Visa IPO Follow-up!

So trying to read the news and other people's opinions on Visa should have you confused at best. I think I should change careers and become a financial advisor, since you don't ever have to be right nor consistent to sell your services to those trying to figure out what to do with their money. I have seen Cramer go from everyone shoudl buy Visa to having a bearish stance on it a few days ago. Most blogs or comments on Google Finance sway from buy now at before it continues to climb to sell because it's going to test its IPO price and beyond.

Since I am not a fincancial advisor I will stick with my original story of buying some at the open, then more as it dips and then make a last run as it begins to climb on some strong volume and instituitional interest.

I have purchased three times now, first at 56.70, then 64.60 and finally at 60.05. My cost basis is right around 60 even. Had I not bought the first round I would be negative right now as are much of the people I know. Not by much but it is never a good feeling to put a chunk of money into a stock and continue to see red when you check your account.

The strategy worked so far. But the question is will Visa rise, and if so when. Well, if I could answer those questions with a high probability I wouldn't be writing this blog... So let's take a semi-educated view on this. At first look, it's Visa so of course it's going to grow and probably surpass Mastercard. This is what a lot of people have said and are still saying. This is purely an emotional investment strategy, not to say it will not perform like this but still not based on facts and figures.

The latest news about the lawsuit investigation about interprocessing fees in the EU already hit Mastercard and didn't effect its price. Besides Vise Europe is not included in the IPO shares.

Asian market commentators are talking about the numbers of users potentially available and the current talks of "card technologies" that contain the Visa logo on them. So this is good news, since for the stock to grow, either investors buy it up ( push the P/E way up or it grows legitimally because the company has grown...

The stock has been porforming very well in relation to the market, very very low volume right now. No radical price fluctuations and has not challenged any new floor.

Once institutions are allowed to buy, and if they do, this will help us individual investors since there's nothing like watching what the big-guys are doing with the stock and following suit, sometimes...

Finally, the insider buying at the original IPO price is somewhat encouraging. Albeit, these guys, who do not need the extra money, could turn around and sell it for a 20$ increase and make some quick profits. But usually a good sign when insiders are buying and not exercising options to turn around to sell.

I have been watching moving averages and bolinger bands when I bought just to add a little technical credance to what I was doing, I did get in a good price points within the day by watching the charts and buying after-hours.

My plan is to ride this out until the economy stabilizes and institutions start buying as well as watching the options when they become available and buy as the indicators support buying as well.

My last word for the day is to hold on to this over the next 12-18 months before deciding to do anything. That is unless the market falls out...

First Day IPO Trivia

An interesting bit or trivia from the SF Gate this morning...

How some previous well-known IPOs faired their first day...

Company Date IPO price Closing price Gain

Visa 3/19/2008 $44 $56.50 28%
MasterCard 5/25/2006 39 46.00 18
Google 8/20/2004 85 100.34 18
UPS 11/10/1999 50 68.12 36
EBay 9/24/1998 18 47.38 163
Netscape 8/9/1995 28 58.25 108

Pulled the trigger

It looks like the floor, at least for today, was around $55-56. I bought a third at 56.70 in the aftermarket. Will keep watching the charts and volume for the next two trigger pulls. Keep this for the long term 12 months and 1 day and enjoy the profits at a 15% tax rate...

Downward Momentum on Visa?

Looks like Visa has found a floor for now around the 55-56$ mark. Keep
watching the momentum and buy accordingly. I think anything below 50
would be a good deal but it might stay depressed for a while. Remember,
Mastercard was below it's open for about a month and half...

I currently have a limit order in at 50, will adjust if momentum
dictates.

Visa Near Real Time Bid Ask

Here ya go... People are trying to make some money today. Largely Bid
prices are below $60.

http://datasvr.tradearca.com/arcadataserver/JArcaBook.php?Symbol=v&x=12&y=6

It's Official $44

$44 a share $2 above expected high…

Visa Quick Update

Nothing official, but some sights are reporting the shares will price
$1-3 above the max range. This puts the IPO price between $43 and 47.
In addition other "experts" have said the real price should have been
around $73 based on current valuation. Good luck to all...

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The Big Winners of the Visa IPO will be

The big winners of Wednesday's IPO will be:

JP Morgan Chase & Co (JPM.N: Quote, Profile, Research), selling roughly
28.7 million shares for proceeds of as much as about $1.2 billion.

Buying Bear Stearns for $2/share... Just over $200M, something
to do with the over $1B mark...

Bank of America Corp (BAC.N: Quote, Profile, Research), selling roughly
14.3 million shares for proceeds of as much as about $600 million.

National City Corp (NCC.N: Quote, Profile, Research), selling roughly
9.9 million shares for proceeds of as much as about $416 million.

Citigroup Inc (C.N: Quote, Profile, Research), selling roughly 6.9
million shares for proceeds of as much as about $290 million.

