In this article we are going to use hedge fund sentiment as a tool and determine whether Mastercard Incorporated (NYSE:MA) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Mastercard Incorporated (NYSE:MA) was in 146 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 156. MA investors should pay attention to a decrease in hedge fund sentiment recently. There were 156 hedge funds in our database with MA holdings at the end of June. Our calculations also showed that MA ranked #6 among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s view the recent hedge fund action encompassing Mastercard Incorporated (NYSE:MA).
Charles Akre of Akre Capital Management
Do Hedge Funds Think MA Is A Good Stock To Buy Now?
At third quarter’s end, a total of 146 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in MA over the last 25 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Mastercard Incorporated (NYSE:MA) was held by Akre Capital Management, which reported holding $2036.9 million worth of stock at the end of September. It was followed by Fisher Asset Management with a $1532.2 million position. Other investors bullish on the company included Berkshire Hathaway, Gardner Russo & Gardner, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Valley Forge Capital allocated the biggest weight to Mastercard Incorporated (NYSE:MA), around 19.08% of its 13F portfolio. KG Funds Management is also relatively very bullish on the stock, earmarking 17.06 percent of its 13F equity portfolio to MA.
Judging by the fact that Mastercard Incorporated (NYSE:MA) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there exists a select few hedgies that slashed their full holdings by the end of the third quarter. It’s worth mentioning that Lone Pine Capital said goodbye to the biggest position of the 750 funds followed by Insider Monkey, totaling an estimated $658.5 million in stock. Mick Hellman’s fund, HMI Capital, also cut its stock, about $188 million worth. These moves are interesting, as total hedge fund interest dropped by 10 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks similar to Mastercard Incorporated (NYSE:MA). These stocks are The Procter & Gamble Company (NYSE:PG), ASML Holding N.V. (NASDAQ:ASML), The Walt Disney Company (NYSE:DIS), Paypal Holdings Inc (NASDAQ:PYPL), Adobe Inc. (NASDAQ:ADBE), Netflix, Inc. (NASDAQ:NFLX), and salesforce.com, inc. (NYSE:CRM). This group of stocks’ market caps are closest to MA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PG | 69 | 6414152 | 1 |
| ASML | 41 | 4858031 | -3 |
| DIS | 101 | 9416047 | -11 |
| PYPL | 123 | 12880990 | -20 |
| ADBE | 95 | 12682168 | 6 |
| NFLX | 106 | 14759355 | -7 |
| CRM | 119 | 14900848 | 11 |
| Average | 93.4 | 10844513 | -3.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 93.4 hedge funds with bullish positions and the average amount invested in these stocks was $10845 million. That figure was $17660 million in MA’s case. Paypal Holdings Inc (NASDAQ:PYPL) is the most popular stock in this table. On the other hand ASML Holding N.V. (NASDAQ:ASML) is the least popular one with only 41 bullish hedge fund positions. Compared to these stocks Mastercard Incorporated (NYSE:MA) is more popular among hedge funds. Our overall hedge fund sentiment score for MA is 95.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately MA wasn’t as popular as these 5 stocks and hedge funds that were betting on MA were disappointed as the stock returned -9.3% since the end of the third quarter (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
