Fintech is the future.
Many call it a buzzword. It is a popular one. But it’s more than that. It’s where the world is going.
These are big statements. So what do I mean by them?
First, let’s make sure we’re on the same page. Fintech is an emerging industry that uses innovative technologies to improve traditional financial activities. Banks are, of course, big creators (and users) of fintech, but there are new stand-alone firms that provide the services as well.
Mobile banking is one of the fintech services many of you use every day. It allows you to do things that would have taken much longer just a decade ago.
I’ve recommended stocks like Paysafe, a U.K.-based fintech firm that private equity firm Blackstone acquired at the end of last year. And I’ve made money over the years investing in names like mobile payment firm Square.
Fintech is old enough now that some people have been able to prove themselves in the space. To reduce your risk, it’s essential that you invest with them.
I recently learned of one management team that is using its own money to buy more shares of the firm. These folks have proven they know what they’re doing in the fintech space. Read on to learn about the firm they started to recreate their last success…
Big Gains in Fintech
We could double our money on this idea.
But I want to be clear: This is a speculation. This fintech-focused company doesn’t even own any fintech-focused assets yet.
It will soon, though.
Today, we’re looking at FinTech Acquisition Corp. II (Nasdaq: FNTE).
The “II” is important. The management team that runs this firm has a long history in traditional banking … and in fintech.
It even recently bought and sold a fintech asset.
In 2016, FinTech Acquisition Corp. (FNTC) bought payment processor CardConnect and took it public.
FNTC invested in CardConnect CEO Jeff Shanahan and his plans to grow the business. Then it let him do it.
A year later, FNTC sold CardConnect to fellow, much larger processor First Data for more than double its purchase price.
Today, FinTech Acquisition Corp. II (FNTE) management expects to do that again.
Betsy Cohen is again the chairman of the firm. Her son, Daniel Cohen, is CEO, and James McEntee is the president and chief financial officer.
In December of last year, FNTE reached a deal to buy Intermex, a processing solutions provider that serves the U.S. and Latin America.
Like at CardConnect, Intermex’s current CEO and his team will continue to lead the company. The team has grown earnings (as measured by EBITDA, or earnings before interest, taxes, depreciation and amortization) by 35% per year since 2013.
In addition, Intermex will go public like CardConnect did. The name of the merged company will be International Money Express. FNTE expects to close the deal shortly after its July 20 shareholder meeting.
Insiders Are Buying
The Cohens and McEntee just bought more than $10 million of stock with their own money at the end of June.
This is the kind of investment I like to see. Investing with a management team that is willing to put its skin in the game with us.
These three already owned a big chunk of FNTE. They grew their holdings with the million-share purchase.
What Should We Expect
International Money Express will continue its growth efforts in the U.S. and Latin America. That is the speculative part of this investment. We can’t know if the new team will be successful, but we have at least two reasons to expect it will.
The Cohen-led team has done it before. In addition, this is the perfect time to be in this business. Fintech is helping or displacing traditional banking services. I expect this will continue.
I then expect leadership will push for a sale … for a solid profit.
Senior Analyst, Banyan Hill Publishing