Moneygram International Inc (MGI): Abrams Capital Management Discloses New Position

Last December, Moneygram International Inc (NASDAQ:MGI) announced the expansion of its operations to India, allowing customers to send money to any bank account in India in less than three hours. According to Grant Lines, the company’s Executive Vice President for Asia Pacific, South Asia, and the Middle East, who was quoted in a statement: “With the addition of India, we now offer bank account deposits through the MoneyGram network into four of the world’s largest remittance receive markets — China, India, Mexico and the Philippines”.

The new position acquired by Abrams Capital Management might come as somewhat of a surprise, considering the company competes directly with Western Union, the fund’s largest holding. The fact that both money remittance service providers will be competing for customers, does not seem to worry Mr. Abrams’ firm.

Western Union might be much larger than Moneygram, boasting a $9.2 billion market cap, yet there are several reasons to consider its much smaller competitor as a savvy investment. In addition to the ongoing transformation process and the expansion of its operations on a global level, Moneygram’s stock is trading at a discount, after dropping around 51% over the past year. Hence, there is reason to believe Abrams Capital Management might view the company as a good value investment. Furthermore, the hedge fund is not the only institutional investor taking a bullish stance towards Moneygram International Inc (NASDAQ:MGI). Clint Carlson’s Carlson Capital for example disclosed a position of 2.8 million shares at the end of the third quarter. Another investment firm betting on the company is Richard Blum’s Blum Capital Partners, which holds 1.9 million shares, amounting to almost 6% of its equity portfolio.

Disclosure: Pablo Erbar holds no position in any stocks or funds mentioned.