Guest hellsten Posted July 7, 2014 Share Posted July 7, 2014 Very interesting discussion about a NY Times article. Found this comment from someone who used to work in the industry particularly interesting: https://news.ycombinator.com/item?id=7996798 What is new here--what's interesting--is the fact that the banks themselves seem to be shutting down their own remittance services. I had always attributed previous "crackdowns" to regulatory capture: certain banks saw a wealthy, highly-fractured niche, and used their connections in DC to turn up the heat on the non-bank players in order to weaken them and take market share. One of the most infuriating things about what we saw happening in 2005-2007 was that while banks were closing the accounts of non-bank service providers, the banks themselves began offering the same services to their own customers, often through the same networks that the non-bank financial institutions were using. Bank of America was the most prominent actor in this regard; but now, even they have stopped offering money transfer service. Go figure. It's really unfortunate that such a cool area of tech (international remittances) draws such negative attention from regulators. If it weren't for that regulatory risk--existential in nature, really--I would still be working in the space. Ironically, this is also why I don't think that Bitcoin is a solution for international remittances. Sounds like he would agree WU has a moat against startups, and even the Bitcoins ;) Also found Azimo (https://azimo.com/en/) through http://remittanceprices.worldbank.org/en. They claim to charge $0 for any amount, any country, any service. Sounds like a heavily funded startup. Good luck… This was also interesting (http://www.bbc.com/news/business-26284493): According to the Pew Research Center, remittances worldwide have nearly tripled since 2000 and fell only for one year after the global financial crisis of 2009. India is the largest recipient with $71bn of money received, followed by China with $60.2bn in 2013, according to World Bank data. … "This is already a commodity business. The competition is very stiff," he says. If we take this sitting down, it's hard to compete” Remittance companies need only require a simple business registration before starting operations. Those start-ups send money through the networks of the larger banks that they compete against, for a fee. About 40 other remittance outfits operate in the shopping mall, with names such as Czarina and Amazing Shop. Original article: http://dealbook.nytimes.com/2014/07/06/immigrants-from-latin-america-and-africa-squeezed-as-banks-curtail-international-money-transfers/?_php=true&_type=blogs&_r=0 As government regulators crack down on the financing of terrorists and drug traffickers, many big banks are abandoning the business of transferring money from the United States to other countries, moves that are expected to reverse years of declines in the cost of immigrants sending money home to their families. While Mexico may be most affected — nearly half of the $51.1 billion in remittances sent from the United States in 2012 ended up in that country — the banks’ broad retreat over the last year is affecting other countries in Latin America and parts of Africa as well. The banks are being held accountable not only for the customers who directly use their money transfer services but also for their role in collecting remittances from money transmitting companies and wiring them abroad. Almost sounds like WU spent some time and money on lobbying... Link to comment Share on other sites More sharing options...
jouni1 Posted July 7, 2014 Share Posted July 7, 2014 i have been thinking about WU also. here in europe immigrants use them to send their social service money back home. seems like a huge business. and scale seems to help. i wouldn't probably trust a startup to send a lot of money to the mother of my children waiting back home. if cash flow and buybacks stay at about the same levels, this thing is a steal at around 10% cash flow yield. somehow, it still makes me a bit uneasy. have to start doing the 500 hours i think ;D Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted July 7, 2014 Share Posted July 7, 2014 i wouldn't probably trust a startup to send a lot of money to the mother of my children waiting back home. I think some people actually would take the risk given Western Union's high fees. I think that the real barriers are: A- The cost of compliance. Most countries have laws designed to stifle money laundering (and rightly so in my opinion). Because of this, there is a regulatory burden on financial companies. Scale is an advantage. B- Fraud. Whenever money is moved around, fraudsters will try to attack the system. This is the reason why 30-40 of Paypal's competitors have given up. To break into the business, you will lose a huge amount of money in the beginning as you figure out the fraud puzzle. There are tradeoffs between fraud and convenience. Part of the puzzle is figuring out the right balance. It seems to me that the payments business is difficult to break into. V, MA, and Paypal may have slightly stronger moats than Western Union. Other people trying to break into payments like Amazon (Amazon Payments), Google (Google Checkout), and Square are having a difficult time. Google Checkout won't accept new customers (probably because they lost too much money from fraud), Amazon doesn't push its payments method on its website, while Square is a highly-popular startup that is in financial trouble. Square and Google Checkout are examples of popular services that may not be commercially viable. They have/had reasonable scale but are probably getting killed on fraud. Link to comment Share on other sites More sharing options...
jouni1 Posted July 8, 2014 Share Posted July 8, 2014 yes i also agree that ma, v and paypal probably have bigger moats. it's the valuation here that has me excited. i'm not sure why i haven't looked at this before. i wonder why combs liked it before BRK, but not anymore. because they're lowering prices? here's the dataroma WU page for the "gurus" they follow: http://www.dataroma.com/m/stock.php?sym=wu pretty heavy weighings for abrams and ariel. i know next to nothing about them, but i believe atleast ariel has done pretty well? my line of thinking is somewhat like this: the US is still pretty much a cash economy, despite being the most advanced nation on earth. WU should have business for at least 20-30 years to come, if they can keep cash flow around a billion dollars and allocate it wisely, it should be a pretty sweet investment. for some reason i'm not too worried about these startups. there are always immigrants at the local western union desk when i walk past it. immigration is probably the only thing that hasn't been hurt by the euro crisis. also the EU is going towards police state kind of politics, so a startup sending money to third world countries wouldn't be the first thing in my mind. everything is regulated(or taxed) to death. some short john rogers comments on WU: http://www.gurufocus.com/news/248807/ariel-investments-john-rogers-comments-on-western-union-co http://www.gurufocus.com/news/218533/john-rogers-comments-on-western-union-co Link to comment Share on other sites More sharing options...
