8. Fiserv, Inc. (NYSE:FI)
Number of Hedge Fund Holders In Q2 2024: 73
Category: Most popular with HFs and overweight among mutual funds
Fiserv, Inc. (NYSE:FI) is a financial technology company that caters to the needs of banks and credit unions to enable ATM functions, payment processing, remittances, prepaid services, and other operations. It is one of the few companies of its kind in the industry, which provides it with a wide moat. Fiserv, Inc. (NYSE:FI)’s exposure to consumer spending and payment processing also means that the firm does well when markets are booming and interest rates are low. As a result, the shares have gained a strong 11.35% since the Fed cut interest rates by 50 basis points in September, Fiserv, Inc. (NYSE:FI) is also exposed to small businesses through its Clover platform, which increases its exposure to cyclical trends. However, there is some stability as well due to deals such as the one with Wells Fargo providing Fiserv, Inc. (NYSE:FI) with a large market. The firm is also targeting businesses with new products such as cash flow management software to further penetrate the financial software market.
Broyhill Asset Management mentioned Fiserv, Inc. (NYSE:FI) in its Q2 2024 investor letter. Here is what the fund said:
“Fiserv is the premier provider of financial technology services, supporting banks, credit unions, and financial institutions with innovative banking solutions, payment processing, and data analytics to streamline and secure financial transactions. The company’s shares slid 7% during the quarter before rallying 10% in July to fresh all-time highs. Clover remains the company’s crown jewel, generating over $300 billion in annualized GPV (Gross Payment Volume) with better monetization, driving 28% revenue growth in the recently reported quarter, and three new hardware products plus pilot programs in Mexico and Brazil going live in the coming months. Simply put, there are few businesses in this industry executing even close to the same level, and fewer still with Fiserv’s scale, distribution, and collection of assets. In our initial write-up, we highlighted the embedded distribution advantages often enjoyed by incumbents, noting that “Fiserv can cross-sell products through its large, engrained distribution channels, driving faster growth than even its most rapidly growing peers. And with Clover and Square accounting for less than 10% of a fragmented market, we think there is plenty of room for both to run.” Notably, Jack Dorsey, Chief Block Head, Square Head, Chairman, and Cofounder, recently came to the same conclusion, admitting as much on the company’s most recent earnings call: “I would state that our product quality is far above the majority of our competitors. Where we have been weaker in the past is how we mirror that with our go-to-market strategy and just updating our approach there, especially given what our competitors have done.“ We wonder which competitors come to mind.”
