RiverPark Funds, an investment management firm, published its “RiverPark Large Growth Fund” third quarter 2021 investor letter – a copy of which can be downloaded here. The RiverPark Large Growth Fund (the “Fund”) returned -3.23% for the third quarter of 2021, while its benchmarks, the S&P 500 Total Return Index (“S&P”) advanced 0.58%, the Russell 1000 Growth Total Return Index (“RLG”) returned 1.16%, while the Morningstar Large Growth Category returned -0.07%. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
RiverPark Large Growth Fund, in its Q4 2021 investor letter, mentioned PayPal Holdings, Inc. (NASDAQ: PYPL) and discussed its stance on the firm. PayPal Holdings, Inc. is a San Jose, California-based financial technology company with a $147.2 billion market capitalization. PYPL delivered a -33.14% return since the beginning of the year, while its 12-month returns are down by -53.21%. The stock closed at $126.08 per share on February 4, 2022.
Here is what RiverPark Large Growth Fund has to say about PayPal Holdings, Inc. in its Q4 2021 investor letter:
“PayPal: PayPal shares declined in 2H21 on disappointing 3Q results and 2022 guidance below expectations. PYPL reported 13% 3Q revenue growth, guided to 13% growth for 4Q (on a softer recovery in travel and holiday season uncertainty tied to supply chain and labor market concerns), and guided to 18% revenue growth for 2022 on continued supply chain concerns, reopening driving more customers to purchase at point-of-sale, and the ending of stimulus payments. Management does expect growth to accelerate throughout 2022, exiting the year at or above its medium-term target of 20% revenue growth, excluding M&A.
PayPal is now the third largest payment company globally (after Visa and Mastercard). As the leading online checkout button/digital wallet, with 416 million active accounts, including 33 million merchants, available across 75% of the top 1,500 North American and European retailers, the company provides the purest exposure to the secular growth in ecommerce. PayPal is also a key beneficiary of the current dramatic shift in consumer buying habits brought on by the pandemic, as well as the relatively newer consumer-to-consumer payment trends through its Venmo peer-to-peer (P2P) payment service. Pay with Venmo will launch on Amazon this year. PayPal management has guided to at least 50 basis points of annual operating margin improvement over the next several years (we note that Visa and MasterCard at their scale currently have +50% operating margins compared with PYPL’s 24%). Combining the secular growth of eCommerce and P2P payments with operating leverage and the strategic use of the company’s significant and growing cash balance ($20 billion at 3Q), we believe the company can grow earnings at a mid-20% rate over the next five years.”
Image by mohamed Hassan from Pixabay
Our calculations show that PayPal Holdings, Inc. (NASDAQ: PYPL) ranks 9th on our list of the 30 Most Popular Stocks Among Hedge Funds. PYPL was in 123 hedge fund portfolios at the end of the third quarter of 2021, compared to 143funds in the previous quarter. PayPal Holdings, Inc. (NASDAQ: PYPL) delivered a -44.16% return in the past 3 months.
In January 2022, we also shared another hedge fund’s views on PYPL in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.
