. Visa operates one of the worlds most advanced processing networks, VisaNet. It facilitates the authorization, clearing, and settlement of payment transactions worldwide.

Visa’s operating revenue primarily comes from payment volume on Visa-branded cards and payment products for purchased goods and services, as well as the number of transactions processed on its network. The company’s revenue comes from service revenue, data processing revenue, and international transaction revenue.

According to Visa’s 10K filing, its payments volume, total volume, and number of transactions make Visa the largest retail electronic payments network in the world.

Visa suspends service in Crimea

In December 2014, Visa and MasterCard (MA) announced that they will be suspending products and services in Crimea.

A statement from Visa reported that “Due to the latest U.S. sanctions imposed against Crimea by Executive Order 13685 of December 19, 2014, Visa is now prohibited from offering Visa-branded products and services to Crimea. This means that we can no longer support card issuing and merchant/ATM acquiring services in Crimea.”

Discover Financial Services sues Visa

In November 2014, Discover Financial sued Visa—the world’s largest credit card company. According to court documents, Discover Financial alleged anticompetitive practices in Visa’s debit card business. Discover Financial sought compensation for the lost profit.

Discover Financial stated that “in order to maintain its monopoly, Visa has undertaken a series of illegal actions that undermine competition – harming rival debit networks, merchants, acquirers, card issuers, and consumers.”

Visa announced 1Q15 results

In January 2015, Visa announced the financial results for 1Q15. It reported net income of $ 1.6 billion. This is an increase of 11%, or $ 2.53 per share—compared to the year before.

For 1Q15, the net operating revenue was $ 3.4 billion. This was an increase of 7% nominally, or 9% on a constant dollar basis—compared to the year before. The increase was driven by solid growth in service revenue, data processing revenue, and international transaction revenue.

The strengthening of the US dollar impacted net operating revenue by ~2% of negative growth during the quarter. The total operating expenses were $ 1.1 billion for the quarter—a 6% increase over the year before.

Visa has a 0.71% exposure to the SPDR S&P 500 ETF (SPY). MasterCard (MA) has a 0.48% exposure to the iShares Core S&P 500 ETF (IVV). SPY and IVV track the overall performance of 500 publicly traded companies in the growth category.

In the next part of this series, we’ll discuss Viking Global’s position in Newfield Exploration.

Continue to Part 16

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