The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing more than 750 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2019. In this article we are going to take a look at smart money sentiment towards Mastercard Incorporated (NYSE:MA).
Is Mastercard Incorporated (NYSE:MA) a bargain? Prominent investors are becoming hopeful. The number of long hedge fund bets went up by 15 in recent months. Our calculations also showed that MA ranked 8th overall among the 30 most popular stocks among hedge funds (see the video below). Below we will compare MA against Bank of America Corporation (NYSE:BAC), The Home Depot, Inc. (NYSE:HD), Verizon Communications Inc. (NYSE:VZ), and Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most market participants, hedge funds are assumed to be slow, old financial vehicles of yesteryear. While there are over 8000 funds trading today, Our experts hone in on the elite of this club, about 750 funds. It is estimated that this group of investors orchestrate the lion’s share of the smart money’s total asset base, and by paying attention to their first-class picks, Insider Monkey has found a few investment strategies that have historically outstripped the broader indices. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update and one of these stocks lost 47% in 4 days.
We’re going to go over the latest hedge fund action surrounding Mastercard Incorporated (NYSE:MA).
How are hedge funds trading Mastercard Incorporated (NYSE:MA)?
Heading into the fourth quarter of 2019, a total of 114 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MA over the last 17 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
The largest stake in Mastercard Incorporated (NYSE:MA) was held by Gardner Russo & Gardner, which reported holding $1812 million worth of stock at the end of March. It was followed by Akre Capital Management with a $1446.7 million position. Other investors bullish on the company included Berkshire Hathaway, Arrowstreet Capital, and GQG Partners. In terms of the portfolio weights assigned to each position KG Funds Management allocated the biggest weight to Mastercard Incorporated (NYSE:MA), around 17.5% of its portfolio. Akre Capital Management is also relatively very bullish on the stock, earmarking 14.3 percent of its 13F equity portfolio to MA.
Now, key money managers were leading the bulls’ herd. Light Street Capital, managed by Glen Kacher, created the largest position in Mastercard Incorporated (NYSE:MA). Light Street Capital had $42.1 million invested in the company at the end of the quarter. Rob Citrone’s Discovery Capital Management also made a $19.7 million investment in the stock during the quarter. The following funds were also among the new MA investors: Israel Englander’s Millennium Management, Bernard Selz’s Selz Capital, and Leon Shaulov’s Maplelane Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Mastercard Incorporated (NYSE:MA) but similarly valued. We will take a look at Bank of America Corporation (NYSE:BAC), The Home Depot, Inc. (NYSE:HD), Verizon Communications Inc. (NYSE:VZ), and Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM). All of these 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 |
|---|---|---|---|
| BAC | 95 | 32049756 | 1 |
| HD | 60 | 4349926 | 7 |
| VZ | 56 | 2373783 | 2 |
| TSM | 52 | 5161771 | 10 |
| Average | 65.75 | 10983809 | 5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 65.75 hedge funds with bullish positions and the average amount invested in these stocks was $10984 million. That figure was $13207 million in MA’s case. Bank of America Corporation (NYSE:BAC) is the most popular stock in this table. On the other hand Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) is the least popular one with only 52 bullish hedge fund positions. Compared to these stocks Mastercard Incorporated (NYSE:MA) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately MA wasn’t nearly as successful as these 20 stocks and hedge funds that were betting on MA were disappointed as the stock returned 4.2% during the fourth quarter (through 11/22) and slightly underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
