Yet Another Value Podcast - Guinea Value's Jinshu Zhang on Fiserv $FISV

Episode Date: April 10, 2026

In this episode of Yet Another Value Podcast, host Andrew Walker speaks with Jingshu Zhang from Guinea Value about Fiserv (FISV) and the broader payments sector. They examine the recent drawdown across payment companies, addressing concerns around AI disruption, regulation, and macro pressures. Jingshu outlines Fiserv’s business structure across financial institutions and merchant solutions, while detailing the impact of leadership changes and operational missteps under prior management. The discussion highlights the ongoing strategic reset, new executive hires from JPMorgan, and extensive on-the-ground research into Clover’s positioning. They also debate capital allocation, insider alignment, activist involvement, and valuation, exploring whether Fiserv represents a turnaround opportunity or a declining legacy asset.See Shu's substack here: https://jingshu.substack.com/See Trata's FISV transcript here: https://www.trata.com/fisv___________________________________________________________[00:00:00] Podcast intro and guest background[00:03:56] Payments sector under broad pressure[00:05:32] Market fears impacting payment companies[00:06:51] AI risks debated in payments[00:11:38] Structural advantages protect payment networks[00:12:49] Capital allocation concerns across peers[00:17:19] Fiserv business segments overview[00:18:59] Leadership change and prior mismanagement[00:24:23] Strategic reset and growth normalization[00:27:49] Variant perception and investment thesis[00:28:50] New executive team and talent inflow[00:34:55] Clover positioning versus competitors[00:36:20] Field research from restaurant interviews[00:42:01] Valuation framework and earnings outlook[00:46:14] Insider alignment and incentives discussion[00:53:34] Organizational culture and employee sentiment[00:58:30] Activist involvement and strategic optionsLinks:Yet Another Value Blog - https://www.yetanothervalueblog.com See our legal disclaimer here: https://www.yetanothervalueblog.com/p/legal-and-disclaimerProduction and editing by The Podcast Consultant - https://thepodcastconsultant.com/

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Plan started just $12 a month. Learn more at tellus.com slash online security. No one can prevent all cybercrime or identity theft. Conditions apply. You're about to listen to the yet another value podcast with your host, me, Andrew Walker. Today we've got Shoe from Guinea Value back on the podcast. This is his second time on. The first time was, it must have been back in October.

You know, memory starts to fail you after a while. But it was sometime late last year. He came on. We talked to E.D.U. And it was just fantastic. I told him, I sometimes point to people as the, you know, I'm not saying it's the best podcast I've ever done. But it's the exact type of podcast I like to do. Shue has done deep research on the company.

He brings background in this space. to the company and he's got some kind of information that, you know, not that it's MNPI, but it is not non-public information and that he's gone out and he's interviewed industry and designers. He interviewed customers, all this sort of stuff. So he brings a deep background. And he's back on the podcast today. We're talking FISA, ticker FISV. And he's done a lot of that here. You know, you'll hear it kind of halfway through. But he went out and on the Clover products. He interviewed 100 plus customers of the of Clover and he talked to them about, hey, what do you like? What do you dislike? He's got background with a lot of the executives. He's reached out to a lot

people have worked with the executive. So I think all of the deep research here, obviously he knows the industry, but all of the kind of non-public but also non-material stuff that he's done is really going to shine through. So hopefully you like it. If you like it, I'll include a link to his substack on the show notes so you can go check that out. So we're going to get to the FISER podcast in one second. But first, a word from our sponsors. And you know what, F it. I'm not even going to do a step recording. Let's just jump into our sponsor right now. This podcast is sponsored by tritrata.com. If you're on the podcast, I'm pointing because I'm wearing my tri-trotter. a hat. You've heard me talking about it for months. I think if you like this podcast, I think

you're really going to like Trada. It is two by-siders who hop on and talk, hey, I'm bullish, I'm bearish on the stock. Let's swap thoughts. I think anonymized. I think it's really awesome. Actually, one of the ways I prepped is they have a FISA podcast from, it was January of this year. And if you read it, it's two skeptics who look at and say, I want to like it. This stock is cheap. But I'm worried about this. I'm worried about that. They actually, you know, this is after the October blowup that we're going to stick us for five. but it's before some pretty poor Q4 earnings. And a lot of the issues that kind of come home to roost in the Q4 earnings, this Trotta

transcript is really identifying and the skeptics are saying, hey, I want to like the stock except for this. I want to like the stock except for this. And the except for this really comes home in Q4. So I have found it a great way to prep for podcasts, get up to speed on new names that I like. I say it all the time. A lot of people through the podcast have found Trada and the most frequent feedback I hear is, hey, Andrew, I love Trada.

I just wish there was more coverage. I wish there were more interviews. I wish there were more companies that were covered. So if you like this podcast, I think you're going to like Trota. Go to try trotta.com. That's try trotta, trata, ta, ta, ta, ta, ta, ta, ta, ta, ta, ta, to try the product out. And also, there will be a link in the show notes.

If you like FisRF, I've got a sample of the FISR of transcript that I like so much that I use to prep that they will make available for free. So you can go check that as well, link of the show notes. And now on to the FistSERF podcast. All right, hello, welcome to the yet another value podcast. I'm your host, Andrew Walker, with me today. I'm really excited to have on for the second time. Shuzang from Guinea-Balue.

How's it going? Doing well. Going well. Thank you, Andrew, for having me. It was a lot of fun last time. It really was. I mean, last time we did EDU, and I think I told you, I started pointing people to, hey, if you want like a pitch-perfect example of how I like a podcast to go,

it's shoes work, combining, you know, on-the-ground research, his background and everything. But, you know, I'll fluff you up a little bit more later. Let me start this podcast, same way to every podcast. Mind everyone, nothing on this podcast is investing advice. Full disclaimer all the way at the end of the podcast, so you can find it there. And she writes getting value. I will be sure to include a link in the show notes to everything he writes there. So you can go check it out if you want to see anything more of Shoo.

And the reason we're having you on is we're going to talk Fiserve. The ticker is FISV. And with that, I'll turn it over to you. What is FisServe and why are they so interesting? Yeah. So I guess, you know, the entire entertainment, space is in doghouse right now. One of my questions, absolutely.

