Brandywine Global Investment Management LLC, a financial services company based in Wilmington, recently revealed a reduction of 5.7% of its position in the Western Union Company. The decrease consisted of the selling of 12,683 shares during the 4th quarter, bringing Brandywine Global’s ownership to a total of 210,652 shares worth $2,901,000 as of their most recent filing with the Securities and Exchange Commission (SEC). The move is expected to affect Brandywine’s future returns and investment strategy.
The news comes shortly after Western Union’s quarterly earnings results announcement on May 2nd. The credit services provider reported $0.43 earnings per share (EPS) for the quarter, exceeding the consensus estimate by $0.09 per share. Moreover, revenue for the quarter reached $1.04 billion, an increase from the consensus estimate of $997.07 million.
Operating through three segments – Consumer-to-Consumer, Business Solutions, and Other – Western Union provides money transfer and payment services to customers worldwide. Its Consumer-to-Consumer segment overseen by Western Union allows consumers to send and receive funds worldwide in minutes with over half a million agent locations in more than 200 countries.
In comparison to previous years’ results, Western Union’s net margin decreased from last year’s Q1 while its return on equity has increased but is still lower than two years ago’s first quarter.
Equities research analysts anticipate that The Western Union Company will post an EPS of 1.61 for the current year; it will be intriguing yet important to see if Brandywine Global Investment Management LLC will further reduce its holdings or continue investments throughout this year considering potential shifts or progresses within the credit services sector amidst new worldwide changes brought about by COVID-19 and other economic factors not mentioned in these reports’.
Hedge Fund Activity Boosts Stake in The Western Union Company
The Western Union Company: An Analysis of Recent Hedge Fund Activity
A recent influx of reports has indicated that several hedge funds are making changes to their positions in the Western Union Company (WU), resulting in a boost of stake in shares. Lazard Asset Management LLC reportedly upped their stake in WU by a whopping 7,000.0% during Q3, with Ronald Blue Trust Inc. lifting its stake by 157.6% during Q4. Signaturefd LLC and Accurate Wealth Management LLC both raised their holdings by some 38.5% and acquired new stakes respectively, whilst Whittier Trust Co. of Nevada Inc.raised its holdings in Western Union Co by 52.3%. All these investments seems to have propped up the stock’s price to $11.64, which is still below its year high of $18.23.
The Western Union company operates mainly as a money transfer and payment service provider through three main segments including consumer-to-consumer, business solutions and others; helping both individual consumers as well as small-to-medium enterprise transactions with payment and FX solutions on transfers between multiple currencies and countries.
Institutional investors and hedge funds now own over 97% of Western Union’s outstanding shares via direct purchases at market prices or other liquid exchange-traded fund products.
Additionally, the firm recently announced that it will be paying out quarterly dividends to stockholders on Friday June 30th, with a dividend yield of over 8%, reflecting an annualized rate of 47%.
Despite having gone under fire from negative reports from analysts such as The Goldman Sachs Group who cut their price target on WU’s stock from $12.50 to $11 following recent performance indications falling below expected margins, there are some signs that real improvement is happening for WU as Wolf Research upgraded WU shares from “underperform” to “peer perform” rating in April while Keefe, Bruyette & Woods downgraded their rating from “outperform” to “market perform.”
As of now, 5 research analysts have put a sell rating and 10 out of 19 rated the stock as hold with an average target price of $13.70 per Bloomberg’s analysis. Thus, it remains to be seen how investors will respond in the coming months to WU’s operational progress alongside market volatility trends due to COVID-19 uncertainties for the rest of the year.
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