From A(IG) to V(isa): Billionaires’ Favorite Finance Stocks Heading Into Q3

Although the U.S. stock markets had a very rough start to the year, they have managed not only to recuperate their losses, but to reach record highs in recent weeks. Major indexes like the S&P 500 and the Dow Jones Industrial Average are both up by more than 6.4% year-to-date now. However, the financial sector could not accompany the wider market in its strong rebound, as evidenced by the Financial Select Sector SPDR Fund (NYSEARCA:XLF) being up by only 0.67% since the beginning of the year, despite a 22% surge since February 12. The sector’s underperformance has been attributed to several factors, including concerns about global growth and the timing of interest rate hikes, to depressed oil prices.

Nonetheless, billionaires in our database continue to bet on some of the key names in the space, making them some of their favorite stock picks overall. In this article we’ll take a look at their favorite finance stocks going into the third quarter of the year and see how they traded them during the second quarter and how those stocks have done this year.

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#5. Synchrony Financial (NYSE:SYF)

– Number of Billionaires With Long Positions (as of June 30): 11

– Aggregate Value of Billionaires’ Holdings (as of June 30): $1.07 billion

The number of billionaires in our database long Synchrony Financial (NYSE:SYF) declined by one over the second quarter of 2016, to 11. Among the ones that stayed, we can count Ken Griffin (Citadel Advisors), with 2.56 million shares or roughly $64.8 million in stock, and David Tepper (Appaloosa Management), with 6.06 million shares. Also of note is how D E Shaw (founded by billionaire David E. Shaw) traded the stock during the quarter, increasing its holding by 57% to 8.87 million shares as of June 30.

Shares of Synchrony are down by roughly 10.5% year-to-date, after a 10.92% tumble over the second quarter. However, since the beginning of July, shares have regained more than 9.6% of their value, mostly during early-July, after the company declared a $0.13 per share dividend and a share buyback program of $952 million.

#4. American International Group Inc (NYSE:AIG)

– Number of Billionaires With Long Positions (as of June 30): 12

– Aggregate Value of Billionaires’ Holdings (as of June 30): $3.51 billion

There was also a decline in billionaires’ support for American International Group Inc (NYSE:AIG) over the second quarter, as 12 of them were AIG shareholders on June 30, down from 14 on March 31. Among those who left were Jim Simons (Renaissance Technologies), who sold all of his 1.63 million shares between April and June. On the other hand, billionaires that remained bullish included Leon Cooperman (Omega Advisors), who held 2.89 million shares on June 30, and David Harding (Winton Capital Management), who disclosed ownership of 599,550 shares of the company as of the end of June.

Shares of the U.S. insurer surged earlier this week after the company said that it had agreed to sell its mortgage guaranty division, United Guaranty, to Arch Capital Group for roughly $3.4 billion. It has been said that this move will help AIG further streamline its business. AIG’s stock is down by 5.18% year to date, but has gained 14.2% since the second quarter ended.

We’ll find out the three most-loved finance stocks among billionaires on page two.

#3. Paypal Holdings Inc (NASDAQ:PYPL)

– Number of Billionaires With Long Positions (as of June 30): 13

– Aggregate Value of Billionaires’ Holdings (as of June 30): $2.92 billion

The number of billionaires in our database long Paypal Holdings Inc (NASDAQ:PYPL) rose by one during the second quarter, to 13. The largest stake was held by none other that the famed Carl Icahn (Icahn Capital), who disclosed ownership of 33.89 million PayPal shares, or $1.23 billion in stock as of June 30. Also bullish was Kerr Neilson (Platinum Asset Management), who held 7.25 million shares at the end of the second quarter.

Shares of PayPal have risen by 4.85% year-to-date despite falling by 6.48% during the second quarter. Quite recently, the company announced a partnership with payments giant Visa Inc. (NYSE:V). As per the agreement, the credit-card company agreed it would not increase PayPal’s fees, and will instead offer the online payments firm’s users access to its contactless payments points across the U.S.

#2. Mastercard Inc (NYSE:MA)

– Number of Billionaires With Long Positions (as of June 30): 15

– Aggregate Value of Billionaires’ Holdings (as of June 30): $2.64 billion

The runner-up in this list is none other than Mastercard Inc (NYSE:MA), in which the number of billionaires long its stock increase by one over the second quarter, to 15. While Visa boasted the same number of billionaire supporters, the value of their combined positions was substantially higher than the value of the billionaires’ stakes in Mastercard. Among this select group of investors was Jim Simons, with 5.38 million shares valued at $474 million by June 30, and Andreas Halvorsen (Viking Global), which more than tripled its position in the company, lifting it to 6.43 million shares.

Mastercard’s stock fell by 6.13% in the second quarter, opening attractive entry points for investors. As of June 30, it has managed to recuperate more than 3% of its value, most recently helped by a top- and bottom-line beat with its second quarter results. However, it should be noted that while the shares have been range-bound over the past couple of years, oscillating between the $80 and $100 levels, the dividend they carry has been boosted from $0.11 per share to $0.19 per share. A few weeks ago, the company announced that “80 percent of its U.S. consumer credit cards have chips, representing an 88 percent increase in chip card adoption since the October 1, 2015 liability shift started to bring EMV-secured payments to the U.S.”

#1. Visa Inc (NYSE:V)

– Number of Billionaires With Long Positions (as of June 30): 15

– Aggregate Value of Billionaires’ Holdings (as of June 30): $3.84 billion

Finally, there’s Visa Inc (NYSE:V), which counted two more billionaire shareholders of its stock on June 30 than it did at the end of the first quarter. Noteworthy investors included Ken Fisher (Fisher Asset Management), which held 14.82 million shares on June 30, and Warren Buffett (Berkshire Hathaway), with 10.23 million shares, or roughly $759 million in stock.

Shares of Visa have gained almost 3.5% year-to-date, even though they lost 3.4% over the second quarter. One of Visa’s latest additions to try and woo customers from competing services is its airport companion program, in partnership with DragonPass. Aimed at frequent air travelers, the program will allow fast-tracking at airports (which will undoubtedly become a somewhat controversial feature), as well as other privileges and discounts related to a traveler’s time spent in the cavernous airports dotting the globe.

Disclosure: Javier Hasse holds no interest in any of the securities or entities mentioned in this article.