Yeah, so the ETF for the payment space, which is I pay, is down 17.1% this year. And they have, even the kings and queens like MasterCard and Visa, they are in bare market territory now. And the entire space, I think, had multiple punches. So they started to decline last year when the genius. Act passed and just the people worry that stable coins going to disrupt the infrastructure and they started to go down. And in September, PayPal CEO came out and said, oh, consumers weakening.

And then, you know, the payment companies went down further. And earlier this year, Cloud came out with their new technology that enabled really easy software development and given that a lot of these payment companies are vertically integrated software companies so they sold off again and uh last but not least people worry about massive layoff now uh and with the iranian situation uh oil is going through the roof and um it's uh people worry about a recession then people getting laid off because of AI and then less consumption less volume which is bad for payment companies so they really had this one two three four punches at them and idiosyncratic to FISA, they also had a particular reset.

Before we go to FISERF, could I actually pause you on the idiosyncratic? Because I wanted to ask, and we might as well start. Just the payment space overall, as you said, has been hit. VSID Master, even Bellwether's like VSA MasterCard, but like, you know, one of the questions to ask you is FISERV, not to front run the questions, is trading it like six times their guidance for 2026 EPS, which sounds very cheap and is very cheap. But, you know, there's like five other payments companies, you know, GPN, several others. Shift 4 has been a popular one among value investors because people really like, what is it, Jared Isaac is the CEO.

They buy back stock. They've got this great and just smash after smash after smash. Like you said it's down 17% years to date. I would have taken the over. I actually thought it was down more. So you laid out the reasons. You know, it's been one bleed after another like major hit arteries. But when you look at these, like what do you think the market is most scared of?

you thought AI and I kind of thought AI. And do you think that is like kind of a real concern? Because if I just said AI, I think a lot of people said, hey, you know, FISA, these guys are integrated in bank payments. Like that is the last thing because there's so much regulatory and everything. But on the other thing, they process billions of payments per day. That's something that AI is really good at. So do you think the AI risk is real or do you think it's overblown?

So I just threw a lot out there. I'd love to just get your general overview of that payment space. Thank you. Thank you. That's a great question, Andrew. So I think maybe AI is a threat for some of these companies. For example, like maybe FACSET, maybe Morning Star, I don't know. Absolutely.

Because I just desubscribed my Morning Star subscription because literally my GM9, my Cloud, Asian, they do the summary of stocks way better than the analysts on Morning Star. So I don't need that anymore. But for the payment space, I think they are, slightly different in several ways. So firstly, as you mentioned, there's anti-money laundering and they know your customer

and a lot of compliance regulatory requirements. It is not that a couple guys, you know, or girls in their home and design something and they can, you know, overcome all the regulatory hurdles. And another, you said, you know, global payments and ship for another company that we own, which is also very cheap,

it's called Euronet worldwide. So that thing is a $2.5 billion market cap and $400 million free cash flow this year. That's excluding the share-based comp. So, I mean, six times. And it's, you know, it's not easy for people to go to 200 countries to get all their licenses for cross-border money transfer. Even Remidly is still using Euronet's infrastructure called Dandelion to do cross-border transfer. So it's very difficult on that front in terms of regulation compliance. And secondly, they have all the proprietary data for decades.

And those proprietary data can't be accessed by those large language models. So by its very nature, it's awarded a garden. And they can have the best service provided to their customers because of the ownership of decades of data, where the external software developers, they can't. That's the second one. And I think the third is the network effect. I mean, I think people had a company that found that I respect both capital. They correctly pointed out that there were a lot of software as a service offerings,

but they're only this many who are successful. So for payment, the two-sided network effect is very strong. It's not like you have a software and you can directly like, you know, go ahead and replace them. And did they have the economy of scale because of their network, in fact, there's a self-reinforcing loop, right? And lastly, I think, you know, for bank course, there's no way that, you know, that's just nonsense,

the AI fear. But I understand what you're saying, you know, on the Clover side, let's say on the POS side, payment, the point of sale service, you know, those postal and things. But here's the key. I read a lot of substack or whatever written by people who are like really technical, like they are really good at technology, but they are not salespeople.

Like in order, you have to go to these mom and pop to sell these products. And when the products have a problem, you need to solve those along with these individuals, these mom and pops. Not everyone is a technology genius that they can solve all. by themselves. And for example, Pfizer recently got into Japan, which, you know, Japan used cash a lot. And it's one of the least digitized developed economy on global basis. And when Pfizer went in, they went through the Sumitomo Mitsui Bank. So it's a merger between the two banks. And it's the second largest banking in Japan in terms of assets. And I think it's on par with like a wealth

far ago in the U.S. It's a huge bank. That bank serves as a distribution channel for I I serve and in the U.S. FI.S. have 600 direct sales and a whole bunch of like they serve 10,000 financial institutions who have local and community-driven relationship with the mom and pops. The mom and pop already have bank accounts opened at those financial institutions. So they just have to cross-sell that POS to them and get a commission for FI. So so this is a business. So this sales component, I notice it's very little discussed by all those posts. So all four dimensions combined together. Network, in fact, sales channel, compliance, regulatory reasons, and proprietary data.

I believe the payment space is wrongly killed by the market due to fear of AI. If I can just zero another last thing. I agree with a lot of what you said, though. As I keep saying, like, I'll do calls. with people and three months ago, I'll say, hey, would you ever use AI for this? And they'd be like, absolutely not. No effing way. Too mission critical, couldn't risk it.

And then you do a call within three months later. And they're like, AI is all I'm using that for nowadays. You're like, oh, my God. But I do agree with you, you know, like the guy in San Francisco who, you know, is using five cajillion clawed tokens per day saying, hey, you know, every restaurant in the world is going to vibe code their own payment processor and take you, like, you know, there's There's just no chance. And as you're saying, like, payments, because it processes a lot of payments, it seems AI

native, but they also have the hardware piece. You also have the fraud piece. Like, you know, being up 99.9% of the time is great for your and my morning store replacement. But if you're a diner that processes a thousand transactions a day, that might be high for a diner. But, you know, 99.9 means you're going to have a couple fraudulent transactions every day. You can't afford that. That would eat your entire margin away.

