No. of Recommendations: 0
I posted this to the Berkshire board about this non-US stock. Maybe it should move here, or to a new WISE board if there's interest.
https://www.shrewdm.com/MB?pid=813773672"Hi folks,
I vaguely remembered there had been a discussion of this UK company that specializes in cross-border foreign exchange at rates much lower than what most financial institutions offer. But I can't find anything, on this board or on the non-US board or anywhere else I've looked on Shrewd. Does this ring a bell for anyone?
It's a company trading at about the same price as its IPO in 2021 (roughly £10, or 1000p, if you prefer), market cap £10b. I like it mainly because it has 1.01b shares outstanding, making all the calculations easy whether they are per share or for the entire market cap (£10b, obviously.) That and the fact that its steady price, while it has gone nowhere for 4 years, now represents 25x last 12 months earnings instead of 340 at the IPO. Its growth has slown down markedly in the last 12 months, but I think it still has a ton of room to grow as it takes share from Western Union and Moneygram who have much higher fees.
They remind me of Interactive Brokers, one of my most successful investments, with this aspect of their philosophy which they expressed a couple of years ago:
"Sustainably lowering prices for customers over the long run remains core to our mission. We charge our customers what it costs us to offer our service, plus a small margin, rather than what we can get away with. So our price, which reflects our cost to deliver payments, changes when our costs go up or down. At 0.65%, the average price remained broadly stable when compared to the previous quarter’s price.."
The 65 basis point cross-border charge they refer to, which is now more like 52 points, compares with fees charged by banks, Western Union, Moneygram etc. which are typically 3-5x as high. They also pay interest on cash in accounts in countries where they are allowed to do so, and keep 1%, transferring the rest to their customers (e.g. if overnight interest rates are 4%, they keep 1% and give 3% to the customer.) Banks charge amounts that vary according to the amount transferred, but it is often well as much as 300 basis points (3%) for small amounts (say <$1000, meaning you lose $30 on your transfer), and credit cards are typically at about the same level, i.e. about 6x higher than Wise. Paypal is even worse. So apart from retail cross-border transfers, lots of travellers have good reason to have an account, and most people have not yet heard of Wise.
Any thoughts on this as an investment or pointers to discussion elsewhere would be welcome, and if there's any interest, we could get a dedicated board opened for it."
