No. 2 - The Credit Card Trade

Private Equity Firm KKR Pays 26 Percent Premium For Payment Processor First Data

Investors are crying “Charge!” today, after KKK staged the second largest leveraged-buy-out ever. Theprivate equity firm is taking over credit card processor First Data Corp. (FDC) for $26 billion – but put away the plastic, they’re paying all cash. Now Wall Street is wondering if there’s fast money to be made from what’s in your wallet?

Guy Adami says just like the utilities earlier in the year, credit card stocks are going to start being the target of buy-outs.

Eric Bolling says investors need to understand FDC is very different from a company such as Mastercard (MA) which makes credit loans.

Dylan asks if the deal means private equity has a positive view on the economy?

Jeff Macke doesn’t think this deal says anything of the sort. Private equity thinks they can extract value from anything, he explains.

Dylan Ratigan says that FDC competitor Fiserv (FISV) got a boost today on the news and then introduces Jeff Yabuki the Chief Executive of Fiserv who joins the conversation on the Fast Line.

Mr. Yabuki explains that Fiserv serves 18,000 clients with transaction processing. His describes his company as the central nervous system of banks and insurance companies.

Mr. Yabuki says it’s not a sexy industry – but it's a great industry.

After the interview, Eric Bolling adds that he likes the credit card processor space, because it’s a profitable business that has flown under the radar. Fidelity National Information Services (FIS), is another name in the space he feels investors should consider.

Guy Adami likes FISV but recommends investors let the stock come down a few dollars before buying.

Jeff Macke echoes buy FISV on a dip.

Tim Strazzini concurs that FISV is a buy. And he recommends investors stay away from Global Payments (GPN) and Heartland Payment Systems (HPY).

Questions? Comments?

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