So I do find that fascinating. Please, I jumped in. I'm happy to continue on this discussion. are happy to switch it up to specifically FISA. Yeah, so you brought up a couple of other very cheap names. So I did survey the entire payment space. We ultimately, the top two positions for us in terms of payment on FISA and EuroNet. I did look at all the other ones.

I know there are a lot of Fingwits on Twitter who love global payments and Shift 4. I'm somewhat like, you know, this is not. based on reason, but usually what the Finwitz love on Twitter will fail, right? You and I both use Twitter quite a bit, so we know that. But specific to global payments and shift the fore. I believe their capital allocation strategy is a mistake. So they are, both of them, you know, global payments, they had this asset swap in terms of like, they sold TIS to FIS and FIS sold WorldPay to,

to global payments. And Global Payments and the Shift 4 both are levered at 3.5 times net debt to EBITDA. Instead of focusing all their cash flow to de-laverage their balance sheet, they insisted on buying back their stocks, and I believe that is irresponsible capital allocation. And I pointed out, like, when Global Payments were at 80 bucks and Shift 4 was at 70, I already posted these comments on Twitter. And people are just going to respond saying, oh, I mean, we think 3.5 times lever is totally fine.

But the problem is, you know, if we really have a recession and EBITA goes down, the debt's going to stay there and slow out and you're going to break covenants. It's very, I think people fail to, a lot of the executives in the U.S. buy back their stocks into extinction. They fail to understand that, you know, the leveraging a balance sheet is actually also going to return. your enterprise value. And because you are derisking your business overall, your equity should theoretically enjoy a higher premium or not a lower. So that's exactly what FISA is doing. They are because of the strategic reset, right? They are net debt to EBITDA is above three times. They are determined to lower it to below three by the end of this year. In the fourth quarter,

they already chipped away $900 million of their debt. They're doing exactly what they're saying, pause their buyback because they bought back so much. of their stock, right? And the stock just, and it's nonsense. And now they are protecting their balance sheet, protecting the investment rate rating. And I think that's the more responsible thing to do. And that's how I want to align my capital and my clients capital with.

You know, if I could just jump in as a former cable bowl, and I think you mentioned in your write-up, you know, I used to be kind of like the shift forward payments. And I think in my heart of hearts, I still have them. I'm like, look, when your stock is sheet, you want to buy back the stock and you can worry about that pay down later. But I am kind of with you. I've seen the downsides of it. And I know I've talked to a lot of people who are very good on the short side of like, look, one of the critical moments. And we are kind of stepping on the fit of some of the

fifth or question apps. But they said, hey, one of the critical moments where we like to go shirt is just technically when something goes from, you know, if you're a $100 enterprise value and your 60 of equity and 40 of debt, they like to do when it flips from. above 50% equity to below in below 50% debt when it flips to below 50% equity and above 50% debt and they're buying back stock. They actually think that's a great technical that the management team is behind on the fundamentals and kind of incinerating value buying back stock. And like the business still hasn't reset yet. They think that's a great technical. And I used to scoff at that.

And now I've seen it so many times lead to tears that I'm kind of like, hey, it is an interest. It's a concern. So we are stepping on the fifth surfing. The only other thing I will say there is, it is funny. You said I disagree with the ship for in global payments capital allocation like the FISServe when one of my questions says, hey, FISServe bought, I think it's $5.6 billion of stock at $170 per share in 2025, and now the stock is 55. So capitalization is funny.

All right, I think that's a great overview of the payments phase. Why don't we turn specifically to FISER? Maybe you can just give an overview of what they do. And there's kind of, you know, it is a big business, but they're kind of two. two or three critical segments. Maybe we can talk there and we'll go from there. Absolutely, absolutely. So the company overall has a revenue of $21.2 billion last year.

And 84% of that is U.S. and Canada. And 16% is international. Argentina and Japan, they are expanding to Japan. And so breaking down that $21.2 billion of revenue is financial solution. which they also call the Financial Institutions Group, FIG, which does the processing of customer loan and deposit accounts, core banking services, digital payment, card transaction, and card issuance. They are actually second largest credit card issuance company along with TIS.

And another half of the business about the same size in terms of revenue is merchant solutions. They do merchant acquiring, digital commerce, mobile payment, security and fraud protection, and so on. And also Clover belongs to the merchant solutions part. And I agree with you 100% your comment that they bought back $5.6 billion of their stock, and the stock just went down 70 plus percent. That was under the previous management team. So perhaps, shall we talk a bit about the management team?

Yeah, I think something else. I think it's worth it. I think it's worth it because they have the management team changeover. I think it really does play to it. So, yeah, why don't we talk about kind of the management team changeover and all that? Yeah. So the previous management team, you know, the CEO, the former CEO, who is now the head of Social Security, is named Frank Bisignayon.

And he probably has the absolutely word. the CEO rating I have ever seen on Glassdoor, ever. I have not seen a worse. I think the CEO approval rate is 12%. Like he's just, and based on what the new CEO said during a town hall meeting, the new CEO Mike Leons, who came from PNC Bank, who is one of the largest clients of I serve. And Mike has a pristine reputation and a very strong track record.

He was actually behind selling off the Bank of American assets during the financial crisis. It was after he pruned Bank of America, got rid of a lot of irrelevant assets, after which Warren Buffett invested in Bank of America through the warrants. So then he went to PNC. He was the second in command at PNC, was going to say. succeed, the current CEO is still young, so he was not going to give it up yet. So FISA approached Mike Lienz and said, would you like to join us? And Mike felt FISA is the best option for him, because firstly, he can become a CEO.

