A current AIM Program Small Cap Equity Holding: Green Dot Corp. (GDOT) by: Nathaniel D'Amato. "Green Dot Won't Slow Down"

Green Dot Corp. (GDOT, $87.64): “Green Dot Won’t Slow Down”

By: Nathaniel D’Amato, AIM Student at Marquette University

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.

Summary

• Green Dot Corp., (NYSE:GDOT) Green Dot Corp (CDOT) is a financial technology innovator currently standing as the largest provider of prepaid debit cards in the United States. GDOT operates out of Account Services and Processing and Settlement Services. Account Services offers an omni-channel distribution platform including reloadable cards. The Processing and Settlement Services segment includes services that specialize in processing the movement of funds and tax processing. The company was founded by Steven W. Streit in 1991, and is headquartered in Pasadena, CA.

•Offers easily accessible financial services on mobile platforms with apps compatible with iOS and Android operating systems

• Has very large and profitable clients including Apple, Uber, PayPal, Walmart, Walgreens, and 7-Eleven

• Strong Q2 2018 results continuing the momentum

Key points: 

Green Dot Corp. is the largest provider of reloadable prepaid cards and has dominated the industry for prepaid cards and online payment platforms in recent years.

The user-friendly services provided by Green Dot include GoBank, allowing for convenient checking account access. Green Dot has developed a highly profitable business model providing checking account services that attract customers through user-convenience. Allowing GDOT to cut the costs of providing perks or paying interest. GDOT has grown sales by an average of 26% the past 5 quarters. This growth is due to very profitable partnerships with companies like Uber and Apple.

Green Dot’s Q2 ’18 results lived up to expectations. Total operating revenue grew by 28% YoY reaching $225.5 million. A big driver in this growth was the acquisition of UniRush in 2017 but organic revenue is still a primary driver with 12% growth YoY compared to only 6% the same period last year.

What has the stock done lately?

Since May, GDOT’s stock price has been on a bullish streak with no signs of slowing down. The stock price only experienced a slight dip in March but recovered immediately. The prepaid card business is growing their customer base and this is reflected in GDOT’s higher profit margins and free cash flow generation growing by over 46% in the last 12 months.

Past Year Performance: 

The price of Green Dot’s stock has grown by over 47% since the start of 2018; growing from $59.58/share reaching over $87/share. GDOT had a very strong performing year, topping consensus earnings the past 10 out of 12 quarters. Only 1 quarter missed and the remaining quarter matched expectations. 

Source: FactSet

My Takeaway:

Green Dot Corp. is likely to remain profitable and will continue growing due to the accelerating popularity of mobile friendly financial services. The increase in urbanization and strong demand arising from millennial customers complements GDOT’s up-to-date fintech capabilities. Also, non-cash payments volume is expected to increase at 5 year historical CAGR of 10.9% by the year 2020, according to BNP Paribas. These factors should allow GDOT to maintain their impressive growth in the future.

The Fourth Set of AIM Class of 2019 Student Equity Presentations Were Delivered on Friday, 9/28/18

Four Students in the AIM Program Pitched Stocks on Friday, September 28th

Alec Jensen, Riddhi Vakil, Lou Steinhafel, and Arsh Salwan
pitched stocks on 9/28/2018

Follow the link to access the student equity write-ups.  You can also find every write-up since AIM's inception in 2005 here.

Riddhi Vakil presented
American Woodmark Corp

September 28th Write-Ups

Lou Steinhafel pitched MGP Ingredients

You can also view last week’s write-ups: September 21st Write-Ups

Alec Jensen pitched
TPI Composites

THE GLOBAL INDUSTRY CLASSIFICATION STANDARD (GICS) CHANGES GO INTO EFFECT ON 10/1/2018

GICS RENAMING THE TELECOMMUNICATION SERVICES SECTOR AS COMMUNICATION SERVICES

The Global Industry Classification Standard (GICS has introduced major changes within the Telecommunication Services Sector.

While the Russell universe went through their annual reconstitution on June 22, the more significant 2018 Global Industry Classification Standard (GICS) changes will go into effect as of September 28, 2018. In light of the changes in the telecommunications sector there will be a number of revisions to the GICS® structure which will be implemented after the close of business on Friday.

