While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Visa Inc (NYSE:V).
Visa Inc (NYSE:V) has experienced a decrease in activity from the world’s largest hedge funds of late. Visa Inc (NYSE:V) was in 164 hedge funds’ portfolios at the end of March. The all time high for this statistic is 166. There were 166 hedge funds in our database with V positions at the end of the fourth quarter. Our calculations also showed that V ranked #5 among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Chris Hohn
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. With all of this in mind we’re going to take a glance at the key hedge fund action regarding Visa Inc (NYSE:V).
Do Hedge Funds Think V Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 164 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -1% from one quarter earlier. On the other hand, there were a total of 157 hedge funds with a bullish position in V a year ago. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
The largest stake in Visa Inc (NYSE:V) was held by Fisher Asset Management, which reported holding $4840.2 million worth of stock at the end of December. It was followed by TCI Fund Management with a $2976.5 million position. Other investors bullish on the company included Berkshire Hathaway, Fundsmith LLP, and Akre Capital Management. In terms of the portfolio weights assigned to each position Truvvo Partners allocated the biggest weight to Visa Inc (NYSE:V), around 33.17% of its 13F portfolio. Hengistbury Investment Partners is also relatively very bullish on the stock, dishing out 23.42 percent of its 13F equity portfolio to V.
Due to the fact that Visa Inc (NYSE:V) has witnessed declining sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of hedge funds who sold off their positions entirely by the end of the first quarter. Intriguingly, Marcio Appel’s Adam Capital said goodbye to the largest stake of all the hedgies followed by Insider Monkey, worth an estimated $35.4 million in stock, and Mendel Hui’s Isomer Partners was right behind this move, as the fund dumped about $32.8 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 2 funds by the end of the first quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Visa Inc (NYSE:V). We will take a look at Johnson & Johnson (NYSE:JNJ), Walmart Inc. (NYSE:WMT), Mastercard Incorporated (NYSE:MA), UnitedHealth Group Inc. (NYSE:UNH), The Walt Disney Company (NYSE:DIS), Bank of America Corporation (NYSE:BAC), and The Procter & Gamble Company (NYSE:PG). This group of stocks’ market valuations are closest to V’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JNJ | 81 | 6913373 | 0 |
| WMT | 58 | 5881223 | -12 |
| MA | 151 | 17097200 | -3 |
| UNH | 89 | 12091302 | -2 |
| DIS | 134 | 12552763 | -10 |
| BAC | 97 | 45321286 | -2 |
| PG | 70 | 8539030 | -13 |
| Average | 97.1 | 15485168 | -6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 97.1 hedge funds with bullish positions and the average amount invested in these stocks was $15485 million. That figure was $26588 million in V’s case. Mastercard Incorporated (NYSE:MA) is the most popular stock in this table. On the other hand Walmart Inc. (NYSE:WMT) is the least popular one with only 58 bullish hedge fund positions. Compared to these stocks Visa Inc (NYSE:V) is more popular among hedge funds. Our overall hedge fund sentiment score for V is 97.6. 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 managed to beat the market by 6.7 percentage points. Hedge funds were also right about betting on V, though not to the same extent, as the stock returned 14.2% since the end of March (through August 6th) and outperformed the market as well.
Follow Visa Inc. (NYSE:V)
Follow Visa Inc. (NYSE:V)
Suggested Articles:
- 10 Best Cryptocurrencies to Buy for Early Retirement
- 10 Best Biotech Stocks to Buy According to Cathie Wood
- 15 Biggest Wine Companies In The World
Disclosure: None. This article was originally published at Insider Monkey.