And secondly, he doesn't have to go to another regional bank that competes with PNC. So he went there. And he basically said Frank didn't do anything over the past two years. And, you know, as we discussed at the beginning of the before we started recording, really like Frank juiced this company by laying off a lot of people. So I talked to, I did a lot of primary research on Pfizer, we talked to a lot of their employees. And they basically said they just anticipate there's going to be a round of layoff

every time there's a holiday. And to give you one example, how bad the business become, like, it's such a wonderful business, right? A financial solutions group, FIG, is 98% customer retention rate, right? Core banking, that's, like, the best business model that you can get, like, if you want to change a core of a bank, it's basically, like, walking down the street while having a hard surgery. That's how hard it is, right? And merchant solutions are a lot of recurring revenue, right? very capitalized. And he laid off so many people such that, so there is a certain division,

a certain group of people at FISA called the client technology advocates. So I found the job description. The first responsibility of CTA is they should lead as the single point of accountability to a critical client, the business, and to the FDS organization of tax service provisioning. So that people went, Mike took over, had just two employees. And those two employees are responsible of catering to the needs and wants of DoorDash, eBay, Walmart, Webster Bank, whole bank, and a whole bunch of clients. Like, there's just no way that this is why, this is why If you look on LinkedIn, if you look at, you know, online there is a lot of place that people say the service and fire service is just like crap, total crap. And after Mike took over, he noticed how bad it is.

He started to hire a law more client technology advocate. That's where the strategic reset came because he just noticed the business is going to fall apart because all your clients are going to leave you if you don't provide a proper service. So now there are more than 30 people. in the CTA and they keep hiring more. And in addition, because there's so many people who understand the technology have already left the company due to, you know, the horrible management team, previous management team. Mike found that there are not enough service people for the local banks, the community bank credit unions.

So they acquired, they acquired Smith Consulting Group, which was run by Darren's Smith for 17 years. So that Smith consulting group, you know, when I saw the acquisition, I was a little puzzle like, why would they acquire a consulting group? It was because all these people have already left. And so you can't find, and a lot of them left for Smith consulting because of the return to office policy under Frank Bezignanio. And the buyback was under the former CFO.

So what really puzzled me, Rob Hall, he actually brought back $1 billion of stock in the third quarter after Mike Leon said there's going to be a strategic reset. This is why there were rumors that, you know, there were infighting between CEO and the former CFO, and the CFO indeed resigned during the third quarter earnings call. Sure. Can I just hop in? I mean, I think what you're driving to, and I agree with you. You know, you heard like, I've seen some calls, expert calls, some Trada calls, talking to experts, all this sort of stuff, who basically say, hey, look, like FISER, as you said, if you try and rip out their core business, especially as a bank, it is like trying to do open

heart surgery. Like these businesses, I remember, I think it's UBS after they buy Credit Suisse. They spend like three years and $750 million to transfer over Credit Suisse's systems to them. Like, it is not easy. So you only, you don't rip someone out lightly. And I heard lots of calls where they were saying, hey, you know, they pushed their customer are so hard in terms of cutting service and raising prices that they were having customers talked about, hey, we've just got to do this.

You know, it was like the old cable company who you can't leave on super steroids. So people were talking about that. I think that's one side. The other side would be, you know, you had the old CEO who leaves in December of 2024. He kind of leaves a little bit after that, but he leaves. And I think people were shocked, and this is where the Q3 October, Q325 earnings come in. You know, I think in Q3 of 25, they grew 16%. And then they came out and said, hey, of that 16%, 10% of that is Argentinian hyperinflation, right?

And another 4% of it is one-time contract sales or something. And I think the old CEO gave none of that color and none of that clarity to the street. So I think it might be fair to say, you know, Mike joins in January of 2025, the stock's 200. He kind of takes over over the summer. And then he does, as you say, a strategic reset. And it's everything you're saying. They had cut costs to the bone so far that customers were actually thinking about leaving. And they had pulled forward all these one-time items and kind of obfuscated the underlying business, made it look as good.

And the guy, I mean, the old CEO, you got handed to him. He leaves the stocks at 200. He leaves for the government for a big government position. So he gets to sell all of it tax-free. But I think it's one of the things where, you know, FistRb was the ultimate compounder stock, right? It's at $10 per share in 2010. It's at $200 for share in early 2025. 20x over 15 years is a compounder stock.

It's sticky, pricey power, everything these guys love. it just as many compounders do, it took it too far, and Mike has done the strategic reset. Would that be a fair frame and everything I just said? 100%. And the $10 that you mentioned in 2010, that was when Berkshire Hathaway was an owner. Like, they actually bought Pfizer at 10. And it's crazy if you think about, you know, even today, you know, selling at seven times adjusted EPS of this year, I mean, Berkshire was still made 5.5 times its money over there. has 15 years. I mean, that kicker, after the stock is about 75%. Yeah, so to your point, it's the ultimate compounder. So I think we've laid out a nice background of what the business

does. I think we've laid out a nice background of, hey, you know, this is kind of the case of it was a compounder, the old management team maybe took it too far. Let me ask you this. You know, you've laid out both of those cases. You've got a position here. What are you seeing that you think the market's missing? Do you think the market is too concerned about the AI fears? Do you think the market is not seeing, hey, this is a new great CEO who's taken all the right steps to get this reset. It could be both. It could be something else. But, you know, the market is a very competitive pace. And Pfizer is a multi-billion dollar payments company that's owned by Berkshire Hathaway. There are a lot of eyes on this. So what are you seeing that all of those eyes are kind of missing?

Okay. Yeah. So just to clarify, Berkshire owned it for a couple quarter and then they sold. Okay, cool. They saw it pretty quickly. And yes, so I think my variant, perception here is that I believe the market sees this as a legacy play that it's going to melt away. Whereas based on my close following this company, I believe the new executive team is one of the absolute best in the fintech space that is going to be able to navigate the changing the tectonic shifts of the payment landscape very successfully. And I'll expand a bit on that to provide more meat, to support. substantiate my claim. The CEO is great, but he's not the greatest in the story, I believe. The true legend here is the C.O.

Named Takas Jakopopoulos. I'm glad you pronounced it not me. So Takis is, so he basically, I'll tell the story this way. So he started the, I'll tell the story this way. So he started the payment division of J.P. Morgan with zero revenue and seven people. And grew it to 25,000 people and the $20 billion revenue run rate. Which, like, the payment space alone is double the size of the payment of the merchant solution of Pfizer right now. And when he left, Jamie Diamond actually threw a private party for him.

And Jamie spoke, you know, thanked him and everything. So TAC has joined FISA in late 2024, I believe. And the reason he didn't become a CEO is that he is a very tech-driven type of person. He said himself that he would become a physicist. But somehow, you know, he has a PhD in mathematical economics, I believe, from Columbia University. And he, you know, I talked to a couple of friends in the fintag space, and one of them is a founder of a fintech company. He told me it's always therapeutic to listen to Taki's talk. And I agree with him on that point.

