I spent a large portion of 2025 and early 2026 getting to know Shift4, and following their Q4 earnings report earlier this year where results fell way below expectations, I took a step back from the business for a few months to clear my head and analyze things from a more distant perspective. I came back to the business and our position with a clearer understanding of the key drivers and how things may play out moving forward, and do not believe a lot has to go right for the stock to work well from here.
I’m a bit late in getting this post out, as Q2 earnings should be reported in about a month (and not expecting any surprises), and the stock is up about 17% in the past month. I’m not sure what’s behind the move other than small cap value catching a bid, and many of the payments businesses are incredibly cheap, which looks attractive compared to what most market participants are buying these days. I’ve written about Global Payments (GPN) in snippets here, but they are a great example. Trading at a mid-single digit multiple of cash flow, they are on pace to buyback nearly half (!) the company within the next two years. I have a very simple investing heuristic, which is that when a company is trading at an absurdly cheap valuation, buying back crazy amounts of stock, and the business is not falling apart, just buy some shares and hold on. Good things typically happen in these scenarios, as evidenced by Medical Facilities Corp., (MFCSF) and Pitney Bowes (PBI), both of which have been working well. But I digress.
In terms of FOUR, I think I have a decent handle surrounding the moat here, and understand the industry and how various players compete, and I’m not worried about FOUR being disrupted by AI or other technologies given their embedded position in their customer’s payments flow, and deep integration with their customer’s software. There is an interesting discussion on VIC after a recent FOUR writeup, discussing open protocols, agentic led shopping and stablecoins, which I think is really missing the forest for the trees. The reality is that FOUR should continue to grow faster than the market because they’re exposed to integrated payments, have differentiated vertical software/products, and can cross-sell payments into acquired customer bases. Also, incremental FCF conversion is still around 60%, which should drive 100–200 bps of annual total FCF conversion improvement as EBITDA grows. Beyond that, if the Global Blue deal doesn’t turn out to be a massive disaster, as I wrote here, FOUR will look incredibly cheap at today’s valuation.
I also use Trata to further amplify this update, especially around Global Blue. Trata has become one of my favorite sources of AI assisted investor-to-investor expert calls. Trata gives hedge funds un-biased, unfiltered stock analysis from anonymous analysts at well-known funds. Trata captures analyst thinking via interviews, and publishes transcript libraries full of content and insights. Trata is the only product I’m aware of that matches analysts and portfolio managers with each other to discuss a business, with each taking a bullish, neutral or bearish stance.
I’ve been a long time user of Trata, and one thing I’ve noticed recently, or keep noticing, is that the amount of calls being done has increased tremendously, and the number of companies with calls done is growing by the day. All positive signs of a growing platform.