This company is the largest player in a highly regulated industry and is deemed to be a Global Systemically Important entity. My favorite investors have invested billions in this company and have been significantly increasing their holdings over the past several quarters.


  • Dividend distributions and share repurchases come from profits generated from normal business operations as opposed to the issuance of debt.
  • The barriers to entry are very high to the extent where the probability of being displaced by a new market entrant is extremely remote.
  • A rising interest rate environment favors this business.
  • The recent pullback in this company’s stock price has restored valuation to a reasonable level.


In my January 21, 2018 ‘High Entry Barriers Work in Its Favor’ article I concluded with the following comment:

‘I intend to acquire additional (stock symbol) shares at some point but not now. My concern at the moment is that there is an element of irrational exuberance which has contributed to the dramatic run up in (stock symbol’s) stock price in recent months. While I do not envision a recession in the short-term, I suspect there will be some event which will present us with a more favorable (stock symbol) purchase price in 2018 than the current price.’

As luck would have it, this company has recently released its Q2 results and the share price has pulled back.

In the Q2 earnings call with analysts, this company’s CFO indicated:

‘The lost business is primarily driven by a couple of clients. One was the result of industry consolidation and the other moved to another provider. The pipeline is good, but it takes time to onboard.’

While investors may not have been impressed with this company’s recent results, I view the recently reported results as encouraging. In fact, following the release of its Comprehensive Capital Analysis and Review (CCAR) results, this company was granted authorization to repurchase $2.4B in common shares by mid-2019. In addition, it was also able to announce a high teens percentage increase in its quarterly common share dividend. These approvals were granted despite the severe assumptions required to be factored into the recent CCAR.

NOTE: CCAR is a regulatory framework introduced by the Federal Reserve in order to assess, regulate, and supervise large banks and financial institutions (collectively referred to in the framework as Bank Holding Companies).

Overall, the company remains strong although some areas of the company are performing better than others. This company expects to benefit from the positive impact of higher interest rates and equity markets, although the pace of growth is expected to moderate from the previous quarter.

In my January 21, 2018 article I pointed out that my favorite investors followed my footsteps (a huge degree of sarcasm) and acquired an initial stake in this company in 2010 after I initiated a position in the company; shares are not held in the FFJ Portfolio but rather in one of our retirement accounts. At the time of that article, my favorite investors held over 50 million of this company’s shares. In conducting research for this article I learned these investors have increased their holdings to ~62 million shares.

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