U.S. Bancorp (USB.N: Quote, Profile, Research), selling roughly 6.2
million shares for proceeds of as much as about $260 million.

Wells Fargo & Co (WFC.N: Quote, Profile, Research), selling roughly 6.2
million shares for proceeds of as much as about $260 million.

Source: Visa Inc amended registration statement with the U.S. Securities
and Exchange Commission, with proceeds calculated based on an IPO price
of $42 per share. (Reporting by Lilla Zuill, editing by Gerald E.
McCormick)

Visa IPO Price Date Moved

According to Goldman Sachs the pricing of the IPO is being moved to
Tuesday instead of Wednesday...

A Golden Play, Is Gold ready to jump... Again?

In light of all the recent market news, economic outlook, weakness in the dollar and now troubles in the African Mines w/ power is looks like the best time to buy gold.  Current analyst are pointing to an 1100/oz price in the next few months.  Below are some top performing ETFs and Trusts.  Two almost mirror each other and have equal expense ratios that are extremely low at .4% providing some options, mainly who you like better.  Both have a long-term positive history and invest directly in Gold Bullion… Nothing else.

 

Rankings from the Street:

 

Name                                                             Peer Rank     Ticker       YTD         1 Year  3 Year  Expense Ratio

 

Market Vectors TR Gold Miners                          7              GDX        7.24         27.04       0             0.55

Central Fund of Canada                                       6              CEF         13.67       28.53      33.03      0.43

Gabelli Global Gold Nat Res&Income                 8              GGN       -4.56        22.22       0              1.17

iShares Silver Trust                                               10            SLV         13.08       24.09       0              0.5

Central Gold-Trust                                                9              GTU        14.85       40.52       21.48       0.34

PowerShares DB Silver Fund                               5              DBS         12.1         21.64       0              0.54

PowerShares DB Precious Metals Fund             2              DBP         8.17         32.3         0             0.79

PowerShares DB Gold Fund                                1              DGL        7.5           35.53       0              0.54

iShares COMEX Gold Trust                             4              IAU         8.31        38.77      29.1        0.4

streetTRACKS Gold Shares ETF                        3              GLD        8.36         39            29.16       0.4

 

Market Vectors Gold Miners (GDX) is a pure ETF holding several Gold Mines (no pun intended) and manufactures that have almost all returned over 25% YTD.  Hence the number 1 position from the street.  That coupled with a .55% expense ratio makes it a great opportunity as well.

 

So what about Silver, Copper and platinum???  Aren’t people stealing copper out of everything they can to re-sell?  Silver has been climbing as well.  Platinum which is Gold on steroids is expected to be trading at 2500/oz in the next month as well.  Something to look into...

 

Strategy to Buy Visa

So you have you're money in your trading account ready for the 20th...
What is the best way to execute a buy or buys and get in at a low price
and not have all your money tied up in case the stock doesn't do what
everyone thinks it will... Let's look at Visa's counterpart Mastercard:

MasterCard first day close: $46
Down to $44 within the first 5 days of trading.
Stayed below $46 for most of the first two months.

As you see there would have been opportunity to buy and still make a lot
of money. This is relatively true of most IPOs. Everyone wants to get
in so they buy at the open and then the profit takers take their profits
and sink the stock a little, sometimes a lot.

So the intent of a buying strategy is to ensure you obtain some shares
in case there is no pull back but hedge against a pull back and limit
the loss if the pull back is wide. If the stock doesn't go down and you
buy more over the first several weeks the problem is your cost basis
rises, but you still own Visa and it's better to buy up then down. If
it does go down and you buy over the first several weeks your cost basis
goes down. Either way you are ensuring yourself a chance to get in on
Visa and ride the long term investment.

My strategy is evolving; I am currently taking a thirds approach, I will
place an order to buy 1/3 of my investment at my comfort price and then
watch for a pull-back, possibly take some profits if I can time it right
then buy another 1/3 or 2/3 plus profits. Finally if there aren't any
more indicators of a pullback I'll pull the trigger on the last 1/3...
Geeky sounding but it should work...

If you are able to buy at your comfort price on the opening day do so
but for those that can't there should be time to get in at the same if
not slightly lower price as the open.

Anyone else have a strategy for buying IPOs let us know!

Response to "What about BIDU?"

BIDU was IBD's #1 of their top 100 for a while but this year BIDU has
made moves to acquire multiple companies to help propel them in the
future. They are/should remain a strong long holding but I don't see
the large rapid increase this year as the past.

For less risk I'd go with QQQQ for now. It's an ETF that plays GOOG,
RIMM, AAPL. All way undervalued right now. Not internationally based
but a good long-term holding with dividends. It is one of the most
active trades on sharebuilder.

CROX Rebound?

