Was KG Funds Management Right About Visa Inc (V), Mastercard Inc (MA), & Two Other Stocks?

KG Funds Management is a Manhattan-based hedge fund founded by Ike Kier and Ilya Zaides. KG Funds manages an equity portfolio worth $107.72 million as of the end of the third quarter. The fund’s five equity positions in companies with market caps above $1.0 billion, posted a weighted average return of 10.79% for the third quarter, based on the size of the holdings at the end of June. The fund invests mainly in tech stocks, which amass over a half of its equity portfolio.

Insider Monkey’s research shows that long bets of hedge funds are profitable most of the times. When we look at the third-quarter returns of the hedge funds in our database which had at least five long positions in companies valued at $1 billion or more, we see their long picks returned 8.3% on average, a full 5.0 percentage points clear of S&P 500 ETFs. However, that long stock-picking prowess is often overshadowed by the hedged portion of their portfolios, in options, bonds, and short positions.

With this in mind, let’s take a closer look at four top picks of KG Funds Management, which include Visa Inc (NYSE:V), Mastercard Inc (NYSE:MA), Moody’s Corporation (NYSE:MCO), and The Walt Disney Company (NYSE:DIS).

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KG Funds Management holds 387,600 shares of Visa Inc (NYSE:V) worth $32.05 million as of the end of the third quarter. The fund left its stake unchanged over the quarter, but amid an 11.7% jump registered by the stock, the value of the holding went up from $28.75 million reported as of the end of June. During the second quarter, the number of funds tracked by us  long Visa Inc (NYSE:V) increased by 11% to 118. Among these funds, Fisher Asset Management held the most valuable stake in Visa Inc (NYSE:V), which was worth $1134.3 millions at the end of the second quarter. On the second spot was Berkshire Hathaway which amassed $759.4 millions worth of shares. Moreover, Lansdowne Partners, Lone Pine Capital, and Soroban Capital Partners were also bullish on Visa Inc (NYSE:V).

In Mastercard Inc (NYSE:MA), KG Funds Management added five shares to its equity portfolio, reporting 230,586 shares as of the end of September. However, as the stock advanced by 15.8%, the value of the position went up to $23.37 million from $20.31 million during the same period. A total of 82 funds from our database held shares of Mastercard at the end of June, up by 3% over the quarter. Of the funds tracked by Insider Monkey, Gardner Russo & Gardner, managed by Tom Russo, held the number one position in Mastercard Inc (NYSE:MA), which was worth $857.7 million at the end of June.  On Gardner Russo & Gardner’s heels was Andreas Halvorsen’s Viking Global, with a $566.4 million position. Other peers with similar optimism included Jim Simons’ Renaissance Technologies, Charles Akre’s Akre Capital Management and Stephen Mandel’s Lone Pine Capital.

KG Funds Management had a $22.72 million stake in Moody’s Corporation (NYSE:MCO), which contained 209,800 shares at the end of September. The stock returned 16% during the third quarter. Moody’s Corporation (NYSE:MCO) was included in the equity portfolios of 34 funds at the end of June, down by two funds over the quarter. Among these funds, Warren Buffett’s Berkshire Hathaway had the biggest position in Moody’s Corporation (NYSE:MCO), worth close to $2.31 billion. Sitting at the No. 2 spot was Akre Capital Management, managed by Charles Akre, which held a $428.4 million position. Some other professional money managers with similar optimism encompassed John Armitage’s Egerton Capital Limited, Paul Marshall and Ian Wace’s Marshall Wace LLP and Mark Massey’s AltaRock Partners.

Finally, in The Walt Disney Company (NYSE:DIS), KG Funds Management trimmed its position by 7% to 215,000 shares worth $19.96 million during the third quarter. The stake was reduced as the stock lost 4.4% between July and September. At the end of June, 44 funds followed by our team were bullish on The Walt Disney Company (NYSE:DIS), down by 10% over the quarter. Among these funds, Lansdowne Partners amassed the biggest position, which was worth $925.7 million at the end of the second quarter. It was followed by Fisher Asset Management with a $867.2 million stake. In addition, Diamond Hill Capital, Adage Capital Management, and Markel Gayner Asset Management also reported substantial stakes in The Walt Disney Company (NYSE:DIS)

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