jouni1 Posted July 8, 2014 Share Posted July 8, 2014 btw, i started to do a 500eur transaction to ghana, the fees would be 20eur. i'm not sure how much cheaper the startups are doing it but 20eur is 3,5 packs of cigarettes down here. if i was the sole money maker for my family back home, i would not risk anything for saving 10-30 euros a month. but that's just me. then again, i think most immigrants would feel the same. pay for convenience and peace of mind. Link to comment Share on other sites More sharing options...
wachtwoord Posted July 8, 2014 Share Posted July 8, 2014 I have invested in WU ~1.5 years ago. I studied it then and apparently, throughout their history (in their current business, not the telegram service), every time competitors start to take away their market share they lower prices up to the point of making little to no money. Because of their size this pushes their competitors out of business after which they can rise prices again and resume their pseudo-monopoly. Of course their moat mainly consists of their (worldwide) network and their knowledge and contracts regarding compliance in many different jurisdictions. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted July 8, 2014 Share Posted July 8, 2014 Personally, I'm not a huge fan of WU management. The CEO seems to have overpaid for their acquisition and is getting WU into business lines outside their core competency. He should probably focus more on the main business. Link to comment Share on other sites More sharing options...
petey2720 Posted September 12, 2014 Share Posted September 12, 2014 http://www.ycginvestments.com/thoughts/106-inflection-point-for-western-union Link to comment Share on other sites More sharing options...
jouni1 Posted September 13, 2014 Share Posted September 13, 2014 http://www.ycginvestments.com/thoughts/106-inflection-point-for-western-union thanks for sharing petey! the valuation is getting interesting again! (i hope something bad happens ;D i'm not at full position yet) Link to comment Share on other sites More sharing options...
LowIQinvestor Posted September 23, 2014 Share Posted September 23, 2014 Here is some bad news for you: http://www.bloomberg.com/news/2014-09-18/western-union-probed-by-sec-over-digital-revenue-reports.html This seems minor considering it represents less than 5% of WU's total revenue. Abrams Capital Management's large position in WU and the current valuation keep making me revisit this company...It may be time to buy some. Link to comment Share on other sites More sharing options...
LowIQinvestor Posted September 24, 2014 Share Posted September 24, 2014 Interesting to see google search trends for "western union" over the past 10 years. https://www.google.com/trends/explore#q=%2Fm%2F01bfgd&cmpt=date Link to comment Share on other sites More sharing options...
LowIQinvestor Posted September 29, 2014 Share Posted September 29, 2014 Is anyone else surprised this hasn't shown up on Berkshire 13-F? Todd Combs loved it back in 2010 trading around this same price and now their are 20% less shares outstanding. (But earnings look to be down 12% since then). Can't imagine that he didn't consider the technological threat of PayPal etc.. This is a puzzling one for me. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted September 29, 2014 Share Posted September 29, 2014 Paypal serves the banked market. Western Union (their core business) serves the unbanked market. Good franchise, bad management. He may have sold because he didn't like Western Union's CEO. That's my guess anyways. Link to comment Share on other sites More sharing options...
LowIQinvestor Posted October 1, 2014 Share Posted October 1, 2014 Western Union Launches Money Transfer at Walgreens and Duane Reade New Western Union retail kiosk model now live at 7,650 locations http://finance.yahoo.com/news/western-union-launches-money-transfer-120000202.html Link to comment Share on other sites More sharing options...
dcollon Posted October 3, 2014 Share Posted October 3, 2014 Bill Gates has some interesting comments on the un-banked and movement of money in this Bloomberg interview. http://www.valuewalk.com/2014/10/bill-gates-talks-ebola-msft-bitcoin-video/ Link to comment Share on other sites More sharing options...
DavidVY Posted April 16, 2015 Share Posted April 16, 2015 I've been long WU since it was @15. I am still holding it. I think it should be worth something in the low/mid 30s. Americans are the tippity-top of tech innovation and trust. Cash is cash. WU does C2C or better yet what I call Cash-2-Cash. That is a huge CULTURAL advantage. Most cultures dont trust banks. They would rather pay 5 dollars and not have it flow through a "corrupt institution". In many cultures, $ is still kept in gold or under their matresses. Hell, in Asia or Russia lots of places don't even accept credit card. You see people paying cash for everything. Its unusual for Americans to realize that USA is not equal to the rest of the world Link to comment Share on other sites More sharing options...
jeyfox Posted August 5, 2015 Share Posted August 5, 2015 Hi, Second quarter numbers are out. There is some growth. They recorded a 35,3 MUSD pre-tax charge concerning a settlement with the CFPN. P/FCF is at 13,1 if we take their CFO target of 1 billion USD and a 200 MUSD capex, we have a 800 MUSD FCF. We will have to see when they have to pay the 100 MUSD relating to their agreement with the IRS. It seems some will be expensed in 2015. They have got lots of points of contact where transactions can take place but not all of them (30% I think had no operations). In my opinion, their moat is not as strong as V and M. Mobile payments, other internet transfers solutions… could be a threat. Cheers! Jeremy Disclosure: no WU holdings. Link to comment Share on other sites More sharing options...
BRK7 Posted January 19, 2017 Share Posted January 19, 2017 trading appears to be halted... Link to comment Share on other sites More sharing options...
BRK7 Posted January 19, 2017 Share Posted January 19, 2017 trading appears to be halted... for what it's worth (maybe nothing), MGI started to rally right around the time of the halt Link to comment Share on other sites More sharing options...
BRK7 Posted January 19, 2017 Share Posted January 19, 2017 news is out.... http://www.businesswire.com/news/home/20170119005920/en/Western-Union-Reaches-Agreements-Resolve-U.S.-Investigations Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now