We recently compiled a list of the 10 Safe Stocks to Buy According to Billionaire Chilton. In this article, we are going to take a look at where Mastercard Incorporated (NYSE:MA) stands against the other safe stocks recommended by billionaire Richard Chilton.
Chilton Investment Company, founded by Richard L. Chilton, Jr. in 1992, aims to achieve appealing long-term returns while minimizing volatility. Since its establishment, the company has diligently adhered to a fundamental bottom-up investment approach, characterized by an ownership mindset. Its primary aim is to acquire fractional ownership in outstanding businesses rather than engaging in short-term stock trading.
Richard L. Chilton Jr. is the chairman, CEO, and chief investment officer of Chilton Investment Co. He has been a hedge fund manager for 18 years, which is a significant tenure in the challenging hedge fund industry. Chilton began his career in 1983 as an analyst with Alliance Capital Management, working alongside small-cap equity managers Frank Burr and Paul Jenkel. In 1990, he started a money management business for Allen & Co., a private bank, but left after two years to establish his own hedge fund company.
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Drawing on lessons in shorting stocks learned from Julian Robertson of Tiger Management Corp., Chilton set up his firm in a small, one-room office in New York, managing a classic long/short equity hedge fund. Chilton’s decision to start his own hedge fund was influenced by Art Samberg, a board member of the mutual fund Chilton co-managed. After expressing his desire to leave Allen & Co., where he had established a money management business, Samberg encouraged him to start his own fund, recognizing his talent. In January 1992, Chilton left Allen & Co., declined an offer from CEO Herbert Allen to buy a stake in his new venture, and instead accepted $1 million in investment from Allen, combining it with family money to launch his hedge fund with $5 million.
Starting his hedge fund in July 1992, Chilton aimed to create a classic long/short equity hedge fund, inspired by the first hedge fund model launched by Alfred Winslow Jones. His strategy was to always remain both long and short, without attempting to time the market. Chilton’s reputation grew through word of mouth, attracting prominent investors, endowments, and foundations. Pension funds later followed.
Chilton Investment’s appeal to institutional investors lies in its client-first approach and strong performance. The firm has been a leader in transparency and SEC registration. During the 2008 financial crisis, Chilton allowed clients to withdraw funds, which later returned. Chilton’s background in managing pension money at Alliance Capital gave him crucial experience in transparency and accountability, making his firm attractive for investors seeking long/short strategies. Chilton sees current opportunities in blue-chip companies with strong financials, solid dividend yields, and steady earnings growth. He expects these “dividend aristocrats” to outperform in a flat S&P environment, offering stability and consistent returns through growing dividends. Today, Chilton’s firm has grown significantly, with offices worldwide, a team of sector specialist analysts, and $7 billion under management across various strategies in global markets.
Richard L. Chilton Jr. graduated with a B.S. degree in Finance and Economics from Alfred University. Acknowledged for his business acumen, Forbes ranks Richard Chilton 773rd among the world’s wealthiest individuals, estimating his net worth at $1.3 billion. Chilton Investment Company caters to 9 clients, managing discretionary assets totaling $1,266,939,000, as per their Form ADV dated March 2024. Their 13F filing for Q1 2024 revealed managed 13F securities amounting to $3.6 billion.
Our Methodology
This article highlights the 10 safe stocks to buy according to billionaire Chilton, including analyst ratings and key details about each company, as well as the number of hedge funds invested in them.
Why focus on the stocks that hedge funds invest in? Our research shows that following the top picks of leading hedge funds can result in returns that beat the market. We use this strategy in our quarterly newsletter, where we choose 14 small-cap and large-cap stocks each quarter. Since May 2014, this approach has generated a 275% return, outperforming the benchmark by 150 percentage points. (see more details here)
A woman using a payment terminal at the checkout of a store showing payment products and solutions.
Mastercard Incorporated (NYSE:MA)
Chilton Investment Company’s Stake Value: $153,061,727
Number of Hedge Fund Holders: 148
Mastercard Incorporated (NYSE:MA) is a leading global payments technology company that connects consumers, businesses, and financial institutions to facilitate secure and efficient electronic transactions worldwide. Mastercard Incorporated (NYSE:MA)’s revenue continues to grow steadily, driven by higher consumer spending, expansion into new markets, and the growth of digital payments. With solid profit margins and strong cash flow, Mastercard Incorporated (NYSE:MA) is well-equipped to handle economic challenges while staying profitable. Additionally, Mastercard Incorporated (NYSE:MA)’s ongoing focus on innovation—particularly in digital solutions, cybersecurity, and new payment technologies—as well as its ventures into data analytics and AI, further strengthens its future growth prospects.
Although Mastercard Incorporated (NYSE:MA)’s dividend yield is currently low at 0.6%, its impressive history of dividend increases makes it an attractive investment. Mastercard Incorporated (NYSE:MA) has raised its dividend for 12 straight years, with a 500% increase over the last decade, reflecting an annual growth rate of about 20%. This consistent dividend growth suggests that Mastercard Incorporated (NYSE:MA) could offer a higher yield in the future if this trend continues. Additionally, despite the modest yield, Mastercard Incorporated (NYSE:MA) has provided exceptional returns, achieving a 552% total return over the past 10 years compared to the S&P 500’s 227%.
Mastercard Incorporated (NYSE:MA) consistently earns “Buy” ratings from analysts as they see considerable growth potential, with price targets ranging from $424 to $545 and an average of $493.47, indicating a possible increase of up to 17.24%. Mastercard Incorporated (NYSE:MA) is ranked 7th on our list of safe stocks to buy according to billionaire Chilton. By the end of the first quarter of 2024, Chilton Investment Company owned 317,839 shares of Mastercard Incorporated (NYSE:MA), worth $153,061,727. This investment made up 4.19% of Chilton’s total portfolio, according to regulatory filings.
L1 Capital International Fund stated the following regarding Mastercard Incorporated (NYSE:MA) in its Q2 2024 investor letter:
“The share prices of Mastercard Incorporated (NYSE:MA) 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.”
Overall MA ranks 7th on our list of the safe stocks to buy according to billionaire Chilton. While we acknowledge the potential of MA as an investment, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.