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Lone Pine Adds New Stake in Visa

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Lone Pine’s new stake in Visa

Lone Pine initiated a new position in Visa (V) last quarter that accounts for 1.95% of the fund’s total 4Q14 portfolio.

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Overview of Visa

Visa is a global payments technology company that offers electronic payments, as well as a wide variety of payment solutions. It offers a portfolio of digital, e-commerce, and mobile products and services. Visa operates its processing network VisaNet for the authorization, clearing, and settlement of payment transactions worldwide.

Visa generates revenue from payment volume on Visa-branded credit cards and payment products for purchased goods and services, as well as the number of transactions processed on its network. Its segments are service revenue, data processing revenue, and international transaction revenue.

Visa believes its payment volume, total volume, and number of transactions make it the largest retail electronic payment network in the world. Visa has a 3.2% exposure to the iShares Dow Jones US Financial ETF (IYF).

Visa–Costco agreement over co-branded credit card program

Visa stock gained recently after Costco Wholesale Corporation (COST) announced a new co-branded credit card program agreement with global bank Citigroup (C) and an acceptance and co-brand incentive agreement with Visa. Under this, American Express (AXP) was replaced by Visa as Costco’s credit card network in the US and Puerto Rico, starting April 1, 2016.

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Visa acquires TrialPay

In February, Visa announced the acquisition of TrialPay, which is a privately held company with an offers platform that connects merchants and consumers via targeted promotions. Visa said it will add TrialPay into its product portfolio.

Visa fiscal 1Q15 results beat estimates

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

For 1Q15, Visa’s net operating revenue was $3.4 billion. This was an increase of 7% nominally, or 9% on a constant dollar basis, compared with the year before. This increase was driven by growth across service revenue, data processing revenue, and international transaction revenue. A stronger US dollar during the quarter impacted total operating revenue increase by around -2%.

Visa’s total operating expenses were $1.1 billion for the quarter, a 6% increase over the year before.

In the next part of this series, we’ll discuss Lone Pine’s new position in HCA Holdings.

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