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MasterCard Incorporated Message Board

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  • vwdiesel10 vwdiesel10 Jul 31, 2012 5:32 PM Flag

    Earnings already priced in after Visa reported...

    MA is the stronger on a fundamental basis-- they are increasing earnings while consistently lowering the float. Visa is increasing their float.

    As per Valueline, Visa share count has gone from 774 million in 2008 to 812 million in 2011, est. 815 million for 2012 and up to 850 million by 2015/17.

    Mastercard, however, had a peak share count of 135 million in 2004, dropped to 126 million today and estimated to drop to 122 million by 2015/17. They are increasing earnings and their financial position without needing to issue additional equity for insiders or cash flow generation-- in fact, they are doing the opposite!

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    • MA is also trading a lower price to sales multiple.

    • Sorry to be such a dotto, but could/would someone tell me what lowering or raising their float means.


      • 2 Replies to psg2mag
      • It's the number of shares that are in the hands of the public and not insiders. A company could have 200 million total outstanding shares, but if the owner of the company owns 50 million, the float would be 150 million-- the amount "floated" out to the public for the rest of the equity in the company. Further, it shows how many additional shares could get dumped onto the market without the company needing to issue brand new shares-- if the insiders know that they are at their peak, but the public thinks they're doing great, they might start selling their own shares. This would raise the float as more of the total outstanding shares would fall into the hands of the (unsuspecting) public.

        However, the insiders, especially a company owner, could buy up large amounts of the float for a huge personal position. This would lower the float by transferring ownership to the insiders. If the company is buying back shares with company money, the over sharecount and proportionally the float will decline. This should raise the share price, as well as the EPS and other metrics. But if the insiders are buying up shares, the EPS won't increase because the same number of shares are out there, but there is more conviction in this because they are betting on their company with their personal money-- they stand to win or lose on their account.

        Make sense?

      • The float of a company whose stock is publicly traded has different default meanings depending on the presumed context.[1] Without a qualifier it may refer to the entire market capitalization of the company or only its publicly traded equity.

        Public float or the unqualified term may also refer to the number of outstanding shares in the hands of public investors as opposed to company officers, directors, or controlling-interest investors.[2] Assuming the insider held shares are not traded, these shares are the publicly traded ones. The float is calculated by subtracting restricted shares from outstanding shares. For example, a company may have ten million outstanding shares, but only seven million are trading on the stock market. Therefore, this company's float would be seven million. Stocks with smaller floats tend to be more volatile than those with larger floats[1]. Large holdings of founding shareholders, corporate cross-holdings and holdings of the Government in partially privatized companies are usually excluded while computing this sense of "public float".

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