Banks needing capital and Visa comes through
Knowledge is key. Knowing how it is all linked ... and how other pieces can help, or hurt, or keep the dominoes from falling ... priceless!
WARNING! This news article, from VISA (V) itself, is being generally ignored by the short sellers and bears, yet it shouldn't be:
"SAN FRANCISCO (AP) - Credit card processor and payments network provider Visa Inc. said Monday it approved a program to allow certain shareholders to liquidate stock early.
Holders of class C shares will be able to sell up to 30 percent of their holdings anytime after July 1. The remaining class C shares will have trading restrictions until March 25, 2011.
Any class C shares sold after July 1 will be converted to class A shares. The sale of the class C shares does not increase the number of outstanding shares of Visa stock, nor is there any dilutive effect of the stock from the sale.
Shareholders looking to sell a portion of the class C stock will need to apply to Visa's transfer agent between July 1 and Sept. 30 to be approved to sell the stakes."
Check out the Visa Class B and C link:
Why is that important? Because the restricted stock is owned by member banks, the banks would have had to hold onto 'till 2011, can be transferred into common stock immediately resaleable in the market, after July 1, and some if not all of the "additional capital needed" infusion solved.
FAS includes V, WFC, JPM, GS, MS, BAC ... look at who the Shareowner Online website is for V: WFC, yep, Wells Fargo ...
Soooo, Visa, all by itself, can help out it's member banks with the additional capital they need .... do the banks get it? Well look at VISA's stock price TODAY: $60.71 +$1.84 (+3.13%) with volume at 10.5 million shares traded, and after hours $61.20 +$0.49 (+0.81%) ...
For the banks, whether they "may" need capital or not, keep in mind, this attaches a market price, for mark to market purposes, to all the C shares, for ALL the participant banks, even those NOT selling. I suspect the banks needing capital will exchange the restricted C shares for the A shares and HOLD them as a capital ASSET and not sell the shares to avoid the tax hit. Yeah, the banks get it, and they're going to keep pumping cash into Visa stock, which makes their Class C shares worth MORE.
If they do sell the shares ... well Visa averages 9 - 10 MILLION shares a day ... I expect little to no trouble absorbing the flow
I'm not the only one running the math. Here's a story from CNBC:
Bank Upgrade Astonishes Traders
Posted By:Lee Brodie
Smiling ... I get it too.