Gabriel Plotkin’s Melvin Capital Portfolio: Top 5 Picks

3. Visa Inc. (NYSE:V)

Mr. Plotkin’s Stake Value: $701 million

Percentage of Mr. Plotkin’s 13F Portfolio: 4.03%

Number of Hedge Fund Holders: 162

Visa Inc. (NYSE:V) is a financial services provider that enables digital payments for a large variety of customers, both corporate and individual. It is also one of the most well known payments firms in the world due to its established brand name. Visa Inc. (NYSE:V) is headquartered in San Francisco, California.

Visa Inc. (NYSE:V)’s biggest hedge fund holder is Alexander Becker’s Codex Capital, which holds 30,500 shares that are roughly worth $7.1billion.

By the end of the second quarter of this year, Mr. Plotkin’s Melvin Capital held 3 million shares of Visa Inc. (NYSE:V) with the stake equaling $701 million and representing 4.03% of the investment firm’s portfolio. At the same time, 162 of 873 hedge funds polled by Insider Monkey held shares of Visa Inc. (NYSE:V).

The company reported $6 billion in revenue for its third quarter, alongside non-GAAP EPS of $1.49 as it beat analyst estimates on both counts. In a September 2021 analyst note, investment bank Morgan Stanley kept a $282 price target and an Overweight rating for Visa Inc. (NYSE:V) shares, expecting its conflicts to resolve.

Qualified Investment Partners, in its first-quarter 2021 investor letter, highlighted that:

What Attracts Us

Superior Business:
• Wide moat business with high barriers to entry:
− Duopoly with top 2 players (Mastercard/VISA) owning 68% share of credit and 94% of debit transactions
− A double sided financial transaction network with scale on each end
• High returns on equity (21.8%) and low levels of capital expenditure compared to sales (3.4%)
• Recurring revenue stream:
⎼ Toll booth based on transaction volumes
• Top security platform versus cyber fraud

Superior Reinvestment Opportunities:
• Long Runway: Secular cash to electronic payment trends supporting double digit growth in demand for the foreseeable future

Superior Management / Capital Allocation:
• Consistent deployment of excess cash flow towards value accretive acquisitions (V Europe), dividends and opportunistic share repos…”