CROX is starting to move, volume is showing stong buys and even a Crox
Director buys 250,000 shares, In a Form 4 filed with the SEC, Michael
Marks reported he bought the shares for $19.87 to $20 apiece on
Thursday. The floor may have been hit. A couple more trading sessions
like this and it could be a strong positive sign of a rebound... I like
the fact the the director bought at the 20$ mark. No options exercised,
etc shows strong belief in the companies future...

Visa IPO Prospectus

Some light reading for those that are interested…

 

http://www.sec.gov/Archives/edgar/data/1403161/000119312508036833/ds1a.htm

 

Still receiving great news ahead of next week’s debut.  IBD highlighted today in the news…

Great article on Block Buster vs. Netflix

Could this be a potential 3 or 4 banger? Not that I'm speculating...

Check it out here:
http://community.investopedia.com/news/IA/2008/And_The_Award_For_Best_Mo
vie_Rental_Company_Goes_To.aspx

Extra, More Visa IPO Thoughts

It’s been quiet lately on the news front so I decided to make my own.  It’s getting close and the local crowd has been maneuvering investments as needed to free up some cash to invest on either 19 or 20 March just depending which one of us gets lucky.  So the question is to invest the day it opens after the IPO or wait until the pullback, should there be a noticeable pullback.  Well here are my thoughts, as usual…  There are two things that I am focusing on and neither of them are things you can really research your way into a strong decision.  One, is who is really making out and why now.  I’m thinking the answer to number one is the banks that are going to make about 10B out of this and are in need of some cash on the books given the current credit crisis.  That is the abridged explanation as to the who and why now question.  The second question is how much can Visa really grow given the PE that they are opening (Ok, PEs don’t necessarily mean that much) with the current environment.  Now the second part is the purely speculative or this question.  You either say as times get rougher with the economy people will turn to credit to buy things and pay over time or you say people will  not use credit as much out of fear of not having the same income due to job changes/losses or loss of equity in their homes.  So who is right?  Don’t know, I guess we could do some statistics and call a number of people and get somewhat of a technical indicator but… that’s not going to happen.  I see momentum and interest driving the price higher than the IPO then a pullback and becoming a good long-term holding.  Also, is their really much room for Visa to grow.  Growth is the question.  Will Visa be a good holding, most likely, but growth is what we are after next to dividends.  If it doesn’t grow it doesn’t chase MasterCard and after all that has been the most scientific benchmark I’ve seen since the announcement…  I guess some research into market coverage for Visa and MC and take an analytical approach to determine growth potential…   Not much time left we’ll see if I decide to be analytical or speculative…

Blockbuster or Netflix

Now I don't remember if I actually discussed Netflix back in the last
6-months, but had I and you bought in it would have been around 17/share
back in September. Which is what picked it up at. At the time the big
deal was home much business they were taking from Blockbuster. Then BB
did its thing with mail-order movie rentals. Many things happened and
BB started dropping fairly quickly and it now looks as though it may be
well oversold and has reached a bottom. Current Citi analyst from
yesterday:

Citi adds Blockbuster Inc (NYSE: BBI) to the 'Top Picks Live' List.
Price target $8.

Citi analyst says, "At the current depressed valuation level, we see
limited downside to BBI. BBI has several opportunities for BBI to boost
results, including: 1) share gains from in-store competitors, 2)
improvements in Total Access terms/pricing, 3) an improving title line
up, 4) the store base revamp, and 5) the five point distribution
strategy (in-store, on-line, by mail, kiosks, and flash card media).
Furthermore, we believe the movie rental business should hold up well in
a tough economic environment as it is one of the cheapest forms of
entertainment."

Now this sounds great a possible 400% increase but from a $2 stock,
everyone can get in on that. It's not like waiting for Visa at $40 a
share and hoping it does the Master Card thing but real potential for
the rest of us without the millions to spare.

My recommendation. BB is still doing well, gave surprising results
recently, they are still everywhere to be seen, some of it's competition
is going out of business (mainly movietime) and they are very well
valued currently. Watch for the price increase supported by strong
volume then buy some and continue to buy up.

BTW NFLX is trading at 31.23 currently, almost a 100% in the past 6
months.

Visa IPO Question

I am expecting an intitial surge based purely on momentum. Then a
slight pull-back, I don't see it dropping below it's IPO price. Most
people are betting it will do well based on MasterCards IPO. The only
difference is MC opened around 19$/share which put it in a low PE in the
low teens I think. Currently MC is trading around a PE of 22-25. Visa
will open, if it opens at about $40, at a PE around 22-25. So unless
there is a lot of interest it might not grow as quickly as MC (400% in
two years). I am looking to make a quick profit, take it out and then
wait for the pullback to buy as a long term holding. VMW shot to 125
before it pulled back. Now it's back around $60. It's PE was off the
chart to start with. As IBD says PE doesn't always mean anything. I
have seen a lot of conflicting information about how much international
market share Visa has compared to MC which, in today's environment, can
make a difference. It is planning on reserving cash for its litigation.
So I don't see much risk in the investment, just need to keep taps on
the expectations.