Is Fiserv, Inc. (FISV) A Good Stock To Buy?

In this article we are going to use hedge fund sentiment as a tool and determine whether Fiserv, Inc. (NASDAQ:FISV) 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.

Is FISV a good stock to buy now? Prominent investors were taking a bearish view. The number of bullish hedge fund bets shrunk by 7 recently. Fiserv, Inc. (NASDAQ:FISV) was in 65 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 94. Our calculations also showed that FISV isn’t 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. Now we’re going to take a look at the key hedge fund action regarding Fiserv, Inc. (NASDAQ:FISV).

Mason Morfit of ValueAct Capital

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

At third quarter’s end, a total of 65 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FISV over the last 25 quarters. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, ValueAct Capital, managed by Mason Morfit, holds the largest position in Fiserv, Inc. (NASDAQ:FISV). ValueAct Capital has a $1.1865 billion position in the stock, comprising 13.7% of its 13F portfolio. Sitting at the No. 2 spot is Tim Hurd and Ed Magnus of BlueSpruce Investments, with a $780.3 million position; 13.6% of its 13F portfolio is allocated to the company. Some other professional money managers that are bullish include Michael Lowenstein’s Kensico Capital, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Zach Schreiber’s Point State Capital. In terms of the portfolio weights assigned to each position ValueAct Capital allocated the biggest weight to Fiserv, Inc. (NASDAQ:FISV), around 13.74% of its 13F portfolio. BlueSpruce Investments is also relatively very bullish on the stock, designating 13.59 percent of its 13F equity portfolio to FISV.

Seeing as Fiserv, Inc. (NASDAQ:FISV) has experienced falling interest from the entirety of the hedge funds we track, we can see that there was a specific group of money managers that slashed their full holdings in the third quarter. At the top of the heap, Renaissance Technologies dropped the biggest position of the 750 funds followed by Insider Monkey, worth about $85.1 million in stock, and Michael O’Keefe’s 12th Street Asset Management was right behind this move, as the fund cut about $20.3 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 7 funds in the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Fiserv, Inc. (NASDAQ:FISV) but similarly valued. These stocks are Equinix Inc (NASDAQ:EQIX), Becton, Dickinson and Company (NYSE:BDX), Edwards Lifesciences Corporation (NYSE:EW), Vale SA (NYSE:VALE), DoorDash, Inc. (NYSE:DASH), CME Group Inc (NASDAQ:CME), and Cigna Corporation (NYSE:CI). This group of stocks’ market valuations are similar to FISV’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 45.1 hedge funds with bullish positions and the average amount invested in these stocks was $3147 million. That figure was $3945 million in FISV’s case. CME Group Inc (NASDAQ:CME) is the most popular stock in this table. On the other hand Vale SA (NYSE:VALE) is the least popular one with only 27 bullish hedge fund positions. Compared to these stocks Fiserv, Inc. (NASDAQ:FISV) is more popular among hedge funds. Our overall hedge fund sentiment score for FISV is 68.7. 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 FISV wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on FISV were disappointed as the stock returned -11% 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.