Fleetcor: Fast-Growing, Capital-Light, High-Margin Payments Business

Steve Gorelik of Firebird Management presented his in-depth investment thesis on Fleetcor Technologies (US: FLT) at Best Ideas 2024.

Thesis summary:

Fleetcor is a global payments company helping hundreds of thousands of SMEs manage their payment needs, from fuel and travel expenses to corporate payment automation. Steve thinks of the company as a collection of proprietary payment networks that benefit both customers and suppliers.

Fleetcor makes money by extracting volume discounts from merchants or collecting processing fees on the payments they facilitate. This is a capital-light, high-margin business growing at high-teen rates through a combination of organic growth of around 8-10% and value-added M&A that has generated an estimated 16% free cash flow yield on investments since 2011.

The stock recently traded at a 6% free cash flow yield due to concerns about the impact of the EV transition on their core business, which Steve believes are overblown. Through a combination of organic growth, M&A and share buybacks, Steve expects investment in Fleetcor to generate 20% IRRs over a medium-term holding period.

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About the instructor:

In addition to being Head of Research at Firebird Management, Steve Gorelik is the Lead Fund Manager of Firebird U.S. Value Fund as well as portfolio manager of Firebird’s Eastern Europe and Russia Funds. He joined Firebird in 2005 from Columbia University Graduate School of Business while completing education from a highly selective Value Investing Program. Prior to business school, Steve was an operational strategy consultant at Deloitte working with companies in various industries including banking, healthcare, and retail. He holds a BS degree from Carnegie Mellon University as well as a CFA (chartered financial analyst) charter and a membership in Beta Gamma Sigma honor society. Steve serves on the number of supervisory boards of listed and private companies in the Baltics. He speaks Russian, English and his native Belarussian.