Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Mastercard Incorporated (NYSE:MA) in this article.
Mastercard Incorporated (NYSE:MA) investors should be aware of a decrease in activity from the world’s largest hedge funds lately. Mastercard Incorporated (NYSE:MA) was in 151 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 154. Our calculations also showed that MA ranked #7 among the 30 most popular stocks among hedge funds (click for Q1 rankings).
To most stock holders, hedge funds are perceived as worthless, outdated investment tools of years past. While there are over 8000 funds with their doors open at the moment, Our researchers choose to focus on the top tier of this group, around 850 funds. These hedge fund managers direct most of all hedge funds’ total capital, and by shadowing their best investments, Insider Monkey has uncovered a number of investment strategies that have historically surpassed the broader indices. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Robert Pohly of Samlyn Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to take a glance at the key hedge fund action encompassing Mastercard Incorporated (NYSE:MA).
Do Hedge Funds Think MA Is A Good Stock To Buy Now?
At Q1’s end, a total of 151 of the hedge funds tracked by Insider Monkey were long this stock, a change of -2% from one quarter earlier. On the other hand, there were a total of 139 hedge funds with a bullish position in MA a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Akre Capital Management held the most valuable stake in Mastercard Incorporated (NYSE:MA), which was worth $2090.8 million at the end of the fourth quarter. On the second spot was Berkshire Hathaway which amassed $1625.3 million worth of shares. Fisher Asset Management, Gardner Russo & Gardner, and Lone Pine Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Lunia Capital allocated the biggest weight to Mastercard Incorporated (NYSE:MA), around 51.08% of its 13F portfolio. Valley Forge Capital is also relatively very bullish on the stock, designating 22.61 percent of its 13F equity portfolio to MA.
Since Mastercard Incorporated (NYSE:MA) has witnessed falling interest from the aggregate hedge fund industry, it’s easy to see that there is a sect of hedge funds that decided to sell off their full holdings by the end of the first quarter. It’s worth mentioning that Rajiv Jain’s GQG Partners said goodbye to the largest investment of the “upper crust” of funds tracked by Insider Monkey, worth about $726.5 million in stock, and James Parsons’s Junto Capital Management was right behind this move, as the fund said goodbye to about $95.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 3 funds by the end of the first quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Mastercard Incorporated (NYSE:MA) but similarly valued. We will take a look at UnitedHealth Group Inc. (NYSE:UNH), The Walt Disney Company (NYSE:DIS), Bank of America Corporation (NYSE:BAC), The Procter & Gamble Company (NYSE:PG), NVIDIA Corporation (NASDAQ:NVDA), The Home Depot, Inc. (NYSE:HD), and Paypal Holdings Inc (NASDAQ:PYPL). This group of stocks’ market values are similar to MA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UNH | 89 | 12091302 | -2 |
| DIS | 134 | 12552763 | -10 |
| BAC | 97 | 45321286 | -2 |
| PG | 70 | 8539030 | -13 |
| NVDA | 80 | 6204940 | -8 |
| HD | 68 | 4359872 | -11 |
| PYPL | 143 | 14717163 | -4 |
| Average | 97.3 | 14826622 | -7.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 97.3 hedge funds with bullish positions and the average amount invested in these stocks was $14827 million. That figure was $17097 million in MA’s case. Paypal Holdings Inc (NASDAQ:PYPL) is the most popular stock in this table. On the other hand The Home Depot, Inc. (NYSE:HD) is the least popular one with only 68 bullish hedge fund positions. Compared to these stocks Mastercard Incorporated (NYSE:MA) is more popular among hedge funds. Our overall hedge fund sentiment score for MA is 96.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.8% in 2021 through August 6th and still beat the market by 6.7 percentage points. Unfortunately MA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MA were disappointed as the stock returned 5.4% since the end of the first quarter (through 8/6) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