I listened to all his tech his public interviews and everything. And he always thinks in binary treats, which is the exact way like Warren and Charlie would think. about things. So he joined FISA and a lot of the talent really followed him. And I'll give you a couple examples. The former global head of e-commerce and tech sales added Gajillo has become a global head of business development at FISA earlier this year. Leah Tau, who is the global head of embedded finance and solutions of JPMorgan, has left and joined FISAV as the enterprise. platform's CRO of FISA earlier this year. Sanjay Sarath was the chief product and customer officer of J.P. Morgan,

and now he joined FISERV as the Merchant Service CPO last year. And Robert Clarkson, who was the chief revenue officer of Stripe of Americas, he left the Stripe to join FISERV earlier this year to become the chief revenue officer of small and medium business and clover. And Adam Hyde, who was the global head of HR operations of JPM Morgan Chase, has come to FISA to become the chief operating officer of merchant solutions. And I'll give you one last example. Jujahar Sohi, he expanded two plus decades on the buy site.

He was a portfolio manager at Nuvian with a very strong track record. he decided to leave the by-site to become the chief performance officer of FISA. And these are, these information, I'm afraid, that the market won't really look into. I mean, Pfizer has dropped so much. A lot of people tax laws sold, and they felt like this new management team is unproven, right? But I'm actually seeing all these positive changes there, and very present. profound changes. Basically, I, you know, I joked to my friend that this is the Avengers Assemble moment of all the giants from J.P. Morgan payments, which is one of the most powerful

powerhouses in this space, all left J.P. Morgan to join. I said, I was like, Jamie Diamond threw a party for Techis. So how tech is Jackalco Polos? You are taking all these people away from JP Morgan. I mean, these are the best talent. I mean, that's how it has a PhD degree from MIT, and she was at McKinsey, and then George J.B. Morgan, I have listened to all her public interviews. It was all fabulous. These are not in the press release, nor in the earnings scores, and you won't see the effect immediately. But I'm seeing all the talent that got attracted. I just give some of the names there are more, and I believe it is a positive reinforcing look because the more talent you have, the more talent you want to leave and join this place.

you reach the critical mass that, you know, you take off. You just described the both thesis for Google in 2010, right? Let me, look, I love that setup, right? You've got, A, the company is trading for, it's trading like a melting ice cube, right? It's trading for six or seven times this year's EPS number. This year's EPS number is hopefully, you know, as they said, hey, this year is kind of the pain, and then they start building and growing in the next year. I can't remember the exact quote, but this is the recent year.

you've got a new CEO who to me, which is where I spent more of my time, has made all the right moves, right? He pulled some very difficult levers that were left to him that kind of were forced by the prior CEO. He took the medicine. He took the short-term payment. And then you've got underneath him a great CTO who's building out this great organization. But let me ask you, so there's the Fyserve Bank side and then there's the Fyserve Clover side. And I think one of the bare thesis I've heard is, hey, Clover, and we kind of started touching on this a bit. But say, hey, Clover is a legacy product, right? All the new cool kids are going to Toast and Square. And it takes a while, right? Because as you mentioned, even with just point of sale at a restaurant, it takes a while

because if you're on Clover at your point of sale, you're not going to rip that out easily. But for a lot of these point of sale retail things, what people say is, hey, the legacy payments, it takes a while, but every new business goes on toasts or goes on Square. And what happens is Clover doesn't die because all their new customers aren't renewing. They die because eventually their customers start going bankrupt and they just kind of shrivel up and triple up as Toaston Square. So let's just ask you on the Clover side. Like, how do you think about that piece and how valuable is the Clover side versus the kind of core fist serve side? Oh, boy. Andrew, this is such a wonderful question. And I was so excited. I did a lot of boots

on a run. I actually interviewed close to like 200 restaurants. Can I probably you there? Because one of the things I love on a podcast. One of the reason I said the EDU broadcasts, we did, I love it when people bring obviously great knowledge of the 10K and the business stuff. But in your write-up, as soon as I saw it, you interviewed 100 plus individual restaurants. And I just want to highlight that. Like when you say, hey, this is how people are thinking about Clover. Like, you actually went and did, this is information that only you have. And I guess now the listeners have another value. But I love it when people can just bring like, in the data of I talked to one or two restaurant, but you did 100 plus. So I just want to give you kudos and make sure people understand

like how kind of unique that is. And that's the type of thing that the best investors, I think, kind of always have in their back pocket. Thank you so much, Andrew. Yeah, yeah, I even reached out to their top sale. His name is Austin. And he's such a great salesperson. I'll talk more about it. I even offered to collaborate. I actually did try to collaborate with him to sell Clover post for them because if I get to sell them, I get a recurring revenue. So I'm actually doing that. We got to hit that with the disclosure. You're on the Clover referral slash-a-o-any plan. Yeah. Yeah. So I guess Andrew, so firstly, you said it might be an ice cube. So firstly, I think, you know, 70% of the posts in the U.S. are still legacy posts that are not

toast, they are not square, they are not clover. They are just like tax global type of POS. And here is the interesting part. If the restaurant doesn't go under, the restaurant owners don't have a huge amount of incentive to change the POS because as long as it can accept the payment, like even the oldest like tax global payment, like, in flushing. I went to flushing and I had dinner lunch and I talked with the restaurant owners there. I was like, can I offer this clover thing to you? And they were like, oh, this thing

is still functioning. So we are not going to switch just as of yet. So there are 70% of the posts in the U.S. that haven't been updated. So they are not really reaching the saturation point where they are competing with each other fiercely. That's the first thing. And secondly, more importantly, I believe, is that toast and the clover, like people keep telling me, oh, toast is eating their lunch. The thing is toast and clover are just, they are facing very different niches in the payment space. So toast, if you don't have a kitchen, then it's almost never economical to have toast. Because in terms of the monthly subscription fee and also the payment processing fee, toast is just much higher.

So for a dining restaurant with a kitchen, toast makes five times as much money as if it just went into a non-kitchen mom-and-pop type of a restaurant. So it's sort of an innovator's dilemma. Why would I go there if I could make so much money here? And yes, toast has the most integrated system. They developed all their software in-house, which is very, very, like the experience for customers is very smooth. It's great.

