While the banks in general have languished, Visa and Mastercard (MA, Financial) have continued to show strong operating results and enjoy powerful networks in the face of an increasingly competitive payment space. The Fund has now gained over ten times the original investment in Mastercard and nine-fold in Visa. This shows the value of tracking fundamentals of individual businesses and knowing which to hold for the very long term. Mastercard has the third most blockchain patents of any company yet CEO Ajaypal Banga has remained cautious saying that “the business model is not proven” and that there was still “a lot to improve and change over time.” However, in a recent conference (Fintech Ideas) Mastercard indicated they are still deeply invested in eventually using blockchain to improve supply chains and deter counterfeit goods. Mastercard had a 52% return on investment (ROI) in 2018 with over $5 billion in free cash flow.
From Jeff Auxier (Trades, Portfolio)'s first-quarter 2019 Auxier Focus Fund shareholder letter.
