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4. Mastercard Incorporated (NYSE:MA)

Number of Hedge Fund Holders In Q3 2024: 131

NTM EPS Estimate: $15.75

Mastercard Incorporated (NYSE:MA) is the second-largest payment processor firm in the US. After Visa, it holds the largest market share in several markets. The firm’s business model, like its larger rival, is dependent on the state of consumer spending in the US economy. Consequently, despite the fact that Mastercard Incorporated (NYSE:MA) commands a 24% share of the US credit card market, the firm is also vulnerable to competition from new-age financial technology firms that offer consumers and merchants alternative avenues to make and accept digital payments. Mastercard Incorporated (NYSE:MA) and Visa have also irritated merchants through their 60-day fraud protection policies that have also led to fraud. The pair’s multi-billion dollar settlement with merchants to reduce fees is also stuck in the courts, and it will have to diversify its revenue base and be on the watch-out for regulatory headwinds to generate tailwinds for the share price.

L1 Capital mentioned Mastercard Incorporated (NYSE:MA) in its Q2 2024 investor letter. Here is what the firm said:

“The share prices of Mastercard and Visa, both long term Fund investments, have both drifted down over recent months. There have been no dramatic developments, but there has been a general slight softening in the rate of growth of consumer spending in the U.S. and globally, a court decision rejecting Mastercard and Visa’s proposed settlement of a long-lasting dispute with U.S. merchants as well as other modest adverse regulatory developments. We continue to view Mastercard and Visa as two of the highest quality businesses in the world, and both are well placed to continue to deliver attractive, risk adjusted returns to shareholders over time.”