Clover has more integrated third-party apps on their POS. However, you know, the price is just way cheaper for Clover for mom and pop that do not have a restaurant. That's a, let's say a creep store or a burrito store, those types of things. That's why, you know, in Union City and we all can wear, you know, I live around these places. and I go into restaurants, it's all clover. Like, most of them are clover because it's not that, they don't need an overkill in terms of toast. And in terms of volume, you mentioned what it just declined,

and that's definitely a metric that we should definitely follow. And if that metric really deteriorates, then the thesis will break apart. But so far, I'm noticing that the volume of clover was actually quite stable, even Q3 of last year, when the stock went down 44% in a day, that quarter wasn't, you know, it was due to the reason that you brought up, you know, the Argentina and, you know, and also overcharging the bank lines. It's not due to clover volume. It was just hovering around 10%.

And this year, it's going to grow like 10% again. And there is also another way to cross-validate this claim. earlier than the market, which is through a publicly traded company called PaySafe. So PaySafe has a division which is an ISO called Independent Sales Organization. So in the U.S., when the banks, although they are channel partners, they mostly just serve their clients. They don't really sell these products. They delegate the responsibility to the so-called ISOs.

And then you have tiered ISOs. You have big ISO, underneath which you have three small ISOs, and they all make money. So the PACEF has a division which is an ISO and they sell clover. And they said it's one of the best products. I think it will like more than 50% for them last year. And they said it's one of the best fit for small and medium business in the U.S. with great functionality. So what I'm seeing is that the volume has not collapsed.

And also the ISO is giving very positive feedback. And the restaurants that I talk to are very happy with their clover terminal. Because I also happen to know the CEO, Wen Lingxin of Chobas. And he's a CEO who I greatly respect. He firstly started with delivery. And then he pivoted into the POS space. And now his company's private valuation basically beat. And he, you know, based on, you know, he, based on,

talking with his employees and talking with him regarding these, you know, the Post, like it's a very niche market with different needs. Like the Post has a specific niche. Chobas has a specific niche, which is the Asian restaurants. They kick everyone's ass there, but they can't really like getting to Mexican, right? And Clover dominates at least from the restaurant that I told. to mom and pop, especially minority ethnic ethnic ethnic, yeah.

Oh, sorry, isn't. So let's break it up. So you've got the Clover side, and you've got the Lexington Financial side. How do you kind of value both, and maybe we can break into some of the parts here? Yeah, yeah. So I guess in terms of valuation,

it's, I kind of like the one-foot hurdles. And when something is selling, So this year, they are projecting an adjusted EPS range of $8 to $0.30. Another thing is, you know, some people might frown at adjusted EPS. But for FISA, their adjusted figure is actually much, much cleaner than a fidelity national information services or a global payment. It's mostly the amortization of, you know, because the FISA bought first data, cumulative, that are a lot of goodwill and tangible, they amortize that. So their adjusted EPS, I believe, is quite reflective of the reality.

I mean, just so people know, now this is 2025, not 2006, but if you want to take away all their adjustments, they report $6.34 per share in earnings, and if you add their adjustments back, they report $8.64. So obviously that's a big difference, but this is a $55 stock. So even if you said forget all of those adjustments, you know, get them out of there. And as you said, it's not huge. The biggest one is amortization of acquisition related intangibles. I mean, of the $2.30 per share, a $1.90 is coming from amortization.

So that is your big, big, that is your big amortization, which most people would not push back on that as a ad back. But even if you ignore it, we're still way under 10 times earnings right now. Yeah, so we don't need a lot of things to go right for us. As long as this thing is not a melting ice cube, you know, if it treats like this, it's fine. I mean, by the end of this year, they're going to be below. They'll probably be somewhere like 2.8, 2.9 times net debtory, bit of leverage, which is a pretty safe territory given the, this is after the reset. And with all the capital and operating investments, additional investments put into the business.

And next year they generate something like $4 plus billion of free cash flow. And the business is at like $28, $29 billion right now. And they just spend some of that to buy back their shares. And then it's very accretive to earnings if they just trades at the current level. And I think tech is going to do some wonder here, just like he did at the payment division of JP Morgan. And I'm already seeing a couple of very, very smart moves at FISA. For example, they bought Stonecastle and they issued their own cryptocurrency called FIUSD, their own stable coin. And this is already being used by North Dakota Agricultural Bank, I believe, for their ecosystem.

And so Stonecastle will provide the liquidity that allows the stable, coin, because people worry, like the banks, they really worry that the stable coin is going to drain their liquidity because every stable coin has to be backed by $1. However, if you have an ecosystem where whatever is generated gets recirculated back through Stonecastle, then you retain the liquidity within your bank consort. So that was a brilliant move. So I think if they can, which I believe they can deliver low double-digit EPS growth on go-forward basis. This thing should at least, at least be valued at maybe like 12 times earnings, if not more. Then next year they're going to generate more than $9 of adjusted EPS.

So they're treating at six times of 20.7. Even if we just get like 12 times, that's a triple digit stock. And right. No, look, I'm with you. Let me as one push it. And it's always tough, but you know, you've got a stop where you've got the new CEO comes in. A lot of his pay package is struck with the stock at 180 to 200. You've got a lot of the new management team comes in.

A lot of them come in kind of over the summer before the October reset. So a lot of their comp is struck there. And, you know, in February, I believe they kind of do top off grants to all of the top brass to kind of make up for the fact like, hey, you can't. and got bags, which is good and bad, right? You hate to see somebody come in, take a job, and then the stock goes down and you give them bags, but at the same time, you give them a reload, but at the same time, you know, you come in, you think you've got this growth business, you're like, oh, I've got a reset.

But, you know, I think I would push back in you on it. Hey, you've got this business where you see the value, right? Hey, we're trading at six to seven times price of earnings. After this year, the reset, we get double digit. And by the way, we've got the best guy to run the payments group. We've got a great CEO who's taking the medicine, reset this year, double-digit growth, the stock's off to the races, right? And then you've got the company focusing on paying down debt, and you and I've talked

about the capital allocation decisions there, and maybe that's the right move. But, you know, insiders come out of their pockets and buy stock. All of these guys have been very, very well paid historically. They're getting pretty big. You don't see any insider buying. You don't see any director buying. I guess I would just say, like, hey, if I'm just looking at the incentives, it seems to me that they've got kind of some line of sight to the turnaround. They've got the core team here.

