We recently compiled a list of Norwegian Billionaire Halvorsen’s Top 10 Stock Picks. In this article, we are going to take a look at where Visa Inc. (NYSE:V) stands against Halvorsen’s other top stock picks.
Ole Andreas Halvorsen, the founder and CEO of Viking Global, has built one of the most respected names in the hedge fund world. Born in Norway, Halvorson graduated with an undergraduate degree in economics from Williams College in 1986. He then later earned a postgraduate business degree from Stanford University. Having received his first taste of finance while working for Morgan Stanley, he’s part of an elite group of investors known as the “Tiger Cubs,” former protégés of hedge fund legend Julian Robertson, who went on to launch their own successful firms.
Viking Global, based in Greenwich, Connecticut, has grown into an investment powerhouse. Back in 2023, the firm delivered an impressive $6 billion in returns for its investors, ranking just behind heavyweights like Citadel and TCI. Much of this success came from smart bets on big names. In the same year, Halvorsen decided to reopen Viking Global’s long/short flagship fund to new investors. Over a decade ago, he had closed the fund, citing its size as a barrier to uncovering profitable trading opportunities.
That said, Halvorsen isn’t just about bullish bets. While long positions are Viking Global’s bread and butter, the firm has also employed strategies that allow it to profit from short positions during turbulent market years like 2020 and 2022. The billionaire firmly believes that effective and profitable trading requires careful analysis and disciplined, long-term valuation. This philosophy has shaped Viking Global’s portfolio into a balanced mix of both long-term and short-term investments. While his primary focus remains on long-term stakes in public and private companies, Halvorsen isn’t afraid to embrace “thoughtful risk-taking” to maximize returns. This balanced approach, combining strategic risk with a commitment to disciplined analysis, is at the heart of Viking Global’s success.
This year, Viking’s funds have been making a strong comeback. Its hybrid fund, Viking Global Opportunities, which invests in both public stocks and private companies, earned a modest 1% return in the third quarter, trimming its year-to-date losses to 1.6%. Meanwhile, its private-asset fund, Viking Global Opportunities Drawdown, gained 4.2% for the quarter, bringing its total return for the year to 8.3%. After a rough second quarter, these results show Viking is back on track and making waves in the investment world. Overall, as of Q3 2024, Halvorsen’s 13F portfolio reflects a strong focus on the healthcare, finance, services, and technology sectors. The portfolio’s total value stands at over $27.43 billion, marking a 1.05% increase compared to the previous quarter.
Our Methodology
For this analysis, we examined Viking Global’s stock portfolio from the third quarter of 2024. The stocks are ranked based on the firm’s stake value in each holding.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up of a modern payments terminal with a pile of credit cards on the side.
Visa Inc. (NYSE:V)
Viking Global’s Q3 Stake: $963.9 million
Number of Hedge Fund Holders: 165
Visa Inc. (NYSE:V), a global leader in digital payments, operates in over 200 markets, connecting 4 billion account holders to more than 130 million merchants and 14,500 financial institutions. As a key enabler of the global economy, Visa dominates the U.S. payments sector, holding 47% of all U.S. credit card outstanding balances and 52% of the U.S. credit card market.
Visa’s fiscal year 2024 concluded with impressive financial results, including $9.6 billion in net revenue—a 12% year-over-year increase—and a 16% rise in earnings per share, reaching $2.71 in Q4. The company plans to bolster its fraud prevention capabilities with the acquisition of Prosa and Featurespace in 2025, aiming to strengthen its operational framework further.
On October 30, Deutsche Bank reaffirmed its Buy rating for Visa Inc. (NYSE:V) and raised its price target from $300 to $340, citing strong fourth-quarter results and optimistic fiscal year 2025 guidance. The bank highlighted Visa’s resilient business model and its potential to capture greater growth, particularly with a potential economic recovery on the horizon. Deutsche Bank also maintained its fiscal year 2025 EPS estimate for the payments company and slightly adjusted its fiscal year 2026 projection to $12.79, introducing a fiscal year 2027 EPS estimate of $14.59.
Mar Vista Global Strategy stated the following regarding Visa Inc. (NYSE:V) in its Q3 2024 investor letter:
“After lagging the broader markets over the last one, three, and five years, we believe Visa Inc.’s (NYSE:V) stock now reflects a more conservative and realistic expectation for future cash flow growth. The electronic transaction toll-taker has long enjoyed a highly defensible network effect that connects global buyers and sellers and scale advantages that keep upstart competitors from disrupting the industry’s economics. At the same time, Visa directly benefits from the secular trend of replacing cash with e-payments. Penetration rates and transaction volumes in developed markets will inevitably slow over the next five years yet we expect Visa revenues to grow 8-10% over our investment horizon. Key value drivers remain global consumer spending growth, e-transaction penetration, “new flows” expansion in areas like business-to-business transactions, and lastly, value-added client service growth.
Visa’s dominant position is reflected in its nearly pristine financials: 68% operating margins, greater than 70% incremental operating margins and only 3-4% capital expenditures as a percent of sales. Awash in excess capital, Visa is one of the more aggressive purchasers of its own stock. Shares outstanding over the last fifteen years have declined by one-third and we expect the company to continue to repurchase 2-3% of shares outstanding annually. Since the 2016 acquisition of Visa Europe, total returns on capital have expanded from 25% to 50% and we expect the metric to approach 100% over the next five years as net operating profits expand roughly 60% on a flat capital base. Overall, Visa should compound per share intrinsic value at 10-13% over the next five years.”
Overall V ranks 5th on our list of Halvorsen’s top stock picks. While we acknowledge the potential of V as an investment, our conviction lies in the belief that certain 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 V 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.
