4. Mastercard Incorporated (NYSE:MA)
Value of Aquamarine Capital Management’s 13F Position (6/30/2024): $29 million
Number of Hedge Fund Shareholders (3/31/2024): 149
Guy Spier follows closely in Warren Buffett’s footsteps when it comes to his conviction in finance stocks,which take up the top four spots in his 13F portfolio. Among them are three of Buffett’s own personal favorites, BAC, AXP and Mastercard Incorporated (NYSE:MA).
Spier has held the same 65,750-share stake in MA dating back to the fourth quarter of 2015, during which time it’s more than quadrupled in value. Buffett owned 3.99 million shares of Mastercard at the end of Q1, though that significant stake still only ranked as the 17th largest position in his $332 billion 13F portfolio.
Mastercard Incorporated (NYSE:MA) and other payment providers have enjoyed exceptional growth in recent years and that projects to continue through the rest of the decade, with the global payments market expected to nearly double in size to $5 trillion. Given its history of impressive return on invested capital over the last five years (47% on average, nearly twice as high as rival Visa Inc. (NYSE:V)’s), a lot of that projected future growth will filter down to the company’s bottom line, and from there, into investors’ pockets. Mastercard has bought back nearly a fifth of its shares over the past decade, while simultaneously raising its dividend every year throughout that period.
Manole Capital Management discussed a long-running regulatory concern for Mastercard Incorporated (NYSE:MA) and other payment providers in its Q2 2024 investor letter:
“We have invested in Mastercard Incorporated (NYSE:MA) and Visa since their IPO’s, in 2006 and 2008 respectively. When both payment companies initially listed, they identified potential legal liabilities stemming from merchant interchange lawsuits. During its IPO roadshow, Visa took a somewhat differentiated tact, by shielding new public shareholders from this liability and putting the risk onto the shoulders of its banking partners, card issuers, and earliest owners.
Over the last few decades, there have been numerous settlements, as well as legislation impacting payment industry. The Durbin Amendment, inside of Dodd-Frank legislation in 2010, altered debit fees. Also, a court ordered interchange settlement was approved over 15 years ago, but it was not fully embraced by the merchant community. Last year, Senator Durbin announced his intention to alter the payment environment again, with his CCCA (Credit Card Competition Act). This created a headwind for the networks, as it appeared that legislation from DC was on the horizon. We wrote numerous articles on this subject, highlighting our view that government interference in setting pricing isn’t ideal. All of our research notes can be read at www.manolecapital.com, under the “Research” tab. If you don’t believe us, since we clearly have a vested interest, there are additional thoughts about how the CCCA would negatively impact consumers…” (Click here to read the full text)
