Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Mastercard Inc (NYSE:MA)? The smart money sentiment can provide an answer to this question.
Mastercard Inc (NYSE:MA) investors should be aware of an increase in hedge fund sentiment of late. 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 Bristol Myers Squibb Co. (NYSE:BMY), China Life Insurance Company Ltd. (ADR) (NYSE:LFC), and Medtronic, Inc. (NYSE:MDT) to gather more data points.
Follow Mastercard Inc (NYSE:MA)
Follow Mastercard Inc (NYSE:MA)
At the moment there are several indicators shareholders use to size up publicly traded companies. Some of the most innovative indicators are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the top money managers can outperform the S&P 500 by a healthy margin (see the details here).
Keeping this in mind, let’s take a peek at the recent action surrounding Mastercard Inc (NYSE:MA).
How are hedge funds trading Mastercard Inc (NYSE:MA)?
At the end of the third quarter, a total of 76 of the hedge funds tracked by Insider Monkey were long this stock, inching up by 1% from one quarter earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Gardner Russo & Gardner, managed by Tom Russo, holds the biggest position in Mastercard Inc (NYSE:MA). The fund reportedly holds a $894.9 million position in the stock, comprising 8.1% of its 13F portfolio. Coming in second is Stephen Mandel of Lone Pine Capital, with a $752 million position; the fund has 3.1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism encompass Andreas Halvorsen’s Viking Global, Warren Buffett’s Berkshire Hathaway and Charles Akre’s Akre Capital Management.
Now, key money managers were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, initiated the biggest position in Mastercard Inc (NYSE:MA). As reported in its latest 13F filing, the fund had $47.5 million invested in the company at the end of the quarter. Christopher James’s Partner Fund Management also initiated a $45.1 million position during the quarter. The other funds with new positions in the stock are Matthew Tewksbury’s Stevens Capital Management, Benjamin A. Smith’s Laurion Capital Management, and John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s also examine hedge fund activity in other stocks similar to Mastercard Inc (NYSE:MA). These stocks are Bristol Myers Squibb Co. (NYSE:BMY), China Life Insurance Company Ltd. (ADR) (NYSE:LFC), Medtronic, Inc. (NYSE:MDT), and McDonald’s Corporation (NYSE:MCD). This group of stocks’ market valuations match MA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BMY | 62 | 2524973 | 14 |
| LFC | 9 | 103883 | -6 |
| MDT | 58 | 2051269 | -5 |
| MCD | 75 | 6105687 | -6 |
As you can see these stocks had an average of 51 hedge funds with bullish positions and the average amount invested in these stocks was $2.69 billion. McDonald’s Corporation (NYSE:MCD) is the most popular stock in this table, whereas China Life Insurance Company Ltd. (ADR) (NYSE:LFC) is the least popular one with only 9 bullish hedge fund positions. Mastercard Inc (NYSE:MA) outshines them all with 76 long positions and $6.65 billion in investments from the hedgies. Taking into account the fact that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
