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This Metric Says You Are Smart to Buy Mastercard Inc (MA)

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Is Mastercard Inc (NYSE:MA) a buy right now? Investors who are in the know are becoming hopeful. The number of long hedge fund positions advanced by 1 lately. However, according to a piece of news, which came today, Sterne Agee announced about reducing Mastercard Inc (NYSE:MA)’s rank.

Mastercard Inc (NYSE:MA)

In the eyes of most traders, hedge funds are assumed to be underperforming, old investment tools of yesteryear. While there are over 8000 funds with their doors open at the moment, we hone in on the aristocrats of this group, around 450 funds. It is widely believed that this group oversees most of all hedge funds’ total asset base, and by keeping an eye on their top stock picks, we have unsheathed a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).

Just as key, positive insider trading sentiment is a second way to parse down the marketplace. Just as you’d expect, there are plenty of stimuli for a bullish insider to drop shares of his or her company, but just one, very simple reason why they would behave bullishly. Plenty of empirical studies have demonstrated the impressive potential of this strategy if you understand where to look (learn more here).

With all of this in mind, let’s take a peek at the recent action surrounding Mastercard Inc (NYSE:MA).

Hedge fund activity in Mastercard Inc (NYSE:MA)

In preparation for this year, a total of 69 of the hedge funds we track were long in this stock, a change of 1% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their stakes significantly.

Of the funds we track, Gardner Russo & Gardner, managed by Tom Russo, holds the biggest position in Mastercard Inc (NYSE:MA). Gardner Russo & Gardner has a $437.3 million position in the stock, comprising 6% of its 13F portfolio. On Gardner Russo & Gardner’s heels is Tiger Global Management LLC, managed by Chase Coleman and Feroz Dewan, which held a $326.7 million position; the fund has 6.1% of its 13F portfolio invested in the stock. Remaining hedge funds with similar optimism include Andreas Halvorsen’s Viking Global, Donald Chiboucis’s Columbus Circle Investors and John Armitage’s Egerton Capital Limited.

As industrywide interest jumped, key hedge funds were breaking ground themselves. JAT Capital Management, managed by John Thaler, assembled the most outsized position in Mastercard Inc (NYSE:MA). JAT Capital Management had 22 million invested in the company at the end of the quarter. Philippe Laffont’s Coatue Management also made a $15.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Mark Broach’s Manatuck Hill Partners, Jim Chanos’s Kynikos, and Seymour Sy Kaufman and Michael Stark’s Crosslink Capital.

How have insiders been trading Mastercard Inc (NYSE:MA)?

Bullish insider trading is particularly usable when the company we’re looking at has experienced transactions within the past half-year. Over the last six-month time period, Mastercard Inc (NYSE:MA) has experienced zero unique insiders buying, and 5 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Mastercard Inc (NYSE:MA). These stocks are Verisk Analytics, Inc. (NASDAQ:VRSK), Fidelity National Information Services (NYSE:FIS), Fiserv, Inc. (NASDAQ:FISV), Moody’s Corporation (NYSE:MCO), and Visa Inc (NYSE:V). This group of stocks belong to the business services industry and their market caps match MA’s market cap.

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