I have indicated in previous articles that I view Mastercard Incorporated (MA) as a core long-term investment.
Following the very recent pullback in MA's share price I have acquired additional shares for one of the Core Accounts within the FFJ Portfolio. This additional purchase is in addition to the purchase made in early October for an account for which I do not disclose details.
On October 16th I provided an interim report in which I disclosed recent activity and the reason why the level of activity on this blog has recently dropped significantly.
Subsequent to writing that article we have adopted a rescue dog (1 year old cockapoo) following the passing of our cockapoo of ~12 years in early August.
Regrettably, the previous owners:
- never trained the dog;
- crated him the vast majority of the time in which they owned him.
That is not the breed of dog you want when you already have your hands full with 4 very young children (one being a newborn)!
Integrating this dog into our household is not an easy process and we have had to engage the services of a ‘dog behavior consultant’ to help us train this dog.
With all that we have on the go I will be unable to devote as much time as I would like to this blog. I do, however, intend to keep you apprised of my investment decisions on an as timely basis as possible….hence this brief article.
On October 3rd I wrote the following article in which I disclosed the impending sale of a rental property and recent transactions initiated through accounts for which I disclose / do not disclose details.
The sale of the rental property did close as planned on October 17th thus freeing up additional funds which will be deployed over time in attractively / fairly valued companies.
The 3M Company (MMM) covered calls I referenced in my October 16th article expired worthless meaning I retained 100% of the option premium I collected and I still own the underlying shares.
In that same article I indicated I have 1 covered call position still outstanding. I continue to be of the opinion that the Automatic Data Processing, Inc. (ADP) covered calls will expire worthless come the November 15th expiry; the share price would need to rise ~$20 between now and expiry to reach the $180 strike price and I do not envision this will occur.
In my October 3rd Mastercard Incorporated (MA) article I disclosed that I had acquired additional shares for one of the accounts for which I do not disclose details. MA’s share price subsequently appreciated to ~$280 but, as lady luck would have it, MA’s share price has recently retraced. On October 22nd I acquired another 100 shares @ ~$261/share for one of the Core Accounts within the FFJ Portfolio.
Although the shares acquired October 22nd will not be eligible for the $0.33/share quarterly dividend payable November 8th, those acquired October 3rd are eligible to receive the dividend.
While some investors may wonder why I would not wait until the release of MA’s Q3 2019 results on October 29th before increasing my MA exposure I have indicated in several previous articles that my investment time horizon is long-term. I was, therefore, prepared to make my investment decision on the basis of the information provided in MA’s September 12th Investment Community Meeting presentation and webcast.
In addition, MA fits in the same mold as Visa Inc. (V); V is my largest holding.
I initiated a V position very shortly after its 2008 IPO because I viewed it as a company with a high level of probability of growing profits at an attractive level over the long-term. In hindsight I should have initiated a position in MA when it went public but I did not and to this day I deem this to be one of my worst investment acts of ‘omission’.
I like both companies because of the:
- significant barriers to entry;
- growth potential;
- manner in which income is generated - a significant percentage of their respective income is generated on the basis of the dollar value of the transactions processed.
If a merchant, for example, pays a 1.75% fee for the sale of a $100 item, V and MA with collect at least $1.75 (in addition to other fees included within the merchant contract's terms and conditions). If a merchant subsequently increases that product’s price to $105, V and MA will collect $1.8375. Income growth without any additional effort on V's and MA's part!
Although it can be debated that MA’s valuation level is somewhat rich I approached my decision to acquire these additional MA shares from the perspective that they will be held in perpetuity. I am reasonably confident that several years into the future each MA share will be worth far more than ~$261 and I won’t even give it a second thought if I have perhaps ‘overpaid’ slightly to acquire these shares.
I wish you much success on your journey to financial freedom.
Thanks for reading!
Note: I sincerely appreciate the time you took to read this article. Please send any feedback, corrections, or questions to [email protected].
Disclaimer: I have no knowledge of your individual circumstances and am not providing individualized advice or recommendations. I encourage you not to make any investment decision without conducting your own research and due diligence. You should also consult your financial advisor about your specific situation.
Disclosure: I am long MA, V, MMM, and ADP.
I wrote this article myself and it expresses my own opinions. I am not receiving compensation for it and have no business relationship with any company whose stock is mentioned in this article.