These changes are designed to reflect the evolution of how people communicate and access entertainment content, among other things. The need for this update became evident as a result of the integration and consolidation among telecommunication, media, and internet companies. 

For example, the telecommunications services sector will be broadened and renamed communication services. In addition, media companies will also move from consumer discretionary to communication services. Internet services companies will move from information services to communication services as well. Also, e-commerce companies will move from the information technology sector to the consumer discretionary sector.

Summary of Changes to GICS:  The Telecommunication Services Sector is being broadened and renamed as Communication Services to include companies that facilitate communication and offer related content and information through various media. The renamed Sector will include the existing telecommunication companies, as well as companies selected from the Consumer Discretionary Sector currently classified under the Media Industry Group and the Internet & Direct Marketing Retail Sub-Industry, along with select companies currently classified in the Information Technology Sector.

Fourth Set of Fall AIM Program Student Equity Pitches on Friday, September 28th - Join Us in Person or On-Line

AIM Class of 2019 Student Equity Presentations 

Friday, September 28th

The third set of fall AIM student equity presentations for the class of 2019 will be on Friday, September 28, 2018. 

   

Follow the link to access the student equity write-ups.  You can also find every write-up since AIM's inception in 2005 here.

September 28th Write-Ups

• Location: Marquette University, College of Business Administration - Straz Hall, 1225 W. Wisconsin Avenue, Milwaukee 53233 - in the AIM Research Room 488, 4th Floor (pdf directions to AIM Room).
• Presentation Times: 3:00 to 4:00 p.m. CST
• Link to pdf Student EquityWrite-ups

If you are unable to attend, you can always view them via the webcast HERE

AIM will again be utilizing Twitter for your comments and questions.  Please follow the instructions below.

How to comment using Twitter:

• Go to the MarquetteAIM Twitter account (you can use Search Twitter on your site) and click Follow.
• During AIM presentations, go to #AIMpitch and follow the tweets (discussion) on Twitter (it will also be appearing on the Rise Display Board in the AIM Room and on your smartphone)
• Tweet your comments and questions during the AIM equity pitches

Follow the rules of etiquette for using Twitter during AIM pitches

• Use the hashtag #AIMpitch to start each tweet
• Use $TICKER (note: this is called a cashtag and it be should the unique ticker/symbol for the stock that is being presented, ex: $TSLA)
• Keep you comment short because each tweet is limited to a maximum of 140 characters
• Example for Tweeting on a student’s Tesla equity pitch (note: the ticker for Tesla is TSLA): #AIMpitch $TSLA How do lower gas prices impact demand for electric cars? 

Marquette is Hosting a Commercial Banking Panel on Wednesday, October 3rd, from 4 - 5:30 pm in Cudahy Hall Auditorium (001)

Kent Belasco, Director of Marquette's Commercial Banking Program, Announces a Panel Discussion on October 3rd

Dr. Kent Belasco stated, "We are hosting a Commercial Banking Panel on Wednesday, October 3rd, from 4 pm to 5:30 pm.  FREE PIZZA to students will be provided to students attending and it is an opportunity to hear from industry professionals about their experiences in a career for commercial banking.  The even will be in Cudahy Hall, the lower level small auditorium, 001."  


This is jointly sponsored by the Wisconsin Bankers Association and Marquette Commercial Banking Program.  Representatives will be there from BMO Harris, Wells Fargo, Town Bank, and Commerce State Bank, among others. 

Come and enjoy some pizza and soft drinks and enjoy an evening of interesting discussion and significant networking opportunities. Bring your questions!
Dress: Business Casual

RSVPs on Handshare are appreciated but not required.

Heartland’s Troy McGlone, CFA, Visited Marquette's AIM Program on Wednesday, 9/26/2018

Troy McGlone provided useful advise to AIM students in the Class of 2020 about Heartland's approach to value investing.

Troy McGlone, CFA, presented to the AIM students on value investing

Troy McGlone, CFA, is a Research Analyst, Heartland Advisors (heartlandadvisors.com) was a guest speaker in the AIM program on Wednesday, September 26. He works primarily with the Heartland Multi Cap team.

Troy McGlone
of Heartland Advisors

Milwaukee-based Heartland Advisors was founded in 1983 by Bill Nasgovitz, who has embraced the value philosophy based on the ideals of Ben Graham. Their 10 Principles of Value Investing serve as guiding tenets for all investment decisions.

