TSP Capital Triples Western Union Equity Ownership

According to an SEC filing dated April 24, TSP Capital Management Group, LLC disclosed a buy of Western Union (NYSE:WU) shares.

• Added 738,789 shares of Western Unio
• Post-trade, the fund holds 1,091,864 shares valued at $9.5 million
• The new stake represents 2.3% of the fund’s AUM, which places it outside the fund's top five holdings

What else to know

• Top holdings after the filing:
  • NYSE: CDE: $32.6 million (8.0% of AUM)
  • NYSE: BVN: $25.0 million (6.1% of AUM)
  • NASDAQ: ADEA: $24.3 million (5.9% of AUM)
  • NYSEMKT: TMQ: $24.2 million (5.9% of AUM)
  • NYSE: CIG: $21.8 million (5.3% of AUM)

Company overview

Metric	Value
Revenue (TTM)	$4.0 billion
Net income (TTM)	$440.8 million
Dividend yield	10.6%
Price (as of market close April 24)	$8.90

Company snapshot

Western Union provides international money transfer and payment services, operating through a broad agent network and digital platforms. It seeks to use its scale and established brand to enable efficient cross-border transactions for both consumers and businesses.

• Offers global money transfer, payment, and foreign exchange services, including consumer-to-consumer transfers, business payments, bill payment, and money orders.
• Serves individuals, small and medium-sized enterprises, and organizations requiring cross-border or domestic money movement solutions.
• Generates revenue primarily from transaction fees and foreign exchange spreads, leveraging a network of agents, digital channels, and business partnerships.

What this transaction means for investors

TSP Capital aggressively purchased Western Union shares in the first quarter. The firm tripled its share ownership to nearly 1.1 million shares. With a $9.5 million value as of March 31, the stake represented 2.3% of its reported AUM.

This confidence comes as Western Union shares haven’t performed well over the last year. Through April 24, the stock price lost 12.2%. That severely underperformed the S&P 500 index’s 29.7% gain.

The company does have a large dividend yield, helping produce a better total return. Still, Western Union’s 2.5% loss after factoring in dividends pales in comparison to the S&P 500’s 31.3% return.

Western Union’s stock current yield 10.6%. Still, with a payout ratio of 95%, the company will have to grow revenue and profits over time. Otherwise, investors, who have seen steady dividend payouts, could face the prospect of a lower payment down the line.

Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.