Hedge Funds Have Never Been This Bullish On Mastercard Incorporated (MA)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Mastercard Incorporated (NYSE:MA) based on that data.

Is Mastercard Incorporated (NYSE:MA) a buy right now? The smart money was becoming more confident. The number of bullish hedge fund bets improved by 5 lately. Mastercard Incorporated (NYSE:MA) was in 156 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 154. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MA ranked 6th among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 151 hedge funds in our database with MA positions at the end of the first quarter.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Jeffrey Talpins of Element Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to review the new hedge fund action encompassing Mastercard Incorporated (NYSE:MA).

Do Hedge Funds Think MA Is A Good Stock To Buy Now?

At second quarter’s end, a total of 156 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the previous quarter. On the other hand, there were a total of 147 hedge funds with a bullish position in MA a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Akre Capital Management held the most valuable stake in Mastercard Incorporated (NYSE:MA), which was worth $2141.8 million at the end of the second quarter. On the second spot was Berkshire Hathaway which amassed $1666.5 million worth of shares. Fisher Asset Management, Gardner Russo & Gardner, and Lone Pine Capital 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 Valley Forge Capital allocated the biggest weight to Mastercard Incorporated (NYSE:MA), around 19.19% of its 13F portfolio. KG Funds Management is also relatively very bullish on the stock, setting aside 14.97 percent of its 13F equity portfolio to MA.

Consequently, specific money managers were leading the bulls’ herd. Prana Capital Management, managed by Peter Seuss, created the most valuable position in Mastercard Incorporated (NYSE:MA). Prana Capital Management had $88.4 million invested in the company at the end of the quarter. Robert Boucai’s Newbrook Capital Advisors also initiated a $88.3 million position during the quarter. The following funds were also among the new MA investors: Jack Woodruff’s Candlestick Capital Management, Jeffrey Talpins’s Element Capital Management, and Bijan Modanlou, Joseph Bou-Saba, and Jayaveera Kodali’s Alta Park 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 UnitedHealth Group Inc. (NYSE:UNH), The Walt Disney Company (NYSE:DIS), Bank of America Corporation (NYSE:BAC), The Procter & Gamble Company (NYSE:PG), NVIDIA Corporation (NASDAQ:NVDA), The Home Depot, Inc. (NYSE:HD), and Paypal Holdings Inc (NASDAQ:PYPL). This group of stocks’ market values resemble MA’s market value.

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As you can see these stocks had an average of 95 hedge funds with bullish positions and the average amount invested in these stocks was $15293 million. That figure was $17099 million in MA’s case. Paypal Holdings Inc (NASDAQ:PYPL) 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 64 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 97.5. 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 24.1% in 2021 through September 20th and still beat the market by 6.9 percentage points. Unfortunately MA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MA were disappointed as the stock returned -6.8% since the end of the second quarter (through 9/20) 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.