I haven't been that bullish on an investment since GameStop in 2020

In September 2019, I invested in GameStop. The stock went down 60% in 2020, and I bought more shares. In January 2021, I sold with an average profits of 3,300%.

GameStop is the investment of a lifetime. There won't be anything like it again.

The reason why it worked was because of the massive risk-reward asymmetry.

The company was trading below its net cash value, it had repurchased 35% of shares outstanding in a single quarter with nearly 100% of shares short, and a new console cycle on the horizon. The market misunderstood GameStop and priced it for bankruptcy.

My only regret with GameStop was not buying more. I stopped buying when it became around 8% of my portfolio and started taking profits when it reached 40%.

GameStop was a deep-value cigar butt stock. I try to stay from such investments now. GameStop worked because there were so many catalysts and all the stars were aligned. I have made mistakes trying to emulate GameStop and lost money.

But that doesn't mean we cannot find investments with low risk and high potential reward. And this time, I not be shy to buy more.

I have found one.

Wise.

Just like the market misunderstood GameStop, I believe that this is the case with Wise today. The market believes that Wise is a neo-banking app competing with Monzo or Revolut in Europe or Sofi in the US or Nubank in Latin America.

But in reality, Wise is more than just an app. It is building the plumbing that enables money to move across borders rapidly, cheaply, and transparently. And Wise is so far ahead of the competition with a wide and deepening moat. This is different to GameStop, which had a very weak moat. In many ways, Wise is less risky than GameStop was. GameStop low risk was market-dependent, which is not really the case with Wise.

Another way that Wise is less risky than GameStop is good management with skin in the game. We don't need to wait for activist investors (Michael Burry, Hestia Capital, Ryan Cohen, etc) to tell the management what to do. They already know.

As far as reward is concerned, all the rewards on GameStop took place in a single month. Wise, on the other hand, is a compounder. This is a company I hope to own forever. The potential reward for Wise is smaller but it can happen over a long period.

Wise still has a small market share of the ever growing cross-border volume with less than 5% of personal and 1% of small businesses.

By further lowering prices and providing even faster transfers, Wise can stay ahead of the competition, enticing more customers (remember that 70% of new customers come from word of mouth). And the customers come in two forms: people and businesses seeking lower cross-border FX fees and banks that can't compete with Wise anymore and would prefer using the Wise Platform in the background for their clients' transfers.

More volume means even lower prices and faster transfers. This is a flywheel. Something that GameStop didn't have.

Compared to most competitors, Wise doesn't subsidize its cross-border take rate. It ensures that it is profitable and maintains margins. But by providing value-added services, Wise can improve these margins. Most of the revenues of Wise doesn't even come from cross-border transfers anymore, something that the market is missing.

This is why recently, Wise raised its medium-term margin target from 13-16% to 15-20% with short-term of 20-25% because of excess interest income.

Since Wise can do all of this with little capital requirements, we should expect a more intensive capital return to owners in the coming years.

Of course, there is no certainty in any investment. But compared to anything else I see available, Wise is the best investment I can think of. And the certainly the best I saw since GameStop in 2020.

If you want to know more of what I saw with GameStop that everyone else missed, you can read all my notes, reports, and analyses on the company. Everything is fully annotated, including the things that I would do differently today. It is available for free.

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