They're starting to see the green shoots, but I'm not seeing the incentives. And, you know, the performance stock that they just gave the CEO in February. If I'm remembering correctly, I think you can pull it up as we're talking. I thought it was very interesting that they said, hey, and if they say, hey, the performance metrics for this $18 million PSU package we're going to give you, we're going to side the performance metrics when we do the investor day in 226. So, you know, I'm kind of wondering just a tiny perspective. Is there another shoot to drop? Should we be waiting for the Investor Day?

Is it, are we six months too early here? And that doesn't mean, you know, six months too early. If it doubles, it's still fine. But, you know, maybe we get another bite at the Apple. Maybe we should see how the Investure Day goes. You know, maybe there's one more reset. So threw a lot out into there. But I guess what I've seen is, why have we seen insiders a little bit more bullish here?

Yeah, yeah. So I think there were three insider buys thus far after your reset. This is after we say. Wine's fraud director. I forgot his name, but he was, I think he was the CEO of Union Pacific. I think you're looking at Lance Fritz, who buys 10,000 shares about 650K worth. Yes, yes, Lance Pritz. And if you look at his track record of insider buys, I think he only made two insider buys.

One is vice-serve and the other is another company he served at Director, which is Parker Hennif. You are correct. I'm looking at it. He's had two. Yep. And that it was a clean buy and the stock almost tripled. So Lance knows probably knows what he's doing. And the other two people who bought, one is the chief legal officer.

The other is the chief financial officer. So the chief financial officer just joined this company after the third quarter, right? And he has been in the position for just several months and that he bought, right? I think he bought a million dollar worth of shears. That is correct. Yeah. So it's good that the legal officer and financial officer both bought stocks because, you know, that perhaps accounting-wise and legal-wise, they are probably fine.

And I wish I would love to see Mike Leon's and attack his job. Gaga-Polos buy their stock at this level. On the other hand, the proxy statement that just came out last week, if we go through the details, basically like the base salary for Mike is about 7%. And the incentive is about 13%. And he got zero last year because there was this financial reset. So understandable, he was, I mean, I can't believe. Because he is such a career-driven man.

And he was first at Maverick, right? It was one of the best hedge funds on Wall Street. And he covered the fintech space. So he knew FISAV back then. And then he was at Bank of America, then PNC Bank, second in command. And he interacts with more than 100 products from FISA. So he knows what is going on at FISA. If Fiserve is really just a sham, I can't believe someone as a shrewd and the career-driven as him,

would have jumped ship to FISA. And 80% of his salary is annual equity awards, and 60% of the shares are PSU, performance share-based. And I like the metrics, you know, 20% of the weighting is free cash full conversion, and 30% is unjust EPS. In addition, he is required to have 12 times his base salary of stocks. You know, so I hear you, but if I was just going to slightly push back there, I'd say, hey, you know, shoes out here telling me, Mike, and I, as I think people have heard through this podcast,

I think he's done, I think he was dealt a seven-two and he's done like a pretty good job of, oh my God, I thought I was coming into a growth company with a, you know, a compounder. And once I got under the hood, a lot of the compounding was Argentina inflation. We cut prices to the bone. I think he's done a good job of instantly taking his medicine. You know, he becomes, I think he becomes the full-time CEO in June, right? I think that's when actually kind of the prior CEO officially gets appointed chief of social care.

So within four months, he's doing a full reset of the whole organization. I think Zemwell, but I would kind of push back on you. I hear you. He's got to get 12 times of salary and stockcom. But as I said, the company just reloaded him with $18 million of $18 million of PSUs that will get set at the investor day. So I'd say, hey, the guy makes $1.2 million a year. I don't know.

But in salary, he's basically already. there, right? Just on the grant. So I do love having a lot more stock, but as I've written to some directors, hey, if you've got five times your annual board fees in stock, that's nice. But if you did that by earning the board fees over seven years, like, I don't know if you're really that aligned, right? Like, you might just look and say, hey, this is some pension. I'll just keep clipping more and more board fees. And, you know, just one last piece of a minute, the chief admin admin. It is not lost to me. He buys $500,000 worth. But if you look, earlier this year, when the stock is in the 200s, he sells $800,000 worth, right?

So in some ways, he's actually doing the best of the retains, right? He sells and he's buying down 75%. He's buying the same, a little less back. So anyway, long-winded way of, I'm with you. He seems a line. He seems great. But if I was going to push back to like, I'm just not seeing like I'm here to just all in on the stock price.

And he doesn't have to, but it's something I do like to see. So I'll pause there. Definitely, definitely. I agree. I think this is the weak part of the both thesis because if the CEO and CEO are not buying, like why are we as investors so enthusiastic about it? I totally agree.

And I do think they have a lot of work to do to really turn around the shit because the company was really, like the morale was extremely negative when I talked with the people who worked at FISA or who currently still work at FISA. Like, one of the people who I talked to, he already left FISERV and joined another bank. He said, like, Frank is just the worst

because there was a software called Sapiens that was installed on every computer that monitors every employee. So the employees, they got so freaked out that they would bring the laptop to the bathroom, not just to launch, they would actually bring it to the bathroom with them. This is how freaked out people were. And all the previous management team people were nicknamed,

like Frank Bizzignano has the nickname of Frank the Tank. And another person who was the head of the FIG, the financial institution group, his name is John Gibbons, and his nickname is John the Ghibelitz. Like, when I pronounce these names in front of their own IR people, they laughed hysterically. Oh, man.

I mean, this is like just a shit show. Like, this is a crap show. So this is how bad the company was. Like, if it weren't due to the absolutely phenomenal business model of a compounder, I mean, this thing would have been killed like a thousand times over. So I think there are a lot of heavy lifting. If I were at the Elm where all my salaries, I don't think, and I have heard people say, like people who are internal to FISA saying that Mike is not that rich.

