C-Suite Buy of the Week: Green Dot Corp ($GDOT)

Dear Benzinga Member,

That long slamming sound you may have heard recently was insider-buying windows slamming shut all across America.

Regulators watch closely for signs of improper or illegal activity when insiders buy and trade shares in the companies they help run.

It is illegal to trade in your own shares if you have material nonpublic information (an impending takeover or catastrophic earnings miss).

I will go on record as saying this is a moronic rule, as insiders, by the very definition of the word, would always have material nonpublic information.

I could go on with a long rant about moronic federal laws, but we do not have the time or space.

Most companies have insider trading windows to keep the SEC at bay and the lawyers’ fees to a minimum. When the window is open, officers and directors can execute buy and sell transactions after receiving the okay from the lawyers.

However, that window is closed during the period around earnings announcements.

It usually stays closed until a couple of days past the earnings release.

Earnings season is in full swing this week, so most windows are closed.

There is no window for institutional investors, however.

Topline Capital is a growth-oriented, research-driven investment management firm that focuses on delivering strong returns with an emphasis on risk management. The firm uses a growth-oriented, research-driven investment approach to take large positions in companies. Topline favors small and microcap companies in the software, payments, healthcare, business services, and gaming industries.

One of its most prominent positions right now is a company I am familiar with. Green Dot Corporation is a leading financial technology and bank holding company known for pioneering the prepaid debit card market. The company’s services cater to the underbanked and unbanked populations in the U.S., offering prepaid debit cards, checking accounts, and money transfer services.

Topline has been adding to its stake in the company.

In the month of September, the fund spent $2.3 million to increase its stake to over 6.1 million shares.

Topline is now the largest shareholder of Green Dot.

Green Dot Corp. GDOT

Source: Benzinga Pro

The company operates a neobank, GO2bank, and maintains one of the largest retail cash reload networks in the U.S. In addition, it partners with several high-profile companies, such as Apple, Amazon, Uber, and Walmart, providing their customers with tailored banking solutions.

Walmart and Green Dot have a long history of working together to serve the large unbanked populations in the United States.

Green Dot issues the Walmart MoneyCard, which provides users with access to many banking features such as direct deposit, money transfers, and ATM withdrawals.

This card is especially popular among the underbanked, offering an alternative to traditional banking services.

For Green Dot’s extensive retail cash reload network, Walmart locations act as significant cash reload points. Customers can easily reload their prepaid cards or accounts at any Walmart store.

It is also the provider of many of Walmart’s financial services kiosks, including many of the financial services offered through Walmart’s in-store kiosks. These services include bill payment, money transfers, and cash checking.

It is all done on a white-label basis under the Walmart brand with Green Dot, the faceless bank and services provider behind the scenes.

If you use Walmart prepaid cards or any of their financial apps and services, you are a Green Dot customer.

If you use Apple Cash to send money to friends or pesky relatives through Messenger or the Apple Wallet app, you are a Green Dot customer. Green Dot Bank, a subsidiary of Green Dot Corporation, serves as the bank behind the scenes for Apple Cash that facilitates these transactions.

Green Dot’s role in this partnership involves acting as the financial institution that holds the funds for Apple Cash, enabling users to store and use their money directly from their Apple devices. Users can spend their Apple Cash balances via Apple Pay at retail locations or online and transfer money to their bank accounts.

This collaboration positions Green Dot as a critical enabler of Apple’s growing suite of financial services, which also includes the Apple Card and Apple Pay. Apple benefits from Green Dot’s banking infrastructure, which has experience in handling digital banking products for large-scale companies. In turn, this partnership gives Green Dot exposure to millions of Apple users, boosting its brand visibility and reinforcing its position in the digital financial services industry.

Green Dot is also becoming a big player in Earned Wage Access (EWA). Companies use this service to pay workers faster. It can give workers instant access to funds via a debit card.

Amazon uses this service and offers its drivers and contractors the Amazon Flex Debit Card. This card allows drivers to get paid faster through instant access to their earnings via Green Dot’s systems. Green Dot is the bank behind this service, ensuring that funds can be transferred quickly and securely.

The demand for Earned Wage Access (EWA) solutions is growing, especially in sectors like staffing. Green Dot’s rapid! PayCard division is well-placed to capture this emerging opportunity.

Green Dot is very well positioned for the future of financial services. It has a bank charter, so it can offer services and access to payment technologies that smaller competitors cannot.

Green Dot has existing relationships with three of the companies that will play a major role in remaking financial services and is well positioned for what will happen in finance and payments.

Consumers and businesses increasingly seek digital banking solutions, pushing companies to embed financial services into their platforms. Green Dot is well-positioned to capitalize on this shift.

When a company’s largest shareholder keeps buying more shares, it indicates that they have spoken to management, examined the finances, discussed the future with competitors and customers, and feel good about it.

Green Dot could be a leader in the financial services sector of the future, and that would result in a stock price that is several multiples of the current quote

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Regards,

Tim Melvin – Editor, Benzinga Research

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