Great insights, highly informative! Thanks for sharing

Expand full comment

Thank you Tiago for sharing your analysis. I really enjoy reading your weekly updates!

This is an interesting pick and I'm now curious to research WU more. Curious to hear what's your take on the 2 billions of Goodwill on the Balance Sheet? That's half the current market cap, and 25% of their assets. WU seems to have made several acquisitions over the years, and it's hard in retrospect to find out how these played out.

Expand full comment
Apr 5, 2023·edited Apr 5, 2023Author

Hi Casper,

Ultimately I'm not accounting for it in my valuation because this isn't an asset play. I'm assigning a book value of 0 even in the bullish case, so it doesn't make sense to me to take goodwill as a negative.

Additionally their goodwill has been on a downtrend for over a decade now, and so its clear they are not going out and blowing a bunch of cash on new acquisitions well above book value.

This is purely a company whose "earnings power" is what drives my valuation, and as long as the company doesn't waste that earnings power I'm happy to own it with a zero'd out balance sheet.

Hope that explains my thinking on it!



Expand full comment
Apr 5, 2023Liked by Tiago Dias

Thank you Tiago for the quick reply. Sorry, I am quite new and still learning a lot. I now realise that's the NCAV $0 in your analysis. It makes total sense to ignore goodwill if you assign a $0 book value.

I like how easy to understand WU's business is. I also believe that WU brings a lot of social value by facilitating a service in need to many around the world. It's an element I like when buying into a business.

And even though there's lot of noise about how they are being disrupted, it seems the disruption is not really happening.

Expand full comment