Troy McGlone provided a brief overview of Heartland’s investment approach and culture – emphasizing collaboration, value focus, and contrarian thinking.  During the afternoon he had the opportunity to interview potential internship candidates.

David Krause, AIM program director commented, “Troy explained the firm’s 10 Principles of Value Investing with several example that the AIM students in the Class of 2020 appreciated. They are at the point in their studies where they are beginning to put the pieces together and Troy’s presentation gave them an opportunity to see how the process at Heartland works. Many of the students found the 10 Principles to be a useful guide as they begin the task of completing their first full blown equity analysis.”

The students had an opportunity to understand how potential stock investments are ‘gridded out’ within Heartland’s approach. He emphasized the importance of deep research and the value of both quantitative and qualitative analysis.

AIM Graduate and Former Marquette Adjunct Instructor Spoke to Students in the Applied Investment Management Program Recently

David Hermanny and Jim Fitzpatrick of Wells Fargo Asset Management Visited the AIM Program on September 21st

Dr. Krause, Jim Fitzpatrick and David Hermanny
in Marquette's AIM Room before class

On Friday, September 21, 2018, the students in Marquette’s Applied Investment Management (AIM) program heard from David Hermanny and Jim Fitzpatrick of Wells Fargo Asset Management. David is a Senior Research Analyst on the PMV Cap Equity Funds team is a, Senior Research Analyst on the TaxableFixed Income Funds.

Wells Fargo Asset Management operates a multi-boutique approach. They believe that their independent, focused investment teams have a better opportunity of generating alpha. The investment teams can focus on investing without the distractions of operating a business.

David Hermanny obtained his BS, Finance from Marquette University in 2011. He was a member of the Applied Investment Management program. David also studied in Germany during his college experience and obtained a German minor.

Jim Fitzpatrick

Jim Fitzpatrick, CFA, obtained his BS, Accounting from Marquette University in 1993. He graduated from the University of Wisconsin-Madison’s Applied Security Analysis Program in 2001. He began his career with Jeffrey Slocum & Associates and since 2002 he has been a member of the Wells fixed income team.  Jim was an instructor at Marquette University and taught Investments in 2010 within the Department of Finance and has been a supporter of the AIMprogram.

During their visit to campus they presented to the AIM juniors and seniors where they talked about how their teams’ approach to asset screening and evaluation. David and Jim held an information session in the afternoon with students interested in career opportunities with Wells. Dr. David Krause said, "It was another opportunity for students to hear from practitioners. Both David and Jim did an excellent job bringing investment concepts to life for the students in the AIM program. We appreciate our relationship with Wells Asset Management."

Dan Leibforth (Marquette AIM 2012) Presented to the AIM and FMA Students on Wednesday, September 19th

Marquette students had an opportunity to hear from a recent graduate about the trends in the asset management industry and the career opportunities from Dan Leibforth, VP/Associate Banker with Citi Private Bank.

Dan Leibforth and Dr. David Krause in the AIM Room

Dan Leibforth is a Vice President/Associate Banker with Citi Private Bank in Chicago. He works directly with team members to create solutions for Ultra High Net Worth client’s needs. 

During an FMA meeting he talked about his role in assisting in the strategic planning and development of client relationships. He discussed his experiences with assisting clients with their banking, investments, lending and custody/trust service needs.

During the class meeting with the AIM seniors he talked about how his team approaches the asset allocation decision. He spent time to address some of the newest innovations in the investment industry including behavioral finance, smart/strategic beta, and the challenges and opportunities that technology presents.

Dan Leibforth

Dan graduated from Marquette in 2012 with a Bachelor of Science (BS) degree with Finance/AIM and Economics majors. He graduated Cum Laude with Honors and was active in the Financial Management Association, Marquette Economics Association, Alpha Sigma Nu (Jesuit Honor Society), and Club Baseball.

Dr. David Krause, AIM program director commented, “It was wonderful that Dan was able to address the AIM students and the FMA club. Bringing young alumni back into the classroom confirms the importance of many of the topics that are included within the curriculum. Dan – and the other AIM alumni – are doing their part to continue to support the Marquette network and help the current students. They support our mission and are great examples of the quality of the Marquette alumni network."