Is PayPal Holdings (PYPL) Still a Great Investment Pick?

Wedgewood Partners, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. For calendar 2021, a portfolio net return of +32.1% was recorded by the fund, outperforming the S&P 500 Index that delivered a +28.7% return for the same period, and the +27.6% gain of the Russell 1000 Growth Index. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Wedgewood Partners, 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 $203.9 billion market capitalization. PYPL delivered a -7.97% return since the beginning of the year, while its 12-month returns are down by -28.95%. The stock closed at $173.55 per share on January 19, 2022.

Here is what Wedgewood Partners has to say about PayPal Holdings, Inc. in its Q4 2021 investor letter:

“PayPal Holdings detracted from performance during the fourth quarter, despite reporting metrics that show its platforms are thriving. The total volume of payments that PayPal proprieties handled grew +26% compared to 2021 and is now over +70% higher than in 2019. In addition, new accounts at PayPal properties grew +12% while PayPal users executed +10% more transactions than last year. PayPal’s one-time parent and former largest customer, eBay, now represents just 3% of the Company’s payment volume as PayPal has aggressively expanded its platforms to include e-commerce merchants of all sizes. This includes Amazon, which announced it will accept payment at checkout from PayPal’s Venmo starting in 2022. Last, index providers S&P Dow Jones and MSCI, announced the potential re-constitution of their equity indexes, including changing the sector classification of payment processors, such as PayPal (and Visa), from “Information Technology” over to “Financials.” We are benchmark agnostic; however, we believe the potential change to this market structure particularly within passive index exchanged-traded funds, likely added to volatility during the quarter.”

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 143 funds in the previous quarter.   delivered a -32.83% return in the past 3 months.

In December 2021, 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.