At Insider Monkey, we pore over the filings of nearly 867 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30th. In this article, we will use that wealth of knowledge to determine whether or not Visa Inc (NYSE:V) makes for a good investment right now.
Is Visa Inc (NYSE:V) a bargain? The smart money was selling. The number of bullish hedge fund positions fell by 19 recently. Visa Inc (NYSE:V) was in 143 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 166. Our calculations also showed that V ranked #8 among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 162 hedge funds in our database with V holdings at the end of June.
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. Now let’s view the fresh hedge fund action surrounding Visa Inc (NYSE:V).
Chris Hohn of TCI Fund Management
Do Hedge Funds Think V Is A Good Stock To Buy Now?
At the end of September, a total of 143 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -12% from the previous quarter. By comparison, 160 hedge funds held shares or bullish call options in V a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, TCI Fund Management was the largest shareholder of Visa Inc (NYSE:V), with a stake worth $4441.5 million reported as of the end of September. Trailing TCI Fund Management was Fisher Asset Management, which amassed a stake valued at $4084.7 million. Berkshire Hathaway, GQG Partners, and Fundsmith LLP were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Truvvo Partners allocated the biggest weight to Visa Inc (NYSE:V), around 30.85% of its 13F portfolio. Hengistbury Investment Partners is also relatively very bullish on the stock, setting aside 27.12 percent of its 13F equity portfolio to V.
Due to the fact that Visa Inc (NYSE:V) has experienced a decline in interest from hedge fund managers, it’s safe to say that there lies a certain “tier” of funds who were dropping their entire stakes last quarter. At the top of the heap, Gabriel Plotkin’s Melvin Capital Management dropped the biggest position of the “upper crust” of funds tracked by Insider Monkey, comprising about $701.5 million in stock. Matthew Stadelman’s fund, Diamond Hill Capital, also sold off its stock, about $296.9 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 19 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Visa Inc (NYSE:V) but similarly valued. We will take a look at Johnson & Johnson (NYSE:JNJ), Alibaba Group Holding Limited (NYSE:BABA), Walmart Inc. (NYSE:WMT), UnitedHealth Group Inc. (NYSE:UNH), Bank of America Corporation (NYSE:BAC), The Home Depot, Inc. (NYSE:HD), and Mastercard Incorporated (NYSE:MA). This group of stocks’ market valuations are closest to V’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JNJ | 88 | 6871782 | 0 |
| BABA | 115 | 10201096 | -31 |
| WMT | 71 | 7932562 | 0 |
| UNH | 95 | 11705313 | -10 |
| BAC | 72 | 46487618 | -15 |
| HD | 58 | 4380170 | -6 |
| MA | 146 | 17659997 | -10 |
| Average | 92.1 | 15034077 | -10.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 92.1 hedge funds with bullish positions and the average amount invested in these stocks was $15034 million. That figure was $26169 million in V’s case. Mastercard Incorporated (NYSE:MA) is the most popular stock in this table. On the other hand The Home Depot, Inc. (NYSE:HD) is the least popular one with only 58 bullish hedge fund positions. Visa Inc (NYSE:V) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for V is 92.3. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 beat the market again by 5.6 percentage points. Unfortunately V wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on V were disappointed as the stock returned -12.9% since the end of September (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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
