Josef Schuster Feels Tighter Regulations May Squeeze Visa, MasterCard Profits

In an article on TheStreet.com, Josef Schuster, a fund manager of Direxion Long/Short Global IPO Fund, indicated that profits at Visa V and MasterCard MA may get squeezed in the wake of tighter regulations. Here are some of the excerpts of Josef Schuster’s interview: On being bullish or bearish? “We are neutral in the short-term as negative seasonal factors and negative news flow from Europe dominates. As we move towards the second half of the year, we are more bullish because we expect the message from strong U.S. economic data and solid earnings to outweigh continued negative news flow from Europe. This should be moderately positive for global stocks and should also point to good opportunities in global IPOs being issued at very attractive price levels. With regards to Asia, we believe that relative strength is building in China.” About his two favorite stocks Schuster likes Japan-based Gree Inc that operates social networking service (SNS) under the name GREE. This social-networking company is a valuation benchmark for Twitter, Facebook and LinkedIn. ‘This company trades at a low correlation to benchmarks and presents a truly unique sector exposure.’ “We also like, a big brand and a recent IPO of a leading Korean insurance company at an attractive valuation. This continues to be a top pick despite the political overhang regarding North and South Korea, which may imply additional currency risk as well.” About his top "sleeper" stock pick “Amadeus IT Holdings, a recent IPO in Spain of a leading global travel reservation system company. We like it because of its strong brand, diversified income stream and its attractive valuation. We expect this stock to eventually enter key benchmarks. This is the first significant European IT IPO in at least four years.” About his favorite sector Schuster said that he is most bullish on strong US consumer brands that have recently been in news for IPOs or spin-offs. These include Hyatt Hotels H, Dollar General DG, Dr Pepper Snapple DPS and Mead Johnson MJN. On the sectors or stocks he is avoiding “We think it is wise to stay away from global alternative energy because we expect sector momentum may slow, enforced by potentially bigger-than-expected cuts in subsidies as a result of the European debt crises. And because U.S. credit reform is a big overhang, we would avoid global payment processing, such as Visa and MasterCard in America, and Cielo and Redecard in Brazil.”