Is Global Payments (GPN) A Smart Long-Term Buy?

Greenlight Capital, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. An annual return of 11.9% was recorded by the fund for the whole year 2021, compared to the 28.7% of the S&P 500 index for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Greenlight Capital, in its Q4 2021 investor letter, mentioned Global Payments Inc. (NYSE: GPN) and discussed its stance on the firm. Global Payments Inc. is an Atlanta, Georgia-based financial services company with a $43.7 billion market capitalization. GPN delivered a 11.58% return since the beginning of the year, while its 12-month returns are down by -22.26%. The stock closed at $150.83 per share on February 2, 2022.

Here is what Greenlight Capital has to say about Global Payments Inc. in its Q4 2021 investor letter:

“We established a new large long position in Global Payments (GPN). GPN offers payment technology and software solutions to enable small and midsize merchants to accept electronic payments in various forms, both at physical locations and online. GPN also offers ancillary services such as payroll, time & attendance, inventory management, and industry vertical specific software (e.g. for restaurants or dentists).

GPN benefits from ongoing consumer preference shifts to electronic payments, which drove double-digit annual top line growth from 2012 through 2019. GPN benefits from inflation since it generally charges a percentage of merchant dollar volume. It earns 40% sustainable operating margins from taking small fees on billions of transactions from a diversified customer base. We rarely find such a high-quality business at a valuation that we find attractive. GPN regularly traded well above a market multiple through early 2021.

However, the stock dropped 46% between April and December as investors became worried about fintech disruption. We think the market is overstating the threat, and believe that it is more likely that a disrupter will buy GPN for its scale, salesforce and relationships, than it is to outcompete GPN. We acquired our position at an average price of $126.67 or 13x consensus expected 2022 EPS. GPN ended the year at $135.18 per share.”

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Our calculations show that Global Payments Inc. (NYSE: GPN) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. GPN was in 68 hedge fund portfolios at the end of the third quarter of 2021, compared to 66 funds in the previous quarter. Global Payments Inc. (NYSE: GPN) delivered an 11.83% return in the past 3 months.

In December 2021, we also shared another hedge fund’s views on GPN 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.