In January 2021, Nasdaq published that it had been a month since Bill Foley, founder of Foley Trasimene Acquisition II Corp that trades under the ticker symbol "BFT," announced the combination of the company with Paysafe. By then, if you already had invested in BFT stock, holding on it to it meant that you had good faith in Paysafe as well.
Some wary investors even wondered if it was worth it to hold on to the BFT stock before the Paysafe deal went through and to put those worries to test, BFT stock is a great long-term investment. Here are a few reasons why you should consider having it on your portfolio.
The Person behind BFT's Founding is a Savvy Investor
Bill Foley has been described as the poster child of SPACs (Special Purpose Acquisition Companies). Bloomberg added that very few people on Wall Street could do what Foley can with a blank check. His ability to see worth in what others do not has made him a billionaire, but most importantly, he makes money for his investors.
He was once quoted saying that he has been a value investor all his life and targets boring companies which are undervalued. He is only one of the two SPAC executives who have raised at least $1 billion on three separate occasions. Therefore when you see a person who has no problem striking a $9 billion deal to acquire Paysafe, you can be sure that the man knows what he is doing.
The Paysafe deal is one of the largest 15 ever, and his interest in SPACs rose during the coronavirus pandemic when the lockdown affected his other businesses. He knows he can deliver to his investors; thus, according to Wall Street Journal, the businessman once referred to himself as a dictator, meaning he will do anything to ensure that his pockets are lined with dollars.
Those who know him know that he is a savvy investor and executive. He is not a speculative investor, having made $40,000 from an investment of $4,000 while in college but lost it all. When he invests in any stock, Foley is sure of the outcome. He believes a good investor invests intelligently all the time, not just once in a while. One Nasdaq author wrote that he was sure Foley would deliver for BFT shareholders.
The Investments Have Potential in the Market
When Paysafe and BFT announced their intention to merge, many thought that it was the best deal. The CEO of Paysafe, Philip McHugh, said that it was an exciting new chapter and the transaction would accelerate growth, especially in iGaming because Paysafe was the payments partner of choice.
The sentiments were echoed by Senior Managing Director of Blackstone, Martin Brand, who said the investment positioned Paysafe for organic and inorganic future growth. Brand added that Foley has an outstanding track record of creating value in financial technology and would increase shareholder returns.
Foley himself, according to Yahoo! Finance said that Paysafe has the right assets, strategy, and team in place to capitalize on long-term value creation in the payments industry, particularly on iGaming, which he had observed was opening up in the United States. Paysafe obtains 75% of its revenue from online and integrated services and 34% from iGaming payments.
It projected that revenue would increase from $1.4 billion in the 2020 financial year to $1.9 billion in the 2023 financial year. The EBITDA (earnings before interest, taxes, depreciation, and amortization) is also anticipated to expand to 36%, making Paysafe a sure bet for BFT, and of course, its shareholders will benefit.
Risks of BFT Stock
Despite the attractiveness of BFT stock, Investor Place highlighted a few risks associated with the investment. As per the article, BFT stock faces valuation risk because the pro forma value is around $14 billion inclusive of debt.
The explanation is that such a valuation is highly unusual because the Paysafe merger provided capital for a private equity exit not to drive growth. Besides, Paysafe already has stiff competition from other digital payments platforms like PayPal that has cemented its place in the US market.
As the article further enlightens us, Paysafe's presence in the US is small with regard to iGaming and online sports betting volume. Apart from PayPal, other online payments platforms like Stripe also reduce Paysafe's market share but even in the light of such risks, the inclusion of the BFT stock in your portfolio is worth it.
What You Should Consider Before Investing Long Term
CBN published that several factors determine long-term investment results. One of them is the rate of return which usually investors prioritize. According to the article, the rate of return is the one factor that is out of control, and no matter how much you want to estimate it, you can never be guaranteed.
The article advises investors to instead focus on what can be controlled, such as the length of time invested. The longer the money is invested, the more the returns because of compounded growth. Depending on how much risk you are willing to take, you can choose between investing in bonds or stocks.
An investor nearing retirement cannot afford to invest in risky stocks, but younger people can dare because they have time to recover from any mistake. Usually, stocks have higher rates of return than bonds; therefore, by mixing up the portfolio to have more stock investments than bonds, you can increase the returns.
However, it is good to remember that the amount of money invested also plays a critical role in the returns obtained. When investing in a mutual fund, you can increase the deposits regularly. This move ensures that by the time your money matures, it will have grown to a significant figure. Sticking to a consistent figure throughout the investment period reduces the returns.
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Written by Allen Lee
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