RenTech Loaded Up On Mastercard, Nike, More in Q2

Nike Inc (NYSE:NKE)

– Shares Owned by Renaissance Technologies (as of June 30): 5.06 Million

– Value of Holding (as of June 30): $279.67 Million

Like Home Depot Inc, Nike Inc (NYSE:NKE) was also a new entrant to Renaissance Technologies’ equity portfolio during the second quarter. Nike Inc (NYSE:NKE)’s stock made its lifetime high of $68.19 at the end of last year, but has been drifting lower since then, having lost over 10% of its value so far in 2016. The company announced last year that it plans to generate $50 billion in revenue by 2020 through growth in e-commerce, women’s athletic wear, and its Jordan brand. Though at the current juncture that goal seems achievable should Nike grow at a CAGR of around 10.3%, some analysts who track the company are skeptical. Earlier this month, the company announced that it will be getting out of the golf equipment basis, although it will continue to sell golf apparel and footwear. Nike’s stock currently sports an average rating of ‘Overweight’ and an average price target of $65.73 from 31 leading analysts and research firms on Wall Street who track it. David Blood and Al Gore’s Generation Investment Management upped its holding in the company by 144% to 4.33 million shares during the April-to-June period.

CVS Health Corp (NYSE:CVS)

– Shares Owned by Renaissance Technologies (as of June 30): 3.84 Million

– Value of Holding (as of June 30): $367.84 Million

Moving on, Renaissance Technologies made a nearly nineteen-fold increase to its stake in CVS Health Corp (NYSE:CVS) during the second quarter. Like Nike Inc, CVS Health Corp (NYSE:CVS)’s stock also made its lifetime high last year and has been drifting lower since and is currently trading flat in 2016. Several analysts who track the stock feel that trading at a forward P/E multiple of 14.83 and a 5-year expected PEG ratio of 1.14 makes the stock undervalued at current levels. They expect the company to perform well going forward owing to the aging of the U.S. population, the cost-cutting measures it has taken, and the debt refinancing deal that it recently executed. For its most recent quarter, CVS Health Corp (NYSE:CVS) reported EPS of $1.32, beating analysts’ consensus estimate by $0.02, on revenue of $43.70 billion, which was $528 million lower than what analysts had expected. For the same quarter of the previous year, the company had reported EPS of $1.22 on revenue of $37.20 billion. Hedge funds that sold off their entire stakes in the company during the second quarter included Clint Carlson’s Carlson Capital and James Dondero‘s Highland Capital Management.

Mastercard Inc (NYSE:MA)

– Shares Owned by Renaissance Technologies (as of June 30): 5.38 Million

– Value of Holding (as of June 30): $474.17 Million

Despite its stock declining by nearly 7% during the second quarter, Mastercard Inc (NYSE:MA) jumped five spots in RenTech’s equity portfolio during the period to become the fund’s third-most valuable equity holding, as RenTech upped its stake in the payment processing company by 54% during the second quarter. Mastercard Inc (NYSE:MA)’s stock has been oscillating between the $80 and $100 levels for almost two years and is currently trading down by 3.32% year-to-date. Though the stock of the company hasn’t appreciated in the last two years, Mastercard has upped its quarterly dividend during that time from $0.11 per share to $0.19 per share, which represents an annual dividend yield of 0.80%. On July 21, Mastercard announced that it had entered into a definitive agreement to acquire 92.4% of UK-based payments technology platform company VocaLink Holdings Limited for approximately $920 million. Analysts have appreciated the opportunistic move made, as prior to the Brexit, the same deal would’ve cost Mastercard around $1.04 billion. On July 29, analysts at BMO Capital Markets reiterated their ‘Outperform’ rating on the stock while upping their price target on it to $128 from $120, which represents potential upside of 34%. Billionaire Andreas Halvorsen‘s Viking Global also boosted its holding in Mastercard during the second quarter, by 230% to 6.43 million shares.

Disclosure: None