Voss Capital, LLC an investment management company, released its fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. Voss Capital’s funds, Voss Value Fund, LP, and the Voss Value Offshore Fund, Ltd returned +9.6% and +9.5% to investors net of fees and expenses respectively, in the quarter compared to a +0.3% return for the Russell 2000 Index, -1.1% return for the Russell 2000 Value Index, and +2.4% return for the S&P 500 Index. The Voss Value Master Fund’s total gross exposure stood at 184.3% and the net long exposure was 84.9% as of December 31st, 2024. The weight of the fund’s top 10 longs was 72.5% and the top 10 shorts were -14.6%. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
In its fourth quarter 2024 investor letter, Voss Capital emphasized stocks such as Euronet Worldwide, Inc. (NASDAQ:EEFT). Headquartered in Leawood, Kansas, Euronet Worldwide, Inc. (NASDAQ:EEFT) is a payment and transaction processing and distribution solutions provider. The one-month return of Euronet Worldwide, Inc. (NASDAQ:EEFT) was 4.01%, and its shares lost 6.89% of their value over the last 52 weeks. On February 25, 2025, Euronet Worldwide, Inc. (NASDAQ:EEFT) stock closed at $102.84 per share with a market capitalization of $4.518 billion.
Voss Capital stated the following regarding Euronet Worldwide, Inc. (NASDAQ:EEFT) in its Q4 2024 investor letter:
“Euronet Worldwide, Inc.’s (NASDAQ:EEFT) stock had been whacked down to an all-time low valuation coming into its Q4 earnings report, presumably on the fears of the new Trump administration’s immigration policies (despite far fewer immigrants being deported under Trump than Obama on an annual basis) affecting Euronet’s money transfer business, Ria, along with general apathy in the payments space. We think these fears have been drastically overblown and it is overall economic growth (and construction employment for the US to Mexico corridor) that is far more important to its business than moderate immigrant deportations (let alone the fact that Ria is an international business and the US to Latin America corridor is a small piece of that business). At current valuation levels of just ~5.4x 2026 EBITDA and 9x 2026 earnings despite remarkably consistent execution and a forecasted reacceleration of growth, we believe EEFT remains undervalued with significant re-rating potential over the duration of 2025.
A part of our Euronet thesis is around ATM take rates. While most “FinTech” companies are constantly concerned about take rate compression, Euronet seems to have take rate tailwinds in their most known and maligned segment, ATMs (which falls within their Electronic Funds Transfer, or EFT, segment). A little over a year ago the company settled an antitrust lawsuit with Visa and Mastercard, who they believed had colluded with each other to put up roadblocks to increased fees on ATMs. Management commented recently that while that settlement was a first step, it was the countries themselves that needed to formally clear the way in allowing more surcharges on ATMs, something they stated is now happening. We believe a significant bump in charges (which come in at 100% pretax margins) after a decade of compression with rising costs could give the company significantly more confidence in growth from their ATMs and could change the narrative around the ATM business as a secular decliner. The last couple quarters have shown the EFT segment generating > 50% rolling incremental EBITDA margins, something we believe is reflective of early improvements in EEFT’s ATM take rate…” (Click here to read the full text)
A distribution centre operations manager overseeing the delivery of point-of-sale (POS) management solutions.
Euronet Worldwide, Inc. (NASDAQ:EEFT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held Euronet Worldwide, Inc. (NASDAQ:EEFT) at the end of the fourth quarter compared to 33 in the third quarter. While we acknowledge the potential of Euronet Worldwide, Inc. (NASDAQ:EEFT) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Euronet Worldwide, Inc. (NASDAQ:EEFT) and shared the list of best cheap technology stocks to buy according to analysts. Polen US SMID Company Growth Strategy exited its investment in Euronet Worldwide, Inc. (NASDAQ:EEFT) in Q4 2024 because of worries regarding the serious threats to its ATM business as society rapidly moves towards cashless transactions. In addition, please check out our hedge fund investor letters Q4 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.