During the last quarter of 2015, the Russell 2000 ETF (IWM) has inched up by 4.8%, lagging behind the S&P 500 ETF (SPY), which has gained over 8%, as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor, and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Visa Inc (NYSE:V) and see how the stock is affected by the recent hedge fund activity.
Visa Inc (NYSE:V) witnessed a slight decrease in enthusiasm from smart money lately as the company was included in 101 hedge funds’ equity portfolios at the end of the fourth quarter of 2015, compared to 102 funds a quarter earlier. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Chevron Corporation (NYSE:CVX), The Home Depot, Inc. (NYSE:HD), and Intel Corporation (NASDAQ:INTC) to gather more data points.
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Today there are dozens of tools investors can use to grade their holdings. A duo of the most under-the-radar tools are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the elite fund managers can trounce their index-focused peers by a very impressive margin (see the details here).
Keeping this in mind, we’re going to take a gander at the fresh action surrounding Visa Inc (NYSE:V).
What have hedge funds been doing with Visa Inc (NYSE:V)?
At the end of the fourth quarter, a total of 101 of the hedge funds tracked by Insider Monkey were long this stock, a change of -1% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Lansdowne Partners, managed by Alex Snow, holds the biggest position in Visa Inc (NYSE:V). Lansdowne Partners has a $1.33 billion position in the stock, comprising 9.1% of its 13F portfolio. The second largest stake is held by billionaire Ken Fisher’s Fisher Asset Management, with a $1.15 billion position; the fund has 2.2% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish comprise Stephen Mandel’s Lone Pine Capital, Warren Buffett’s Berkshire Hathaway and John Armitage’s Egerton Capital Limited.
Because Visa Inc (NYSE:V) has witnessed a decline in interest from hedge fund managers, we can see that there was a specific group of hedgies who unloaded their entire positions during the last three months of 2015. However, the largest position among the funds in the Insider Monkey database was sold by David Stemerman’s Conatus Capital Management, which was previously worth $41.7 million. Lee Hicks and Jan Koerner’s fund, Park Presidio Capital, also cut its stock, valued at about $28.6 million.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Visa Inc (NYSE:V) but similarly valued. These stocks are Chevron Corporation (NYSE:CVX), The Home Depot, Inc. (NYSE:HD), Intel Corporation (NASDAQ:INTC), and Citigroup Inc. (NYSE:C). This group of stocks’ market caps are close Visa’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CVX | 44 | 1478288 | -1 |
| HD | 62 | 3718999 | -7 |
| INTC | 56 | 4344035 | 11 |
| C | 106 | 9970358 | -15 |
As you can see these stocks had an average of 67 hedge funds with bullish positions and the average amount invested in these stocks was $4.88 billion. That figure was $9.39 billion in Visa’s case. Citigroup Inc. (NYSE:C) is the most popular stock in this table with a total of 106 funds reporting long positions as of the end of December. On the other hand, Chevron Corporation (NYSE:CVX) is the least popular one with only 44 bullish hedge fund positions. Visa Inc (NYSE:V) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard C might be a better candidate to consider a long position.
