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Best Financial Services Stock: FIS or GPN?

Artisan Mid Cap Fund recently released its Q1 2020 Investor Letter, a copy of which you can download below. The fund posted a return of -11.55% for the quarter (investor class), outperforming their benchmark, the Russell Midcap Index which returned -27.07% in the same quarter. You should check out Artisan Mid Cap Fund’s top 5 stock picks which helped them beat the market by nearly 16 percentage points. There weren’t a lot of funds who could deliver these kinds of returns without shorting the market or using aggressive put options.

In the said letter, Artisan Mid Cap Fund highlighted a few stocks and Fidelity National Information Services Inc. (NYSE:FIS) is one of them. Fidelity National is a global provider of financial services technology and outsourcing services. Year-to-date, FIS stock lost 7.2% and on May 11th it had a closing price of $128.24. Its market cap is of $79.74 billion. Here is what Artisan Mid Cap Fund said:

“Fidelity National Information Services has benefited from regional banks’ outsourcing their core banking systems, and more recently, the company won of its first outsourcing deals with top banks in the US and Japan. We believe this could be a broader effort by larger banks to outsource their core systems, creating a meaningful opportunity for Fidelity National to accelerate its revenue growth. Furthermore, the company recently indicated its merger with Worldpay is going better than planned and raised its synergy expectations. While we believe the profit cycle remains very compelling, the company’s market cap has grown to the limit of our mid-cap mandate, and we began harvesting our position at the beginning of the quarter as our successful campaign matures. Shares have since come under pressure due to concerns that Fidelity National—like Global Payments—faces a difficult short-term environment for payment volumes. We expect Fidelity National’s earnings overall will prove relatively resilient despite these pressures and thus paused our sales.”

As you can see Artisan Mid Cap Fund believes that Fidelity National and Global Payments Inc (NYSE:GPN) stocks face short-term uncertainty for payment volumes. In Q4 2019, the number of bullish hedge fund positions on FIS stock increased by about 11% from the previous quarter (see the chart here).

Disclosure: None. This article is originally published at Insider Monkey.

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