He has a living standard that the base salary will allow him to keep living that way. But it's not a huge amount of money. Yeah, okay. I'm just going to tell them to get the fudge out of here because I'm, looking at the proxy, and I understand some of this is like paying off prior vests up. He made 70 million bucks in 2025. Now, some of that is, I think he gets, from memory, a $12 million award to make up for $8 million of awards that he has to give up at PNC, so, you know, they gross up for taxes.

But get the fudge out of here. If you're going to tell me a guy who made $70 million in 2025 is not that rich, like, I'm not about to come out here and cry for you. And I'm sure I can go off the pinnacle and find multiple years of him bringing in $5 million. You know, it reminds me the New York Times. had a piece that was like, this couple is just struggling to live on $500,000 per year on the Upper West Side. And, you know, they broke down their finances and they were like, we have to save $10,000 per month. Like that is a required line item?

And you kind of would be like, how tone deaf is everyone here that they have required expenses is saving $120,000 a year, like more than the average American family makes in the year. So I'm not, I'm sure he's equity motivated and he's got a lot of side. But I'm just not going to cry poverty for a guy who made 70 million. Let me ask you. Last question. Sorry, I hopped up on a real high soapbox there. But just the chiming one sentence. So I'll tell you this little secret.

So there is a website called layoff.com. Okay. And like this layoff.com has all these companies like Pfizer has a very active board on layoff.com. So I have pretended as an employee who is very angry and posted, so all the posts on that layoff the account board that says Mike is a failure because he's not buying back. He's buying the stock in the open market. I posted multiple times. So I monitor that board very closely on a daily basis. All the posts about Mike, sorry Mike, but I posted these things because I was pissed that you're not buying the shares in the open market.

because your stock is so cheap and you are so rich. So, Mike, shame on you. But all these, it's very puzzling and interesting that all these employees just absolutely support him. Maybe that just tells you like how absolutely abhorrent Frank Bizzignano is such that any change is a positive improvement. And if you look at Glassdoor, the approval rate of Mike Beans is 70, 71%. So that's the interesting part.

I just dropped that. Sorry, that's fantastic. All right. I think it's the layoff.com is what you're referencing. I can't find it. I'm going to go look later. Let me ask last question here.

And then I'll give you last words. And we'll wrap it up. Jana, I believe, comes out in February. And they come out with one of those activist things that's kind of like, I think this is more when somebody with an activist has a, we think the stock is cheap and there's the guys doing great, but we need to say something. and they kind of say like, hey, we support selling non-core assets and everything.

But, you know, Jan is a well-respected activist firm that has taken positions at big companies and gotten change and gotten board seats and everything. I don't think they've pushed for any of that here yet, but I just love to ask you, you know, Janus here. What do you think there is activist potential now? What do you think that kind of Janna playbook is from here? Yeah. So at the Wolf Fintech Conference, Mike Leon said, currently they still like.

like the integrated model where you have both sides, the financial institutions, as well as the merchant side. And I personally also think that there is a benefit of having both sides because you have the financial institution to cross sell your product to the merchants. And it's just a pretty smooth logic of having both under the same good. There was, there was, but it is an incredible reason why it didn't work for FIS and it didn't work for global payments. But I think for if I serve, this could work actually to their benefit. And if you listen to some of the, you know, Takis had an 18-minute interview earlier in March with Fortune.

It was a great interview. And when he thinks in terms of, you know, financial fintech innovation and stable coin, how it's going to change the financial landscape, it makes a lot of sense to make changes both on the FI. IG site and version solution group. But there was an important comment. Mike said the new management team didn't create this structure.

So they are not wedded to it. They will try to make it work. But if it really doesn't, they are not going to be adamant about staying the same path. So I think if they just a cell, let's say cell clover or whatever, I mean, that that multiple is gone. they can easily multiple arbitrage because currently they are at six times enterprise value to EBTA, I believe. So I think Jana, if I were Jenna,

so I personally also reached out to Jana partners. I said, can we have a conversation and maybe compare some notes? I did a lot of work on this, but I'm small. I'm a very small, so they ghosted me. I don't blame them. I'm too small for them.

But if honestly, If I were a Jana, I probably won't do much at this moment either because I think the management team is doing all the right things. I believe one-fice serve makes a lot of sense because, you know, they focus on clients first. They, you know, clover is their babies. It's very important. They're going to have an innovative platform, stable coin embedded finance. You know, they have one of the best cloud native, modern core things act. They are going to be AI enabled and they're going to be efficient capital. allocators. So I feel like if I were an activist, I don't have too much to demand.

If it were global payments, maybe I would say, you know, I think the global payments executives are very aloof. They're a little, you know, by just listening to their talks at various conferences, I think they are very arrogant in terms of, they think the new development in terms of fintech is nonsense. They're not seeing any changes. They're not seeing any changes. they're sort of like having their eyes closed and they say we are the largest payment process or we don't care about the others. And also I would say maybe stop buyback, just leverage your balance sheet because you are dangerously overlavered and buyback clearly doesn't work here.

Your stock is trading at five, six times earnings. But for FISA, I don't have complaints. I don't know what Jenna's going to do, but I think the management team is doing the right thing. I mean, you have some of the real masters at the Elm playing the chance for you. So maybe just take the right ideas. No, look, I certainly hear you. It's just, it's not lost to me that the only thing in payments that has worked over the past four years has been either split-offs or selling a company's last division. And FISA is right for that because, you know, merchant solutions, which is where the Clover is and financials.

I don't really know if there's a lot of synergies between having the two together. So, you know, when you've got two big divisions that two big divisions without a lot of synergies, there is a natural. split it off. There's been, there's always acquisitions of the payment space, even acquisitions that you never thought. So you could imagine a split off to acquisition path. But as you said, also if it's working, like you don't need to get in the way. But I think there are a few different levers here. It's a pull. Anyway, shoot, we are way over an hour. So I'm going to have to wrap it up here. This has been awesome. Really enjoyed having you on. I'm going to include a link to the substack and everything and the show notes. If you can go follow all your work there.

Whoa, big sneeze to end the podcast. But this has been great. Really enjoyed having me on for the second time. And absolutely looking forward to having you on for the third time. Thank you so much, Andrew, for having me. It's always a huge amount of fun talking with you. And thank you for all the great and stimulating questions that forced me to think it's great. You are awesome, man.

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