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The Western Union Company Message Board

  • redheadinvestor@ymail.com redheadinvestor Jul 24, 2013 11:03 AM Flag

    Disclosure from the redheadinvestor

    Today I exited WU shares, 6 months after entering. This was a tactical move. I have been looking for a month+day anti-wash-sale window to book gains without losing the dividend or being on the wrong side of foreseeable news. Today, I opened that window. Tentatively plan to re-enter WU.

    1) My opinion of WU as a long investment has not changed. I have long-dated options - still hold them.

    2) Had planned to hold through EPS. Changed my mind. Why?

    2A) I think WU might miss, maybe by a cent. That's just BOTE math. But if I'm wrong, I also don't think making will be a catalyst. WU has had two post-crash EPS releases and performance releases on track. So I just don't think the market is waiting for a third data point. I think the risk is downside weighted near term in the immediate wake of earnings.

    2A1) We're near the pre-crash price and plateauing.

    2A2) Last Q, management had completed 75% of the price cuts EOQ. That's the correct plan - but these price cuts seem to be worth negative 4 to 5 cents PSPQ through this Q also.

    2A3) 2Q12 was an earnings high point and comps will have negative optics.

    2B) Despite impressive gains and recommendations from the usual sources, WU continues to lack true buzz. This is strange, but I don't operate the rumor mill. WU has not yet buzzkilled the (idiotic) pet theory that it's dead.

    2C) MGI being hawked = ?

    2D) I wanted to exit sooner to give myself a wider re-entry window between the end of the wash-sale days and the next dividend deadlines.

    3) Macro: S&P boomed all year, near 1,700, now 2X fast runups from 1575. Aug/Sep coming = usually bad. Mortgage rates inflected down in Jun (?!) and housing news is starting to sound cheerleadery. I just don't think the rally monkey is immortal.

    4) The short position in WU grows and grows. WU is oddly heavily shorted in apples-apples DTC terms.

    Hope to be back in soon... ...I'll stick around. I'm comfortable with my move even if it proves wrong. :-) GLTAL.

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    • u r a smart person, people like u are rare among MB

    • Thanks, Red, for the thoughtful post. I unfortunately am a longer term holder and was holding through the last crash. I'm about break even right now after being down way more than I'd like to admit. Given upcoming vacation schedule and earnings announcement, I'm tempted to cut bait and follow your lead. Still haven't decided, but I appreciate your thoughts. I can't rationally see anything wrong with any of your points.

      • 3 Replies to cunninginvestor
      • redheadinvestor@ymail.com redheadinvestor Jul 25, 2013 5:08 AM Flag

        (Yesterday) "The U.S. S&P 500 index (.SPX) shed 0.4 percent, a modest move and yet still the biggest fall in almost a month."

        ...With the index already at record levels, and with the economy showing some signs of activity but not exactly in amazing shape, it's... ...not quite normal, for the index's worst trading day for a month to be -0.38%.

      • redheadinvestor@ymail.com redheadinvestor Jul 24, 2013 10:35 PM Flag

        BTW I misspoke in my post. I'm aware that wash-sale rules don't apply to gains. I meant to say: I have other realized (and realizable) losses from other trades and positions against which I'd like to recognize and offset this gain in WU, liberating trapped liquidity elsewhere. The rest of my post still applies - I also think I will have a chance to buy back in lower than I sold in the coming months due to Wall Street misperception/myopia re: WU and due to the rally having temporarily run its course.

        One of my other positions is in ETFC. I'm happy with their earnings release.

      • redheadinvestor@ymail.com redheadinvestor Jul 24, 2013 8:51 PM Flag

        Thanks for yours too! Tryin' to keep it real here at YMB.

        Note that any miss (if any!) will be small. It's hard to imagine WU doing worse than earning 30 cents per share. But it's all relative to expectations.

        My perspective of WU management is that they are capable and delivering, and will follow through with the execution plan even if they miss analyst EPS. They don't care about analyst estimates - nor should they. If you read their slide shows they say things like "Plan on track, growth to resume in 2014." I was also worried that analysts would move EPS estimates down, for 3Q and 4Q, after a 2Q miss.

        Their financials do show erosion in the revenue in transactions originating in the United States (beginning in 3Q12) probably because of a combination of price sensitivity and those transactions starting to go web. WU electronic growth will eventually more than make up for this, and web will never totally kill the traditional money transfer business, but that's a work in progress. Growth in the web space will be higher going forward. The C2B and B2B spaces have shown signs of shaking off the cobwebs but I'm willing to wager that this isn't the breakout Q for those spaces.

        Just kind of one of those inflection points, where the backstory will be as positive as ever, but will probably be lost in short-term garbage like negative comps and apocalyptic headlines. If I didn't need to book the gain, I'd ride it out, but I do need to, so I'm picking now. :-) Anyway, my phone's ringing, some guy named Murphy and something about a law... :-)

 
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