In this article, we discuss 5 high growth value stocks to buy according to Seth Klarman. If you want to see more stocks in this selection, click 12 High Growth Value Stocks to Buy According to Seth Klarman.
5. Fiserv, Inc. (NASDAQ:FISV)
Number of Hedge Fund Holders: 59
Baupost Group’s Stake Value: $202,382,000
3-year Revenue Growth: 59.2%
Fiserv, Inc. (NASDAQ:FISV) provides payment and financial services technology worldwide. The company operates through Acceptance, Fintech, and Payments segments. Securities filings for Q4 2022 reveal that Seth Klarman owns 2 million Fiserv, Inc. (NASDAQ:FISV) shares worth $202.3 million, representing 3.3% of the total holdings. However, Klarman slashed his stake in the company by 44%.
On February 15, Baird analyst David Koning increased Fiserv, Inc. (NASDAQ:FISV)’s price target to $138 from $132 and maintained an Outperform rating on the stock. The analyst believes that Fiserv has a stable and rapid growth profile and considers KKR’s departure to be beneficial. In recent years, Fiserv, Inc. (NASDAQ:FISV) has been one of the most dependable and least erratic companies on Baird’s list.
According to Insider Monkey’s third quarter data, 59 hedge funds were long Fiserv, Inc. (NASDAQ:FISV), with Harris Associates holding the leading stake in the company, comprising 21.2 million shares worth $2 billion.
Artisan Partners made the following comment about Fiserv, Inc. (NASDAQ:FISV) in its Q3 2022 investor letter:
“While our list of potential candidates is filling up, we are being patient. We added two new positions in Q3: Fiserv, Inc. (NASDAQ:FISV) and Heineken. Fiserv is a provider of financial technology, core processing and payment processing services to financial institutions and merchants. The company reports three segments: acceptance (merchant acquiring), payments & networks (issuer processing and debit network), and fintech (core bank processing). Fiserv has strong market positions and scale across these businesses, but competitive intensity varies. In the acceptance segment, Fiserv owns Clover, a high-growth point-of-sale (POS) system forsmall and medium businesses, with similar annualized gross payment volume to Block’s Square. However, Fiserv is receiving little credit for Clover. The market is overly concerned about the competitive nature of merchant acquiring and legacy processors losing market share to new entrants. We believe Fiserv’s business is more resilient and will continue to grow in the medium term driven by its scale and Clover. Moreover, fintech and payments are good businesses that are undervalued by the market. Both businesses are in highly consolidated industries where scale advantages are critical, and revenues are sticky due to high switching costs. A high share of recurring revenue and profit, an attractive margin profile and high free cash flow conversion are characteristics that should provide downside protection, in our view. We started our position with shares selling for about 11X normalized operating profit. That is a below-average multiple for an above-average business.”
